Submitting documentation for multinational enterprises (MNEs) in Russia

Multinational enterprises (MNEs)

Multinational enterprises (MNEs) are recognized as a set of organizations and (or) foreign structures without forming a legal entity, which are interconnected through participation in capital and (or) control, for which all the following conditions are met:
1) preparation of consolidated financial statements by the requirements of the Russian legislation or the requirements of stock exchanges, including foreign stock exchanges.
2) MNEs participants are tax residents of different states, while at least one MNEs participant must be a tax resident of Russia or receive income from business activities through a permanent representative office in Russia, and at least one MNEs participant must not be recognized as a tax resident of the Russian Federation or, being a tax resident of Russia, subject to taxation in the territory of a foreign state about business activities through a permanent establishment.

Members of multinational enterprises are recognized

  • as
    entity as a part of a set of organizations and (or) foreign structures without forming a legal entity, recognized as a multinational enterprise (MNEs)
  • as
    entity included at the end of the financial year in an MNEs whose statements are not included in the consolidated statements due to the size or insignificance of data about such a person
  • as
    permanent establishment of the above entities
The Central Bank of the Russian Federation, state authorities, local governments, and public authorities of the federal territory "Sirius" are not recognized as participants in the multinational enterprises.

Documentation on multinational enterprises (MNEs)
MNEs participants provide the following documents to the tax authorities:
  1. notification of participation in an international group of companies (CbC Notification);
  2. country information on the multinational enterprises the taxpayer is a member of.

CbC Notification

A CbC Notification is submitted no later than eight months from the end of the reporting period for the parent company of such an MNEs (clause 4 of Article 105.16−2 of the Tax Code of the Russian Federation).

Notification must be submitted electronically only. The format of the CbC Notification and the procedure for filling it out and submitting it in electronic form is approved by Order of the Federal Tax Service of Russia dated 03/06/2018 N ММВ-7−17/124@ (as amended on 07/16/2020) On Approval of the Format of the CbC Notification, the Procedure for Filling It Out and Submitting It In Electronic Form.

The information in the notification is reflected as of the end date of the reporting period.

The CbC Notification must indicate:
  • name, main state registration number, identification number of each taxpayer — MNEs participant, code of the reason for registering it;
  • information about whether the taxpayer submitting the notification is the parent company of the MNEs or its authorized participant;
  • information about the inclusion (non-inclusion) of the taxpayer in the list of strategic enterprises or that the taxpayer is a subsidiary of organizations from this list;
  • information about the federal executive body authorized by the Government of the Russian Federation to provide preliminary consent to the transfer of information about strategic enterprises or their subsidiaries to the competent authorities of foreign states;
  • the name of the parent company of the MNEs, the state of its tax residence, its registration number, its taxpayer code in the state of its registration (or their analogs), its registration address;
  • the name of the participant who is an authorized participant of the MNEs, the state of his tax residence, the registration number assigned to him in the state of his registration, his taxpayer code, and his registration address;
  • grounds confirming the right of an MNEs participant to submit a country report and (or) notification of participation in the MNEs about all participants of this group recognized as taxpayers by the Russian Tax Code;
  • the date that is the last day of the reporting period.

When is CbC Notification not required?

Country information on the MNEs refers to information provided by the participants of the MNEs:
  • on income (expenses), profit (loss) received (incurred) in connection with the activities of MNEs participants in the Russian Federation and (or) a foreign state;
  • on the leading indicators characterizing the activities of MNEs participants in Russia and (or) a foreign state;
  • on the amounts of taxes calculated and (or) paid to the budget system of Russia and (or) a foreign state (territory), MNEs.

Country information consists of the following documents:
  • Global Documentation of MNEs (Master file);
  • National Documentation of MNEs participant (Local file);
  • Country-by-country report, CbCR.
Country information is not provided if the total amount of income of the MNEs for the financial year:
  • less than 50 billion rubles if the parent company is a resident of Russia;
  • less than the amount of income established for submitting a country report by a foreign state if the parent company is a resident of this foreign state.

The Global Documentation (Master File) and Country Report (Country-by-country report, CbCR) are being presented for the first time for periods beginning in 2017. For 2016, they can be submitted voluntarily.
  • National Documentation (Local file) may be requested in case of controlled transactions.

The country-by-country report, CbCR

The CbCR is submitted by the parent company of an MNEs or an authorized representative of an MNEs who is a resident of Russia or who has voluntarily recognized themselves as a resident of Russia. These persons submit a country report no later than 12 months from the end of the reporting period.
The taxpayer also submits a CbCR if this participant receives a corresponding request from the Federal Tax Service of the Russian Federation.

The CbCR must contain the following information for the reporting period based on consolidated reporting:
  1. the total amount of income broken down by groups of transactions (within the MNEs and outside the group);
  2. the amount of profit (loss) before tax;
  3. the amount of income tax;
  4. the amount of income tax paid;
  5. amount of capital;
  6. the amount of accumulated profit;
  7. number of employees;
  8. the amount of material assets;
  9. identification information about each participant, indicating the state in which they were created, residence, and main activities of each participant.
The information is reflected in a generalized form for each state of which the participants are residents.
The CbCR report is submitted only in electronic form. The format of the CbCR report and the procedure for filling it out and submitting it was approved by the Order of the Federal Tax Service of Russia dated March 6, 2018, N ММВ-7−17/123@.

The CbCR report must be in Russian, except in cases where the parent company was a non-resident of the Russian Federation. Duplication in a foreign language is allowed.

The CbCR report is completed in rubles but may be in the currency in which the parent company of the MNEs prepares consolidated financial statements.
Recalculation of the reporting currency of the participants of an MNEs, which is different from the reporting currency of the parent company, can be carried out according to the rules for drawing up the consolidated financial statements of the parent company of such an MNEs. This information should be included in the notes to the country report.

National documentation (Local file)

National documentation is submitted at the request of the Federal Tax Service of the Russian Federation by an MNEs participant and contains information about a controlled transaction with an MNEs participant who is a non-resident of Russia.

Such documentation can be requested no earlier than June 1 of the year following the calendar year in which the controlled transactions were carried out.
If the information disclosed in the Global Documentation needs to be indicated in the National Documentation, then in the National Documentation, it is sufficient to make references to the relevant paragraphs of the Global Documentation.

In addition, a taxpayer participating in MNEs may provide other information confirming the comparability of controlled transactions with transactions between unrelated persons.
The values of controlled transactions for which National Documentation is compiled may be indicated in the currency in which such transactions are denominated.

The composition of the information in the national documentation is the same as in the case of providing information on controlled transactions.
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