Country-by-Country Reporting (CbCR) is a vital component of international tax compliance for multinational enterprises (MNEs). In Russia, the Federal Tax Service (FTS) has implemented specific guidelines aligned with the OECD’s Base Erosion and Profit Shifting (BEPS) Action 13. This article provides Chief Financial Officers (CFOs) and financial executives with a comprehensive understanding of the CbCR requirements in Russia, including applicability, filing procedures, and penalties for non-compliance.

Applicability of CbCR in Russia

Criteria for Reporting:

• MNE groups with consolidated group revenue of RUB 50 billion or more (approximately €750 million) in the preceding fiscal year are required to submit a CbC report.
• The reporting entity is typically the ultimate parent entity of the MNE group that is a tax resident in Russia. In certain cases, surrogate parent entities or constituent entities may also be required to file.

Relevant Legislation:

• The primary legislative framework for CbCR in Russia is outlined in Chapter 14.4 of the Russian Tax Code.
• Detailed regulations are provided in Federal Law No. 340-FZ of 27 November 2017.

Reporting Requirements

Information to be Reported:

• The CbC report must include aggregate information relating to the global allocation of income, taxes paid, taxes accrued, stated capital, accumulated earnings, number of employees, and tangible assets other than cash or cash equivalents.
• It must also contain details of all the constituent entities for which financial information is reported, indicating the jurisdiction of tax residence of each entity and the main business activities.

Form and Submission:

• MNEs must complete and submit the CbC report using the specific XML schema provided by the Russian FTS.
• The report should be filed electronically via the FTS online portal (Личный кабинет налогоплательщика).

Filing Deadlines

• The CbC report must be submitted within 12 months from the end of the reporting fiscal year. For example, if the fiscal year ends on 31 December 2023, the report must be submitted by 31 December 2024.

Penalties for Non-Compliance

Penalties:

• Failure to file the CbC report by the deadline can result in a penalty of up to RUB 100,000.
• Additional penalties may apply for inaccurate information, non-compliance, or failure to keep adequate records.

Defences:

• Entities may avoid penalties if they can demonstrate that there was a reasonable cause for the failure to comply.

Confidentiality and Use of Information

Data Protection:

• The information in the CbC report is treated as confidential and will only be exchanged with tax authorities in jurisdictions with which Russia has a competent authority agreement.
• The data is used to assess high-level transfer pricing and other BEPS-related risks.