The Finance Ministry (MoF) has published a Letter No. 52359 for describing the allocation of income and expenses to a Permanent Establishment (PE) in Russia of a non-resident company and it has issued on 17th October 2014. In accordance with article 246 of the tax code, a non-resident having a PE in Russia is counted as a taxpayer. Again, according to article 306 of the Tax Code, a PE includes a branch, representative office, division, bureau, agency, other structural subdivision, or any other place through which a non-resident often carries on business actions in Russia. The MoF also described that under article 307 of the Tax Code, a non-resident doing activities through a PE in Russia must determine the corporate income tax base considering the income derived from performing activities in Russia through the PE and the related expenses that are deductible under the Tax Code. Under article 252 of the Tax Code, expenses are treated as tax deductible, if such costs are economically justified, properly documented, and incurred with the view to obtain taxable income. Also, income allotted to the PE in Russia should be determined considering the functions performed, the assets used and the economic or commercial risks estimated by that PE.
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