Findings of the peer reviews
The peer reviews found that the process of the automatic exchange of financial information in Russia is broadly consistent with the requirements of the Standard, but that some improvements are needed. In particular, Russia has concluded automatic exchange agreements with interested jurisdictions and put them into effect without undue delay, and the actual exchange of financial information proceeds in accordance with the requirements of model agreements established by the OECD.
Nevertheless, the experts noted some areas of inconsistency between Russian legislation
and the Standard and give the following recommendations:
- Broaden the definition of "financial assets", which is presented in Article 142.1 of the Tax Code of the Russian Federation in the form of an exhaustive list. The experts point out that this approach to formulating the definition is at odds with the way the equivalent term is presented in the Standard and recommend using an inclusive approach in formulating it.
- Amend legislation to incorporate a definition of Reporting Financial Institutions, and particularly Participating Jurisdiction Financial Institutions.
- Bring the definition of "change of circumstances" into line with the definition provided in the Standard. As of November 2022, the definition of "change of circumstances" contained in the Russian Tax Code is limited to circumstances that result or may result in a change of tax residence, while the Standard gives a broader definition.
- Amend the Tax Code to include a definition of "Account Holder" in accordance with the Standard.
- Amend legislation to establish measures to prevent attempts by financial institutions to circumvent proper tax due diligence and reporting procedures, as well as sanctions on account holders and controlling persons for the provision of false information.
It is worth pointing out that similar conclusions and recommendations were also contained in the 2020
Reports on the peer review of the automatic exchange of financial information, but they have still not been implemented in domestic legislation.
We will continue to monitor developments in this area.