OECD initiatives on the international taxation rules

In October 2019, the OECD published for public discussion its proposals for Pillar One as a part of the implementation of the Program for the development of an agreed solution to tax issues arising from the digitalization of the economy, approved by the G20 at the Japan Summit in June 2019.

This concept is much wider in scope than the measures regarding taxation of digital companies undertaken by countries unilaterally. In this regard, Russia is no exception - the task of developing new approaches to taxation of digital companies was enshrined in the Guidelines for the budget, tax and customs tariff policy for 2020 and for the planning period 2021 and 2022 prepared by the Ministry of Finance of Russia.

Suggested innovations:

1. A new concept of taxable presence. Upon reaching a significant amount of local sales (regardless of the presence of a physical presence), the group of companies forms a remote taxable presence in the country of sale (country of location of users / buyers of GWS - goods / works / services). It is anticipated that this concept will be introduced in addition to the existing provisions on permanent establishment;

2. The new rule of profit distribution. The emergence of a remote taxable presence will allow the country of sale to tax the estimated share of the residual profit of the group of companies, regardless of whether the group has a physical presence in this country (in the form of a subsidiary or a permanent establishment).

The final document is expected to be published by the end of 2020.

Source: https://www.oecd.org/tax/oecd-invites-public-input-on-the-secretariat-proposal-for-a-unified-approach-under-pillar-one.htm