AGE

Eighth session, on May 22, 5-6 of June

«PROBLEM ASPECTS OF DISCHARGING TAX AGENT DUTY IN

TRANSFRONTIER CASES»

Mikhaleva Maria Olegovna

TABLE OF CONTENTS:

1. Issues defining…………………………………….………………………………3

2. Provisions devoted to a fiscal agent…………………………………...………….4

3. Tax resident certificate……………..………………………...……………………5

4. Certificate alternative……...……………………….……………………………...8

5. Ways of solving problems……………………….……………...………...………9

6. The procedure of obtaining tax resident certificate……………………….…….10

7. Ways of solving problems……. ,,,,,……………………….……….…………..…15

LEGAL RELATIONSHIP INVOLVING FISCAL AGENT AND FOREIGN COUNTY RESIDENT TAXPAYER:

1ST PROBLEM:

Form and substance of tax resident certificate;

2ND PROBLEM:

The procedure of obtaining tax resident certificate;

3RD PROBLEM:

Fiscal agent duty to confirm taxpayer residency;

4TH PROBLEM:

Interstate collaboration of tax authorities in purpose to provide information interchange.

Provisions devoted to a fiscal agent:Article 24 of Tax Code of Russian Federation defines fiscal agent as a person who exercise duties of tax computation, tax deduction and tax transfer to the budget of Russian Federation.• Russian legal entity (its subdivision);• Permanent mission of foreign company;• Individual entrepreneur.

To control the propriety of tax computation, deduction and transfer Paragraph 3 of the Article obliges fiscal agent to file documents to tax authority.

In that cases CERTIFICATE (note) of tax residency could be used.

Tax resident CERTIFICATE:

Certificate (note) of tax resident provides:• Exemption from taxation, tax privileges; • Tax re-calculation according to status change;• Tax rate estimation;• Tax deductions, tax set-off.

Official document issued and certificated by competent authority of the legal relationship subject residency state confirming its legal status in purpose of taxation according the provisions of Double Tax Treaty Agreement..

1. Competent organs authorized to issue and certify the document are determined by Article 3 of every Agreement;

2. THERE IS NO DETERMINED FORM OF THE DOCUMENT/ It could be issued as a note or as a certificate

SUBSTANCE AND FORM OF THE DOCUMENT

ARE REGULATED BY NATIONAL LAW.

Table 1 figured out the comparison of tax residency certificate (note) substance

:Country TIN Legal

addressIndicating the year

The purpose The subject of the receipt

Period

Belarus + + From which one TIN was assigned

For agreements application

The competent authority of a particular state

the period is set

Kazakhstan + - From which one TIN was assigned

For agreements application

- the period is set

Kirghizia + + In which one he was a resident

For agreements application

The competent authority of a particular state

-

Russia + + In which one he was a resident

For agreements application

the tax authority of a particular state

-

Tajikistan + - From which one TIN was assigned

For agreements application

- the period is set

Uzbekistan + + In which one he was a resident

For agreements application

The competent authority of a particular state

-

Tax resident CERTIFICATE:

3. Certificated in a proper way:

• pastille;

• consular legalization.

4. With document translation from foreign language attached.

Many of states especially Russian federation do not define substance characteristics of the document.

"It is not defined the concrete information that residency certificate should contain as well as it's formal requirements are not described" ( the letter of Federal Tax Agency of RF from 31.01.2013 №OA-4-

13/19590@).

Such peculiarities could affect:

• delaying the term of document extension;

• nonacceptance of certificate by reason of inappropriate certification (Federal Arbitrage Court of Moscow region decision from 26.04.12 №A-40-83149/11-116-236, FAC decision of North-West Federal District) and taxation in general order;

• accountability of fiscal agent

.

