Features of taxation for foreign organizations

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In accordance with the norms of the Tax Code of Russia, taxpayers – foreign organizations are foreign legal entities established in accordance with the legislation of foreign states, international organizations, their branches, and representative offices established on the territory of the Russian Federation.

The activity of a branch of a foreign organization falls under the signs of a permanent establishment since it is connected with the conduct of regular business activities in the territory of the Russian Federation. This means that the activities of a branch of a foreign organization will be subject to the taxation rules provided for by the tax legislation of the Russian Federation in relation to a permanent representative office of a foreign organization.

A representative office of a foreign company is recognized as a taxpayer for most types of taxes. Transferring funds to the Russian budget is a duty.

The Tax Code establishes for foreign representative offices the obligation to calculate income tax, as well as calculate VAT in accordance with Russian legislation, determine the procedure for paying corporate property tax.

The activities of a representative office of a foreign organization (any other branch other than a branch) can also be qualified for tax purposes as leading to the formation of a permanent representative office, if the foreign organization conducts business through this branch.

A permanent establishment submits a tax return in respect of movable and immovable property at its location.

The objects of taxation are:

• income received by the representative office as a result of its activities in Russia, reduced by the amount of expenses.

• income of a foreign organization from the possession, use or disposal of the property of its permanent establishment in the Russian Federation, less the relevant expenses.

• other income derived by a representative office in the Russian Federation, as well as interest on debt obligations, income from the use of intellectual property rights, etc.

In accordance with the Tax Code of the Russian Federation, foreign organizations have the right to register with the tax authorities as taxpayers at the location of their permanent representative offices in Russia. At the same time, it is determined that foreign organizations that have several divisions (representative offices, departments) on the territory of the Russian Federation independently choose a division, at the place of tax registration of which they will submit tax returns and pay tax on operations of all divisions of a foreign organization located in the territory of the Russian Federation. RF. Foreign organizations are required to notify in writing the tax authorities at the location of their subdivisions registered in the territory of the Russian Federation of their choice.

Also, a foreign organization that has several divisions in the territory of the Russian Federation is obliged to centrally submit declarations and pay tax.

Thus, foreign companies established on the territory of the Russian Federation need to calculate in advance the volume of future benefits, determine the scope of activities, find qualified personnel to comply with all legal norms and pay appropriate taxes.

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