AEB Taxation Committee Business Meeting: ” Is the Russian Tax Reform at an end ?”

1. AEB Taxation Committee Business Meeting: ”Is the Russian Tax Reform at an end?” 17 December 2014 Ararat Park Hyatt

2. Alina LavrentievaChairperson of the AEB Taxation CommitteeWELCOME ADDRESS AEB Taxation Committee Business Meeting: ”Is the Russian Tax Reform at an end?”, 17 December 2014, MOSCOW

3. Frank SchauffAEB Chief Executive Officer, WELCOME ADDRESS AEB Taxation Committee Business Meeting: ”Is the Russian Tax Reform at an end?”, 17 December 2014, MOSCOW

4. Round table with Sergey D. Shatalov, Deputy Minister of Finance and AEB Taxation Committee experts IS THE RUSSIAN TAX REFORM AT AN END? AEB Taxation Committee Business Meeting: ”Is the Russian Tax Reform at an end?”, 17 December 2014, MOSCOW

5. New in tax legislation and tax practice in 2014 AEB Taxation Committee Business Meeting: ”Is the Russian Tax Reform at an end?”, 17 December 2014, MOSCOW

6. Anastasia SpiridonovaDeloitteTax monitoring - taxpayers start and win? AEB Taxation Committee Business Meeting: ”Is the Russian Tax Reform at an end?”, 17 December 2014, MOSCOW

7. Tax MonitoringAnastasia SpiridonovaDeloitte

8. WhatisTax Monitoring? It is a new way of working with the Tax Authorities. The principle is to achieve a collaborative relationship between the tax authorities and businesses based on trust, understanding and transparency. The aim is to give the business certainty of the tax position as quickly as possible. How? on a voluntary basis by singing the agreement for information collaboration on all taxes and duties with electronic communication or online access to ERP open minded dialog in the form of questions and answers (determined opinion/мотивированное мнение) without field visit Who can participate? Accrued taxes RUB 300mln. Revenue RUB 3bln. Assets RUB 3bln. When? starting from01 January 2016if the application submitted till 01 July 2015 Period covered one calendar year

9. Practical implication Determined opinion (мотивированное мнение) at request of the taxpayer or by the tax authorities’ decision period of consideration of the taxpayer’s request is 1 month transfer pricing matters cannot be a subject of determined opinion resolve of conflicts in Federal Tax Service Benefits and limitations no late payment interest if the taxpayer fulfilled the determined opinion no desk tax audits for the period of tax monitoring. Exceptions: (1) decreasing tax obligations (2) early termination of tax monitoring (3) late submission of tax return (4) claiming VAT or excise from the budget no field tax audits for the period of tax monitoring. Exceptions: (1) and (2) as above (3) initiated by the higher tax authorities (4) non-following of the determined opinion

10. Making a rational decision… Is company’s tax function ready for tax monitoring? Are there adequate resources to support the workload? Can the amount of possible exposure be predicted? Does the overall tax risk appetite hinder the use of tax monitoring? Ability to commit to high level of transparency? The tax authorities have publicly announced that they will approach Tax Monitoring in a positive manner.

11. Denis ZaytsevDS LawNew in disputing cadaster value of assets and land plots AEB Taxation Committee Business Meeting: ”Is the Russian Tax Reform at an end?”, 17 December 2014, MOSCOW

12. New in disputing cadaster value of assets and land plotsDenis ZaytsevDS Law

13. New in legislation Federal law № 143-FZ dated 04 June 2014: Change of subject-matter jurisdiction. All disputes regarding challenge of cadaster value of assets and land plots have been passed to the courts of general jurisdiction. Federal law № 225-FZ dated 22 July 2014: right to amend draft of project of evaluation of cadaster value; obligatory pre-trial disputing of cadaster value for legal entities; new concrete terms of evaluation of cadaster value; new terms to dispute results of conducted evaluation of cadaster value; new order to approve change of cadaster value under decision of commission or court.