CERTIFICATE ALTERNATIVE:

Some of the countries accept information about foreign companies from international sources as their residency confirmationTable №2

Country International publication

Belarus Bankers AlmanacInternational Bank Identifier CodeAirline Coding Directory

Kazakhstan does not accept

Kirghizia does not accept

Russia Bankers AlmanacInternational Bank Identifier Code

Tajikistan does not accept

Uzbekistan does not accept

WAYS OF SOLVING PROBLEMS:

• Establish unified form of residency certificate and define criterions that it should conform to;

According to the results of certificate substantial analysis performed in Table 1 it should be noticed that there are a number of significant differences between them that as a consequence could affect its application.

• Provide universal certificate invocation;

In the majority of states every issued certificate is addressed to the competent authority of the concrete country. To simplify the procedure and to save time the unified certificate could be issued that would be valid in all the countries-members of EurAsEC (Eurasian Economic Community).

• Rely on informational publications inclusive company constant location data as a certificate alternative.To simplify the procedure of certificate demand (getting information in short terms) fiscal agent could use reliable information from acknowledged Information publications inclusive essential for tax authorities data.

THE PROCEDURE OF OBTAINING TAX RESIDENT CERTIFICATE:

National law of every state defines it's own procedure of obtaining tax resident certificate.

Table 3 shows the comparison of certificate (note) obtaining procedure.

(Process of receiving the note in Russian Federation could be complicated since tax authorities have a right to require unlimited list of papers from applicant. That could obviously delay the term of certificate receiving and as a consequence affect tax computation by fiscal agent).

Table 4 depicts one of the most significant aspect concerning duty to submit the document. Currently legislative provisions of the countries vary. That's why there could be collisions in duty execution.

Country legal document The authority responsible for the issuance

The term of issue

Required documents

Belarus Resolution of the Council of Ministers of the Republic of Belarus 17.02.2012 №156 "About unified list of administrative procedure approval"

The tax Inspectorate of tax Ministry of the Republic of Belarus at the place of registration

5 days Application (with information about organization)

Russia The information message of the Federal tax service of the Russian Federation "About the procedure of tax resident of Russian Federation status confirmation"18.02.2008

Interdistrict IFTS of Russia for the data center, Moscow

30 days Apart from application inclusive information about company other papers could be required

оCountry legal document The authority

responsible for the issuance

The term of issue

Required documents

Kazakhstan Standard of public service rendering "certification of taxpayer residency 19.12.2007 №469

Tax authorities in the regions, Almaty and Astana, which is the parent of the tax authority., in which the taxpayer is registered

30 days Application and confirmation that effective company management is located in the Republic of Kazakhstan

Uzbekistan Order of the state tax Committee of RU on may 14, 2010 №139

State tax Committee of RU through district (city) Government tax inspection at the place of registration/registration

Using the interactive service 5 days ( 1 day the possibility of issuing, 1 day for transfer and 3 days for preparing).

The statement, a copy of identification document (documents confirming the temporary registration in the state)

Country legal document The authority responsible for the issuance

The term of issue

Required documents

Kirghizia The regulations, approved by Government Decree from 15.05.2012, №298

The Ministry of Finance and his authorized representative

30 days The statement, a standard certificate on registration in tax authority of the Kyrgyz Republic

Тable№ 4Страна Obligation

Belarus tax agent/the taxpayer is a foreign organization

Kazakhstan tax agent

Kirghizia the taxpayer is a foreign organization/the authorized person, Is not entitled to come

Russia the taxpayer is a foreign organization/the tax agent passes the tax authority

Tajikistan the taxpayer is a foreign organization/.private individual

Uzbekistan the taxpayer is a foreign organization/private individual

WAYS OF SOLVING PROBLEMS:

• Impose responsibilities discharging on foreign company-taxpayer;

• The general procedure of residency certificate receiving should be established;

Based on mutual assistance among the states it is possible to unify the procedure of certificate obtaining in cases when foreign company – taxpayer doesn’t submit it to a fiscal agent. Tax authorities could exercise this procedure providing information interchange. This method would save time, decrease percentage of disputable cases and effectively avoid double taxation.