Article 308. Specifics in the Taxation of Foreign Organisations if the Activity Is Performed on a Construction Site

1. For the purposes of this Chapter, interpreted as construction sites of foreign organisations on the territory of the Russian Federation shall be:

1) the place of building new, as well as of reconstruction, expansion, technical re-equipment and (or) repairs of the existing objects of immovable property (with the exception of air and sea vessels, inland navigation ships and space objects);

2) the place of building and (or) assembly, repairs, reconstruction, expansion and (or) technical re-equipment of structures, including floating and boring installations, as well as machinery and equipment, whose normal functioning requires a rigid mounting on the foundation or fastening to the construction elements of the buildings, structures or floating facilities.

2. When identifying the term of existence of the construction site for the purposes of calculating tax, and also of putting the foreign organisation onto the records with the tax bodies, works and other operations whose duration falls into this term, shall embrace all the kinds of preparatory, building and (or) mounting works, including those involved in building approach lines, communications, electric cables, drainage and other objects of the infrastructure, with the exception of the objects of infrastructure initially developed for other purposes not connected with the given construction site.

If a foreign organisation, while being a general contractor, gives orders for the performance of a part of the contractual works to other persons (subcontractors), the period of time spent by the subcontractors on carrying out the works shall be seen as the time thus expended by the general contractor himself. This provision shall not be applied with respect to the period of works which the subcontractor performs under direct contracts with the customer (the builder) and which are not included in the volume of works entrusted to the general contractor, with the exception of those cases when these persons and the general contractor are reciprocally dependent persons in conformity with Article 20 of the present Code.

If the subcontractor is a foreign organisation, his activity on this construction site shall also be considered as creating a permanent representation of the subcontractor organisation.

The given provision shall be applied to Subcontractor organisations whose activity comprises in total not less than 30 days, under the condition that the general contractor has a permanent representation.

3. For the purposes of taxation, seen as the beginning of the existence of the construction site shall be the earliest of the following dates: the date of signing an act on handing over the site to the contractor (an act on admitting the subcontractor's personnel to the performance of his part of the total volume of works), or the date of the actual start of the works.

Seen as the end of the existence of the construction site shall be the date of the customer's (builder's) signing an acceptance act on the object or on the complex of works envisaged by the contract. Seen as the end of the subcontractor's works shall be the date of signing the act on the acceptance of works by the general contractor. If the acceptance act was not formalised or if the works have in fact ended after signing such act, the construction site shall be seen as having stopped its existence (the subcontractor's works shall be seen as completed) on the date of the actual end of the preparatory, building or mounting works included in the volume of works of the corresponding person on the given construction site.

4. The construction site shall not stop its existence if the works on it are stopped only for a time, except for cases of the conservation of the construction object for a term of over 90 days by the decision of the federal executive power bodies, of the corresponding state power bodies of the subjects of the Russian Federation, or of the local self-government bodies adopted within the scope of their competence, or as a result of an impact of force majeur circumstances.

If the works on the construction object are continued or resumed after an interval in the works when the act mentioned in Item 3 of this Article, is signed, the term of performance of the continued or resumed works and of the interval between the works shall be added to the total term of the existence of the construction site only if:

1) the territory (water area) of the resumed works is the territory of the earlier stopped works or that closely adjoining it;

2) the continued or resumed works on the object are entrusted to a person who has earlier performed the works on this construction site, of if the new and the former contractors are reciprocally dependent persons. If the continuation or the resumption of the works is connected with the construction or mounting of a new object on the same construction site or with an extension of the earlier completed object, the term of performance of such continued or resumed works and of the interval between the works shall also be added to the total term of existence of the construction site.

In all other cases, including the performance of repairs, reconstruction or technical re-equipment of an object which was earlier handed over to the customer (builder), the term of performance of the continued or resumed works and the interval between the works shall not be added to the total term of existence of the construction site, started with the works on the earlier commissioned object.

5. The construction or mounting of such objects as roads, viaducts and channels, or as the laying down of communications in the course of whose performance the geographical place of their location changes, shall be considered as an activity performed on one construction site.

Article 309. Specifics in the Taxation of Foreign Organisations Not Performing an Activity Through a Permanent Representation in the Russian Federation but Deriving Incomes from the Sources in the Russian Federation

1. The following kinds of incomes received by foreign organisations, which are not connected with its business activity in the Russian Federation, shall be referred as the foreign organisation's incomes derived from the sources in the Russian Federation and shall be subject to levying with tax to be withheld from the source of the payment from the incomes:

1) the dividends paid out to foreign organisations who are shareholders (partners) of Russian organisations;

2) the incomes received as a result of the distribution in favour of foreign organisations of the profit or of the property of organisations, of other persons or of their associations, including in cases of their liquidation (taking account for the provisions of Items 1 and 2 of Article 43 of the present Code);

3) the interest income from any kind of debt liabilities, including bonds with the right of participation in the profits and convertible bonds, including:

- the incomes received from the state and municipal emission securities, the terms of whose issue and circulation envisage the receipt of incomes in the form of interest;

- the incomes on other debt liabilities of Russian organisations not pointed out in the second paragraph of the present Sub-item.