14. New in courtpractice Ruling of Presidium of Highest Commercial Court of the RF dd. 11.02.2014 case №13839/13 Decision of Commercial court of Krasnoyarskiykrai dd. 09.12.2014case № А33-11253/2012 Ruling of Tenth commercial appeal court dd.12.11.2014 case № А41-35176/14 Order of Supreme Court of the RF dd. 12.11.2014 case № 5-АПГ14-52 Ruling of Commercial court of North-Caucasian district dd. 04.12.2014 case № А53-3588/2014

15. New in disputing cadaster value of assets and land plots Thank you for your attention DS Law

16. Mikhail OrlovKPMGLegislative developments in VAT calculation procedure AEB Taxation Committee Business Meeting: ”Is the Russian Tax Reform at an end?”, 17 December 2014, MOSCOW

17. Legislative developments to the procedure for calculating VAT Mikhail OrlovPartner, KPMGHead of Tax&Legal, Russia&CIS

18. Federal Law No. 382-FZ dated 29 November 2014 (enters into force from 1 January 2015) Russia will be deemed the place of supply for air transportation services provided by Russian airlines if the goods are transported between two points outside Russia and the aircraft lands in Russia. Such services will be subject to the zero percent VAT rate (clause 1 of Article 148 and clause 1 of Article 164 of the RF Tax Code)  Taxpayers will have the right to offset input VAT in any period within three years of the booking of the goods (work, services) and property rights in the accounting (clause 1.1 of Article 172 of the RFTax Code)

19. Federal Law No. 382-FZ dated 29 November 2014 (enters into force from 1 January 2015) Taxpayers will have the right to offset input VAT in the period when the goods (work, services) were purchased even if the VAT invoice is received in the next period, but before the filing date of the VAT tax return for the previous tax period The deadline for filing the VAT tax return and VAT payment is extended for five days   

20. Federal Law No. 366-FZ dated 24 November 2014 (enters into force from 1 January 2015) There will be no need to restore input VAT related to goods, work, services used in activities subject to the zero percent VAT rate (sub-clause 5, clause 3 of Article 170 of the RF Tax Code) It will be possible to fully offset input VAT related to expenses, whose deductibility has been limited for corporate income tax purposes (clause 7 of Article 171 of the RF Tax Code) Order No. ММВ-7-3/558@ of the Russian Federal Tax Service dated 29 October 2014 The new form of the VAT return, which will include information from the sales and purchases ledgers, is currently awaiting registration at the Russian Ministry of Justice

21. Vladimir KonstantinovPwCCourt practice on VAT matters (bonuses, inventory losses, advertising,international transportation) AEB Taxation Committee Business Meeting: ”Is the Russian Tax Reform at an end?”, 17 December 2014, MOSCOW

22. Court practice on VAT matters(bonuses, inventory losses,advertising, international transportation) Vladimir KonstantinovPwC

23. Agenda Bonuses Resolution #33 of Plenum of Supreme Arbitration Court 2

24. Bonuses The nature of bonuses: Reduction of sales price Payments for sales promotion services VAT neutral incentive payments 3

25. Bonuses Leroy Merlin case - Decision of the Presidium of the Supreme Arbitration Court of the Russian Federation #11637/11 of 7 February 2012 Bonuses are trade discounts Input VAT recovery reversal Significant risk for significant amount 4

26. Bonuses *Impact of Leroy Merlin case Has the risk materialized? Tax audits Court practice 5

27. BonusesCourt practice positive 2012 2013 2014 negative 12/02/12 6

28. Bonuses *Pattern of decisions? (1 of 2) Bonuses do not change price under the contract No corrective VAT invoices 11/06/2014 21/06/2014 Sodexo EuroAsia LLC Cassation level (Moscow Region) #A40-976590/13 Castorama RUS LLC Cassation level (Moscow Region #A40-39492/13 Period: 2010 – 2011 Judges: • KOROTYGINA N.V. • BUYANOVA N.V. • SHISHOVA O.A. Period: 2009 - 2010 Judges: • BUYANOVA N.V. • EGOROVA T.A. • SHISHOVA O.A. 7

