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New Tax Rules in Investment and Construction


On 28 July 2011, a Resolution of the Plenum of the Russian Supreme Arbitration Court with direct implications for construction and investment activity was published. The resolution creates substantial tax risks for all those involved in that sector; builders, investors and developers. Taxand Russia looks at the main provisions of the document adopted and the impact on taxation including:

  • Issues concerning the classification under civil law of relationships arising when investments are made in facilities under construction
  • The fundamentally different classification of the relationships between investors and developers. As a result, the implications of those relationships in terms of the tax law have changed substantially
  • That investment activity in the area of financing the construction or reconstruction of real estate facilities may be classed as a relationship under a sale and purchase agreement, a contractor agreement or a simple partnership agreement


Taxand's Take

Taking account of the conclusions reached by the Plenum of the SAC in the Resolution, organisations involved in investment relationships entailing the construction of real estate facilities need urgently to assess whether they should review their tax obligations for VAT and profit tax. Because of the three-year time limit for tax audits to be held, they should assess not only planned transactions but also current and already completed transactions in terms of the legal reclassification of relationships set out in the Resolution.

Your Taxand contacts for further queries are:
Sergey Savseris
T. +7 495 967 00 07

Mikhail Zausalin

T. +7 495 967 00 07


Sergey Sosnovsky

T. +7 495 967 00 07


Taxand's Take Author