Euro-Asian Law Congress Ninth session, on 14 May, of June 2015 год «The procedure aspects of confirmation the tax treaty application right in the countries of BRICS». Mihaleva Maria Olegovna Ekaterinburg Евразийский научно-исследовательский центр сравнительного и международного финансового права

TABLE OF CONTENTS: 1. Tax treaty definition and its meaning. ……...……………………………...…………..…3 2. Tax treaties administration ……………………….………….…...…………………...….4 3. Peculiarities of tax resident certificate receipt in BRICS member countries …………….5 Brazil………………………………………………………………….……….……………...5 Russia…………………………………………………………….…………………………...7 India…………………………………………………………………………………….……..9 China……………………………………………………………………………………...…11 South African Republic………………………………………………………………… In judicial practice there could be difficulties concerning the tax resident certificate submission. …………………………………………..…………………………………… Defining tax resident Certificate criterions. Indian experience…………………..………15 6. Peculiarities of confirmation the status of a person who has a real right to get a profit (beneficial owner). ……………………………………………………………………….…16 7. Tax resident certificate……………………………………………………………………17 Евразийский научно-исследовательский центр сравнительного и международного финансового права

1. Tax treaty definition and its meaning. Tax treaty / DTAA (Double Taxation Avoidance Treaty) has a purpose to promote countries cooperation and provide the most favourable tax conditions for external-economic activity. It effects: 1. Double Taxation Avoidance; 2. Application of tax benefits; 3. Unilaterally tax exemption; 4. Application of tax deductions or tax set-off; 5. The way of tax optimization; 6. Capital flow increase; 7. Prevention of fiscal evasion; 8. Income distribution between countries budgets. Евразийский научно-исследовательский центр сравнительного и международного финансового права

2. Tax treaties administration. Bilateral Double Taxation Avoidance treaties between Russia and members of BRICS. Table №1. Terms and conditions of application: 1. Substantive aspects; 2. Procedural aspects: - confirmation of the foreign resident status (tax resident certificate submission); - confirmation of the status of the person who has a real right to get profit («beneficial owner»). Евразийский научно-исследовательский центр сравнительного и международного финансового права COUNTRY the date of signing the agreement entry into forcedate of application Brazil India China South Africa

3. Peculiarities of tax resident certificate receipt in BRICS member countries. Table №2. Евразийский научно-исследовательский центр сравнительного и международного финансового права COUNTRY Features of the procedure for obtaining the document BRAZIL Form approved by“Instrução Normativa nº 1.226, de 23 de dezembro” de 2011 of the Secretariat of the Federal Revenue of Brazil. The tax authority (“Autoridade fiscal Brasileira”) issues certificates of residence. The form for the confirmation of residence can be obtained online under the following link: oUnicoINSRF doc Written application including: 1. BRAZILIAN TAXPAYER IDENTIFICATION (NUMBER, FULL NAME OR COMPANY, COUNTRY, ADRESS) 2. INCOME EARNED ABROAD (TAX WITHHELD OR TO BE WITHHELD AT SOURCE, CONVENTION FOR THE AVOIDANCE OF DOUBLE TAXATION OF INCOME BETWEEN COUNTRES, TYPE OF INCOME, NAME AND ADDRESS OF THE SOURCE OF PAYMENT 3. TAXPAYER’S STATEMENT (CONFIRM THE VERACITY OF THE INFORMATION PROVIDED HEREOF AND THE FULFILLMENT OF THE LEGISLATION OF THE COUNTRY OF THE SOURCE OF PAYMENT)

Евразийский научно-исследовательский центр сравнительного и международного финансового права COUNTRY Features of the procedure for obtaining the document BRAZIL Form approved by“Instrução Normativa nº 1.226, de 23 de dezembro” de 2011 of the Secretariat of the Federal Revenue of Brazil. __________________ Advantages and disadvantages Information could be received through the electronic communication services. There is an opportunity to print the document. After that certificate information is included to a general base where residency of other people could be checked-out. ___________________________________________________________ - Difficulties concerning the confirmation of certificate authenticity could emerge when apply to foreign fiscal agencies with printed certificate; + The use of electronic services (general base where certificate could be checked-out, the possibility to print certificate); + Short terms of request examination;

