Subject The article analyzes the law enforcement practice in the context of resolution of tax disputes arising from the application of double tax treaties' (DTT) benefits by taxpayers of corporate income tax. It confirms the justified use of DTT benefits by taxpayers and tax agents. Objectives I determine trends in the law enforcement activities of tax and judicial authorities in the Russian Federation related to the application of the concept of beneficial ownership of income, and formulate criteria for assigning a person to the beneficial owner category. Methods The study employs classical methods of economic analysis, induction and deduction, as well as the comparative method. Results I analyzed certain indicators and criteria of eligibility for beneficial owner of income status; defined a strategy for validating the use of reduced rates of withholding tax. The findings may be helpful for corporate income tax administration. Conclusions Despite the emerging court practice, which in most cases is against taxpayers, I conclude that to have a successful mechanism for confirming the beneficial ownership of income, it is important to create a detailed ‘defense file’ containing the necessary information on disposal and use of received income. The key point here is substance over form.
Keywords: beneficial owner of income, actual right to income, law enforcement practice, double tax treaty, withholding tax
References:
Khavanova I.A. Mezhdunarodnye dogovory Rossiiskoi Federatsii ob izbezhanii dvoinogo nalogooblozheniya: monografiya [International Double Tax Treaties in the Russian Federation: a monograph]. Moscow, Yurisprudentsiya Publ., 2016, 349 p.
Povetkina N.A. Finansovaya ustoichivost' Rossiiskoi Federatsii. Pravovaya doktrina i praktika obespecheniya: monografiya [Financial sustainability of the Russian Federation. Legal doctrine and practice to ensure it]. Moscow, Kontrakt Publ., 2016, 344 p.
Machekhin V.A., Marshankulova O.S. [Preventing Inappropriate Treaty Abuse of Privileges Granted under Agreements for the Avoidance of Double Taxation in the BEPS Action 6 Report]. Aktual'nye problemy rossiiskogo prava = Actual Problems of Russian Law, 2017, no. 1, pp. 92–99. (In Russ.) URL: Link
Machekhin V.A. [Tax Deoffshorization in Russia and Project BEPS: A Comparison]. Vestnik Universiteta imeni O.E. Kutafina = Courier of Kutafin Moscow State Law University (MSAL), 2016, no. 6, pp. 107–117. URL: Link (In Russ.)
Andrianova N.G. [Practical problems of realization of deoffshorization legislation in the Russian Federation]. Problemy sovremennoi nauki i obrazovaniya = Current Problems of Science and Education, 2017, no. 35, pp. 35–39. URL: Link (In Russ.)
Arakelov S.A. [Developing the concept of beneficial ownership for income: Approaches of Federal Tax Service considering relevant court decisions]. Zakon = Law, 2017, no. 5, pp. 45–56. (In Russ.)
Ledeneva Yu.V. [The Concept of the Actual Right to Income: Enforcement Aspects of Implementation]. Zhurnal rossiiskogo prava = Journal of Russian Law, 2018, no. 3, pp. 106–115. URL: Link (In Russ.)
Machekhin V.A. [Beneficial ownership in Russian Tax Law]. Nalogoved, 2017, no. 4, pp. 50–61. (In Russ.) URL: Link
Kirillov A.V., Vasil'ev N.A. [The Actual Right to Income: Holding Companies Are at Risk]. Nalogi-zhurnal = Taxes (Journal), 2018, no. 2, pp. 10–14. (In Russ.)
Anishchenko D.E. [Conception of ‘Actual Right to Incomes’ in the Russian Judicial Practice]. Nalogi-zhurnal = Taxes (Journal), 2016, no. 4, pp. 26–29. (In Russ.)
Kanashevskii V.A. [The Concept of Beneficial Ownership in Russian Judicial Practice (Private Law Aspects)]. Zhurnal rossiiskogo prava = Journal of Russian Law, 2016, no. 9, pp. 27–38. URL: Link (In Russ.)
Khavanova I.A. [Concept of Beneficiary Owner (Proprietor) in Tax Law]. Zhurnal rossiiskogo prava = Journal of Russian Law, 2014, no. 12, pp. 50-60. URL: Link (In Russ.)
Bruk B.Ya. [Beneficiary Owner Concept Codification Outlooks in the Russian Tax Legislation]. Zakon = Law, 2014, no. 8, pp. 43-57. (In Russ.)
Polezharova L.V. [New Approaches to the Development of the Mechanism for Control of the Beneficial Owner of Income in the Russian Economic Context]. Ekonomika. Nalogi. Pravo = Economics. Taxes. Law, 2016, vol. 9, no. 6, pp. 111–121. URL: Link (In Russ.)
Vasil'ev A.Yu. [Approaches for beneficial ownership determination]. Nalogoved, 2017, no. 6, pp. 28–37. (In Russ.) URL: Link
Litvinova K.Yu., Shtukmaster I.B. [Beneficial owner of income: Who is that?]. Nalogoved, 2018, no. 9, pp. 41–49. (In Russ.) URL: Link
Fedorova O.S. [Issue Topic: Corporate income tax: Relevant issues from tax consulting practice]. Nalogi i finansovoe pravo = Tax and Financial Law, 2016, no. 7, pp. 8–110. (In Russ.)
Nikolaev A.V. [Beneficial Ownership Under BEPS: Between ‘Unsuccessful Attempt’ and ‘Universal Rule’]. Zakony Rossii: opyt, analiz, praktika, 2018, no. 12, pp. 46–50. (In Russ.)
Gorokhov A.I. [The application of the concept of the beneficial owner in the current Russian tax disputes case law]. Original'nye issledovaniya, 2018, vol. 8, no. 3, pp. 4–7. (In Russ.) URL: Link