4) the incomes from the use in the Russian Federation of the rights to the objects of intellectual activity. To such incomes, in particular, shall be referred any kinds of payments received by way of compensation for the use or for granting the right to the use of any author's copyright to the works of literature, art or science, including cinema films and films or recordings for television or radio broadcasting programmes, for the use (for granting the right to use) of any patents, trade marks, drafts or models, of plans, of secret formulas or processes, or for the use (for granting the right to use) of information concerning industrial, commercial or scientific experiences;

5) the incomes from sale of stocks (partner shares in the capital) of Russian organisations over 50 per cent of whose assets consists of immovable property situated on the territory of the Russian Federation, as well as of the financial instruments derivative from such stocks (partner shares). With this, the incomes from the sale on foreign exchanges (through foreign trade organisers) of the securities or of the financial instruments derivative from them which are circulated on these exchanges shall not be recognised as incomes from sources in the Russian Federation;

6) the incomes from the sale of immovable property situated on the territory of the Russian Federation;

7) incomes from letting out or subletting property used on the territory of the Russian Federation, including the incomes from leasing operations and from letting out or subletting sea-going ships and aircraft or transport facilities, as well as containers used in international shipments. With this, incomes from the leasing operations connected with acquisition and use of the subject of leasing by the recipient of lease shall be calculated reasoning from the total amount of leasing payment less the reimbursement of the cost of the lease property (when it is granted out on lease) to the grantor of lease;

8) incomes from international shipments.

Seen as international shipments shall be any kinds of shipments effected by a sea-going ship, river boat or air vessel, by a motor transport vehicle or by rail transport, with the exception of cases when the shipment is effected exclusively between the points situated outside of the Russian Federation;

9) the fines and penalties for violating contractual obligations by Russian persons, state bodies and (or) the executive bodies of local self-government;

10) other similar incomes.

2. Incomes received by foreign organisations from the sale of commodities, of the other property save indicated in Subitems 5 and 6 of Item 1 of this Article, as well as of property rights from the performance of works and rendering services on the territory of the Russian Federation, which do not lead to the formation of a permanent representation in the Russian Federation, shall not be subject to taxation in conformity with Article 306 of the present Code.

The re-insurance premiums and bonuses paid out to the foreign partner shall not be recognised as incomes from sources in the Russian Federation.

3. The incomes listed in Item 1 of this Article shall be seen as the object of levying with tax, irrespective of the form in which such incomes are received, in particular, of whether they are received in kind, by the settlement of the liabilities of this organisation, in the form of remitting its debt or of offsetting the claims to this organisation.

4. When delineating the tax base on the incomes pointed out in Subitems 5 and 6 of Item 1 of this Article, from the sum of such incomes may be deducted the outlays in accordance with the procedure envisaged by Articles 268, 280 of the present Code.

The said outlays of the foreign organisation shall be taken into account when defining the tax base, if by the date of payment out of these incomes at the disposal of the tax agent withholding the tax from such incomes in conformity with this Article, there is documented data on such incomes submitted by this foreign organisation.

5. The tax base for the incomes of foreign organisations subject to taxation in conformity with this Article, and the sum of tax withheld from such incomes shall be computed in the currency in which the foreign organisation received such incomes. The outlays made in a different currency shall be computed in the same currency in which the income was received, in accordance with the official exchange rate (cross-rate) of the Central Bank of the Russian Federation as on the date of making such outlays.

6. If the founder or the beneficiary under a contract of trust management is a foreign organisation having no permanent representation in the Russian Federation, while the trusted manager is a Russian organisation or a foreign organisation performing its activity through a permanent representation in the Russian Federation, the tax from the incomes of such founder or of such beneficiary obtained in the framework of the trust management, shall be withheld and transferred to the budget by the trust manager.

Article 310. Specifics in the Calculation and Payment of Tax on the Incomes Derived by a Foreign Organisation from Sources in the Russian Federation Withheld by the Tax Agent

1. Tax on the incomes received by a foreign organisation from sources in the Russian Federation shall be calculated and withheld by the Russian organisation or by the foreign organisation performing an activity in the Russian Federation through a permanent representation which pay out the income to the foreign organization in every payment of the incomes indicated in Item 1 of Article 309 of this Code with the exception of the cases envisaged by Item 2 of the present Article, in the currency of the payment of the income.