Евразийский научно-исследовательский центр сравнительного и международного финансового права COUNTRY Features of the procedure for obtaining the document RUSSIA The information message of the Federal tax service of the Russian Federation "About the procedure of tax resident of Russian Federation status confirmation" The Federal Tax Service issues certificates of residence. The request must be submitted to the “Interdistrict Inspectorate of the Federal Tax Service for Central Data Processing” including the following documentation: 1.Written application including: Name and address of the applicant, Country and authority where this certificate should be filed, List of the documents enclosed, Contact telephone number, Calendar year for which the confirmation is required, Tax Identification Number (if any); 2. Copy of the entire passport (incl. entry/exit stamps); 3. Copy of registration at the place of residence in Russia 4. Calculation of days spent in Russia in the respective year Depending on the individual circumstances, additional documents may be required proving the permanent residence of the applicant in Russia. The request should be processed within one month.

Евразийский научно-исследовательский центр сравнительного и международного финансового права COUNTRY Features of the procedure for obtaining the document RUSSIA Advantages and disadvantages - The list of documents is not strictly determined as a consequence expert could enquire any other documents from the applicant; - Additional document enquiry could delay the date of certificate issue; + Establishment of general rules of certificate receipt on the federal level.

Евразийский научно-исследовательский центр сравнительного и международного финансового права COUNTRY Features of the procedure for obtaining the document INDIA Notification of CENTRAL BOARD OF DIRECT TAXES («CBDT») into force on the 1st day of April, The local tax authority issues certificates of residence. The CBDT has released Form 10FA and Form 10FB for residents of India specifying the manner in which the TRC can be obtained from an Assessing Officer in India. The request must be submitted to the individual’s Assessing Officer and include the following document: Written application (1.Full Name and address of the applicant 2.Status 3. Nationality (in case of individual) 4. Country of incorporation/ registration (in case of others). 5. Address of the applicant during the period for which TRC is desired. 6.PAN/ TAN No. (if applicable) 7. Basis on which the status of being resident in India is claimed. 8. Period for which the residence certificate is applicable. 9. Purpose of obtaining Tax Residency Certificate (mustbe specified). 10. Any other detail.

Евразийский научно-исследовательский центр сравнительного и международного финансового права COUNTRY Features of the procedure for obtaining the document INDIA Notification of CENTRAL BOARD OF DIRECT TAXES («CBDT») into force on the 1st day of April, _________ Advantages and disadvantages Another information: - Individual’s Permanent Account Number; - Copy of the last tax assessment; -Copy of the last tax return filed. ______________________________________________________________ + Forms 10 FA, 10 FB were passed on federal level to regulate tax resident certificate receipt; - Experts could enquire additional documents from the applicant;

Евразийский научно-исследовательский центр сравнительного и международного финансового права COUNTRY Features of the procedure for obtaining the document CHINA. The local tax authority issues certificates of residence. The request must be submitted to the tax authority in charge of the employer who has the Individual Income Tax (IIT) withholding obligation for the individual. The requirements for obtaining a certificate of residence may vary, depending on the province in which such a certificate is requested. ________________________________________________________ In Beijing, the following documents have to be handed in: - Completed and signed application form for the certificate of Chinese resident status - Relevant documents of Chinese resident status, including the list of periods of time spent in China and the copy of entry record - Copy of PRC IIT payment certificate (if no taxes have been paid, a written explanation letter is required)

Евразийский научно-исследовательский центр сравнительного и международного финансового права COUNTRY Features of the procedure for obtaining the document CHINA ________________ Advantages and disadvantages In the City of Guangzhou, the applicant should submit the following documents to the local tax authority; -The completed application form for a certificate of Chinese resident status in triplicate -The original and a copy of the passport of the applicant (the original will be returned to the applicant) - The original PRC IIT and other tax payment receipts (if no taxes have been paid, a written explanation letter is required) - supporting documents for PRC residence days (applicable to non-Chinese domicile only, e.g. entry stamped pages on passport The request should be processed within 10 days. _______________________________________________________________ - There is no unified certificate receipt procedure (specific province requirements) - The necessity to submit some documents in original; + Short term of document issue.

