Russia: New GAAR provisions in the Tax Code

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The Russian parliament on 5 July 2017 approved a draft law (no. 529775-6) introducing a new general anti-avoidance rule (GAAR) into the Tax Code.

The new law introduces a new Article 54.1 containing a definition of the limitations on the rights and obligations exercised by taxpayers in calculating the tax base. According to the Article, the tax base or the tax due may not be reduced on the basis of incorrect information relating to the economic facts; incorrect information about persons subject to registration for tax or for accounting registers; or incorrect information in the tax return.

Where the tax base or the tax due is reduced the principal purpose of the transaction must not be to achieve an underpayment of tax or to obtain a tax credit. The liability created by the transaction should be the responsibility of a party to a contract concluded with the taxpayer, or of another person who took over the responsibility by a contract or under the law.

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