29. Bonuses *Pattern of decisions? (2 of 2) Bonuses do not change price under the contract No corrective VAT invoices 10/10/2014 10/11/2014 Pharmperspectiva LLC Supreme court #306-КГ14-1504 Castorama RUS LLC Supreme court #305-КГ14-3243 Period: 2009 – 2010 Judge - PERSHUTOV A.G. Period: 2009 - 2010 Judge - PERSHUTOV A.G. VAT recovery should not be reversed VAT recovery should be reversed 8

30. Bonuses *Conclusions Risk of loss has increased Tax environment Risk management – various scenarios are possible 9

31. Overview of the Resolution of SAC Plenum Resolution on VAT matters (no. 33 dated 30 May 2014); Significance of the Resolution. 10

32. Inventory losses 11 Inventory losses – output VAT due? • Reasons – outside control of tax payers • Documents • Volume of losses – “common level”

33. Advertising materials 12 Range of free distribution which does not trigger VAT costs is changed (reduced) • Items which may not be regarded as “goods”

34. Thank you for attention Vladimir Konstantinov PwC Partner, Indirect Tax Leader vladimir.konstantinov@ru.pwc.com Tel.: + 7 (495) 967 6236

35. Alexander ErasovGOLTSBLAT BLPTax crimes investigations – New dangers for business and defense tactics AEB Taxation Committee Business Meeting: ”Is the Russian Tax Reform at an end?”, 17 December 2014, MOSCOW

36. TAX CRIMES INVESTIGATIONS - NEW DANGERS FOR BUSINESS AND DEFENCETACTICSAlexander ErasovSenior Associate / Tax Dispute Resolution / Tax Crime DefenceGoltsblat BLPGoltsblat BLP LLP is the Russian practice of Berwin Leighton Paisner (BLP), an award-winning international law firm with offices in London, Moscow, Abu Dhabi, Beijing, Berlin, Brussels, Dubai, Frankfurt, Hong Kong, Paris and Singapore AEB Business Meeting: "IS THE RUSSIAN TAX REFORM AT AN END?”, December 17, 2014, Moscow

37. What has changed? The procedure for initiating tax-related criminal cases PLUS • The list of actions falling within the scope of property and money laundering (legalisation) is expanded • The Deoffshorisation Law is adopted • Amendments to Art. 199 of the Criminal Code (tax evasion by an organisation) are expected • The draft law “on tax right abuse” is on the agenda Whatmightitleadto?

38. Relief from criminal liability for tax crimes Termination of statute of limitations Active repentance Special grounds and conditions for relief from criminal liability for tax crimes • Tax evasion and failure to withhold tax (Articles 198-1991of the Russian Criminal code) • Tax arrears + fines and late payment interest are paid in full • Payment is made before a court session is appointed • Concealment of monetary resources or property for recovering tax arrears (Article 1992 of the Russian Criminal code) • Six-fold recovery of damages

39. Here come the police – defence tactics WHO MIGHT GIVE YOU A VISIT? PROVIDING DATA Agree your actions with your lawyer/advocate Do not be in a hurry to submit additional evidence - the less you provide to law enforcement officers, the higher your chances of later improving the situation The information stated in your documents should be in line with data from other sources – do not disprove yourself, leave this to the officers • Search and detection agents • Investigative Committee of the Russian Federation

40. Here come the police – defence tactics Golden rules for a surprise visit CALL YOUR ADVOCATE Do not get in the way of law enforcement officers (though you are not obliged to help) Monitor all actions taken by law enforcement officers Do not destroy or delete any documents, correspondence or phone messages • Do not provide falseinformation • Avoid provoking the officers • Neither discuss nor give any explanations on the merits • Do not give in to psychological pressure exerted by law enforcement officers

41. Thank you for your time & attention Alexander Erasov Senior Associate Tax Dispute Resolution / Tax Crime Defence Goltsblat BLP +7 (919) 778 67 77 Alexander.Erasov@gblplaw.com AEB Business Meeting: "IS THE RUSSIAN TAX REFORM AT AN END?”, December 17, 2014, Moscow

42. Q&A AEB Open Event: Round Table ”Internal Communications: Best Practices”, 19 JUNE 2014, MOSCOW