Евразийский научно-исследовательский центр сравнительного и международного финансового права COUNTRY Features of the procedure for obtaining the document SOUTH AFRICA No formal process is in place. ________________ Advantages and disadvantages No formal process is in place. However, one can attempt to obtain a certificate of residence from the South African Revenue Service in writing (incl. the tax reference number). _______________________________________________________ - The procedure of certificate receipt is not defined precisely and as a consequence that could cause both receipt terms procrastinating and ungrounded requirements of SAR tax experts; + In practice document is issuing

4. In judicial practice there could be difficulties concerning the tax resident certificate submission: 1. About the possibility of alternative documents application, that confirm foreign country tax resident status; (abstracts from the trade register; certificates issued by other competent governmental authorities). Federal Arbitrage Court of North-Caucasus region , decision from N А / The time when the document should be submitted; (to the moment of payment or to the moment of tax authorities requirement). Federal Arbitrage Court of Moscow region № Ф /13 decision from № А / About using tax resident certificate in other tax periods; Federal Arbitrage Court Povolzhsky region № Ф /13 decision from N А / Matters of substance and certificate legalization; (the absence of required information, improper certification of the document) Federal Arbitrage Court of Moscow region № Ф /12 decision from № А /2012. Евразийский научно-исследовательский центр сравнительного и международного финансового права

5. Defining tax resident Certificate criterions. Indian experience. The Finance Act 2012 strictly defined tax certificate criterions. Certificate shall contain the following particulars, namely: 1 Name of the assessee; 2. Status (individual, company, firm etc.) of the assessee; 3. Nationality (in case of individual); 4. Country or specified territory of incorporation or registration (in case of others); 5. Assessee’s tax identification number in the country or specified territory of residence or in case no such number, then, a unique number on the basis of which the person is identified by the Government of the country or the specified territory; 6. Residential status for the purposes of tax; 7. Period for which the certificate is applicable; and 8. Address of the applicant for the period for which the certificate is applicable; The consequences: The reaction of foreign business partners were rather negative. (Specified criterions are not clause to a contract). A new law was passed in 2013 (The Finance Act 2013) and defined that criterions as optional. Евразийский научно-исследовательский центр сравнительного и международного финансового права

6. Peculiarities of confirmation the status of a person who has a real right to get a profit (beneficial owner). (Articles 10, 11, 12 of Agreements adopted within the OECD (Organization for Economic Cooperation and Development) frame Convention use a term "beneficial owner" as a condition for granting tax benefits) Condition: In order to prove that the recipient is a “tax resident”, merely providing a tax resident certificate issued by the tax authority of the other country is not enough. (India The Finance Act 2013, China Circular 601,81, 24 ) A recently published letter of the Ministry of Finance RF 2 (the Letter) addresses the question of the documents needed to determine the actual recipient of dividend income (the beneficial owner Letter No R3/16236 of 9 April 2014 ). Confirmation procedure includes: 1. Subject examination according to "beneficial owner" criterions. 2. Complex check-out of receiver accounts and transactions. 3. Enquiry of confirming information documents. Евразийский научно-исследовательский центр сравнительного и международного финансового права

7. Tax resident certificate. Features of the document: 1. National legislation of every country defines provisions concerning procedural and substantive aspects. 2. Certificate is an international document. (Just a few of bilateral double taxation avoidance treaties set a form of this document (as an example treaty between Russia and Belorussia). - Substance requirements should be established on the international level. - Receipt procedure could be universal and more simple. Ways of solving problems: 1. Establish unified certificate form. 2. Provide universal certificate application. 3. Establish unified procedure of certificate receipt. 4. Work out alternative ways of document receipt and confirmation of information: * Administrative procedures providing mutual assistance among the state authorities; * Application of other papers (abstracts from the international editions, notarial copies of documents). Евразийский научно-исследовательский центр сравнительного и международного финансового права