Tax Digest: Key Changes in June 2025

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June has become a month of intensified tax control and digitalization. The main trends include expanded powers for the Federal Tax Service (FTS), combating evasion, and revising tax benefits.

1. New Powers for FTS: Company Status Evaluation

  • The State Duma approved at first reading a bill granting the FTS authority to issue official extracts analyzing legal entities’ state.
  • Extracts can be requested by both companies themselves and third parties (for due diligence or counterparty checks).
  • Controversial points:
    • Short dispute period (5 days)
    • Unclear data update frequency
    • Undefined legal status of extracts in tax disputes

2. Control over Business Fragmentation on Marketplaces

  • The FTS launched an experiment aimed at identifying sellers with signs of fragmentation (splitting businesses to retain tax breaks).
  • Marketplaces like Wildberries and Ozon are sharing data with tax authorities and sending notifications to risky sellers.
  • These sellers must provide explanations to the FTS within 10 business days.

3. Amendments to Special Economic Zone Benefits

  • A law was signed abolishing special economic zone (SEZ) benefits for Magadan region residents starting from 2026. Instead, an investment tax credit is proposed but not universally available.
  • Legislation is being considered to maintain SEZ benefits for investors in Octobersky SEZ (Kaliningrad Oblast) amid general increases in corporate profit tax rates.

4. Extension and Adjustment of Tax Exemptions

  • Zero VAT rate for hotels extended until 2030.
  • Proposal to increase catering industry’s revenue threshold exempted from VAT from RUB 2 billion to RUB 3 billion.
  • Other significant amendments:
    • Zero VAT for supplies needed for special military operations.
    • Ability to account interest income subject to sanctions upon actual receipt.
    • Increase in non-taxable maternity assistance amount from RUB 50 thousand to RUB 1 million per childbirth.

5. Enhanced International Exchange of Tax Information

  • CIS countries updated their Protocol enabling automatic exchange of information regarding one country’s resident participation in another country’s company capital.
  • Goal: Combating tax avoidance schemes using legal entities registered in Commonwealth states.
  • Risk: Strengthened scrutiny under controlled foreign company rules and concealment penalties.

6. Presidential Directives on Tax Policy

The Government was instructed to:

  • Review mechanisms for investment tax credits.
  • Analyze efficiency of self-employed taxation regime.
  • Develop proposals for changes to simplified taxation system (STS).
  • Consider tax incentives for stock market investors.
  • Clarify taxation rules for non-residents.

7. Intensification of FTS Control Work

  • Fictitious Relocation: Active audits target entrepreneurs who change regions seeking preferential treatment (Udmurtia, Mordovia, Kalmykia). Red flags include mass registrations at single addresses, lack of expenses in new regions, unverified presence.
  • International Payments via Agents: In-depth verification of transaction structures, genuine location of counterparties, and roles played by payment agents. Risks include additional VAT assessments and account freezes.

8. Digitalization of Residency Confirmation Process

  • An online service launched by the FTS allows submission of applications for Russian tax residency certificates.
  • Processing times: Electronic certificate—1 day; paper version—10 days.
  • Context: Rising demand for confirming or returning Russian tax residency.

9. Tax Policy: Rates Stable, Exemptions Under Scrutiny

  • Ministry of Finance confirmed no plans to raise major federal taxes.
  • However: Existing tax exemptions will undergo audit concerning effectiveness, necessity, and economic returns. Unjustified benefits may face cancellation.

June 2025 marked further reinforcement of FTS’ analytical and control capabilities, accelerated development of digital services, and review of tax benefit systems. Focus areas included increased transparency (company evaluations, anti-fragmentation measures, fictitious relocations), enhanced cross-border operation controls, and optimization of tax preference regimes. Businesses should enhance documentation and vetting processes for compliance purposes.

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