Since August of 2023, businesses have had to adapt to the fact that Russia has suspended double tax treaties with a number of foreign states. Although suspension of double tax treaties is not provided for by the international treaty itself, the suspension was ordered by a Decree of the Russian President (Presidential Decree No.585 dated August 8, 2023, hereinafter “Decree 585”), as we wrote earlier.

As stipulated by Article 37 of Federal Law No.101-FZ “On international treaties of the Russian Federation” dated July 15, 1995, since double tax treaties were initially ratified by law, there also needs to be a federal law to approve their suspension by the Presidential Decree.

Federal Law No.598 “On the Russian Federation suspending certain provisions of international tax treaties of the Russian Federation” (“Law 598”) was published on December 19, 2023 to confirm the serious intentions Russia has in this regard. The law takes effect on December 30, 2023. It substantially duplicates the content of Decree 585 and does not introduce any additional provisions or restrictions:

·           The suspension of double tax treaties is still in effect starting August 8, 2023, and its subsequent approval through introduction of the new law does not change its effective date because Decree 585 remains the act serving as grounds for the suspension from August 8, 2023 to the date when Law 598 takes effect, i.e. until December 30, 2023.

·           As before, the suspension of double tax treaties is temporary “until foreign states remedy violations of the legitimate interests of the Russian Federation and the rights of its citizens and legal entities or until such international treaties are terminated with respect to the Russian Federation."

In practice, Law 598 does not change the existing situation, and the negative consequences of the suspension of double tax treaties still arise starting from August 8, 2023.

We will also prepare a separate review of the provisions of the Russian Tax Code that will soon take effect to mitigate the adverse consequences of the current situation on Russian entities/persons.

Since August of 2023, businesses have had to adapt to the fact that Russia has suspended double tax treaties with a number of foreign states. Although suspension of double tax treaties is not provided for by the international treaty itself, the suspension was ordered by a Decree of the Russian President (Presidential Decree No.585 dated August 8, 2023, hereinafter “Decree 585”), as we wrote earlier.

As stipulated by Article 37 of Federal Law No.101-FZ “On international treaties of the Russian Federation” dated July 15, 1995, since double tax treaties were initially ratified by law, there also needs to be a federal law to approve their suspension by the Presidential Decree.

Federal Law No.598 “On the Russian Federation suspending certain provisions of international tax treaties of the Russian Federation” (“Law 598”) was published on December 19, 2023 to confirm the serious intentions Russia has in this regard. The law takes effect on December 30, 2023. It substantially duplicates the content of Decree 585 and does not introduce any additional provisions or restrictions:

·           The suspension of double tax treaties is still in effect starting August 8, 2023, and its subsequent approval through introduction of the new law does not change its effective date because Decree 585 remains the act serving as grounds for the suspension from August 8, 2023 to the date when Law 598 takes effect, i.e. until December 30, 2023.

·           As before, the suspension of double tax treaties is temporary “until foreign states remedy violations of the legitimate interests of the Russian Federation and the rights of its citizens and legal entities or until such international treaties are terminated with respect to the Russian Federation."

In practice, Law 598 does not change the existing situation, and the negative consequences of the suspension of double tax treaties still arise starting from August 8, 2023.

We will also prepare a separate review of the provisions of the Russian Tax Code that will soon take effect to mitigate the adverse consequences of the current situation on Russian entities/persons.