Tax from the kinds of incomes indicated in Subitem 1 of Item 1 of Article 309 of the present Code shall be calculated in accordance with the rate envisaged by Subitem 2 of Item 3 of Article 284 of the present Code.

Tax from the kinds of incomes indicated in the second paragraph of Subitem 3 of Item 1 of Article 309 of the present Code shall be calculated in accordance with the rate envisaged by Item 4 of Article 284 of the present Code.

The tax from the kinds of incomes indicated in Subitem 2, Paragraph Three of Subitem 3 and in Subitems 4 and 7 (insomuch as they relate to letting and subletting property used on the territory of the Russian Federation, including that used in leasing operations), 9 and 10 of Item 1 of Article 309 of the present Code shall be calculated in accordance with the rates envisaged by Subitem 1 of Item 2 of Article 284 of the present Code.

The tax from the kinds of incomes listed in Subitems 7 (insomuch as it relates to the incomes from letting and subletting of sea-going ships, aircraft and other movable transport means or containers used in international carriage) and 8 of Item 1 of Article 309 of the present Code shall be calculated in accordance with the rate envisaged by Subitem 2 of Item 2 of Article 284 of the present Code.

The tax from the kinds of incomes indicated in Subitems 5 and 6 of Item 1 of Article 309 of the present Code shall be calculated taking account of the provisions of Item 2 and 4 of the said Article, in accordance with the rates envisaged by Item 1 of Article 284 of the present Code. If the outlays mentioned in Item 4 of Article 309 of the present Code are not recognised as outlays for the purposes of taxation, the tax from such incomes shall be computed according to the rates envisaged by Subitem 1 of Item 2 of Article 284 of the present Code.

The sum of tax withheld from the incomes of foreign organisations in conformity with this Item shall be transferred by the tax agent to the federal budget simultaneously with the payment out of the income, either in the currency of the payment out of this income, or in the currency of the Russian Federation, in accordance with the official exchange rate of the Central Bank of the Russian Federation as on the date of the transfer of the tax.

If the tax is paid out to the foreign organisation in kind or in another non-monetary form, including in the form of making mutual offsets, or if the sum of the tax subject to withholding exceeds the sum of the foreign organisation's income received in monetary form, the tax agent shall be obliged to transfer the tax into the budget in the computed sum, having reduced in the proper order the income of the foreign organisation received in non-monetary form.

2. The calculation and withholding of the sum of tax from incomes paid out to foreign organisations shall be effected by the tax agent on all the kinds of incomes pointed out in Item 1 of Article 309 of the present Code, in all cases when such incomes are paid out, with the exception of the cases when:

1) the tax agent is notified by the receiver of the income that the paid out income refers to the permanent representation of the receiver of the income in the Russian Federation and that at the disposal of the tax agent is the copy of the certificate certified by a notary on the receiver of the income being put onto the records in the tax bodies, formalised not earlier than in the preceding tax period;

2) with respect to the income paid out to the foreign organisation, Article 284 of the present Code envisages the tax rate of 0 per cent;

3) incomes are paid out and received from production sharing agreements if the legislation of the Russian Federation on taxes and fees envisages relief of such incomes from withholding the tax in the Russian Federation as they are transferred to foreign organisations;

4) incomes are paid out which in conformity with international treaties (agreements) are not levied with tax in the Russian Federation, under the condition that the foreign organisation presents to the tax agent the confirmation, envisaged by Item 1 of Article 312 of the present Code. In this case, the payment of the incomes by Russian banks on transactions with foreign banks does not require confirmation of the fact of the permanent place of location of the foreign bank in the state with which an international treaty (agreement) is signed regulating the questions of taxation, if such place of location is confirmed by information supplied in generally accessible information hand-books.

3. In the event of paying out by the tax agent to a foreign organization of the incomes which are taxable under international treaties (agreements) in the Russian Federation at reduced rates, the calculation and withholding of the tax from incomes shall be effected by a tax agent at appropriate reduced rates, provided that a foreign organization presents to the tax agent the confirmations stipulated by Item 1 of Article 312 of this Code. With this, in the event of paying out by Russian banks of incomes from operations with foreign banks, the confirmation of the fact of a foreign bank's permanent location in a state, with which an international treaty (agreement) regulating taxation matters is made, shall not be necessary, if such location is confirmed by the data from international reference-books open to general use.

4. The tax agent shall submit by the results of the reporting (tax) period, within the time terms fixed for the presentation of the tax settlements by Article 289 of the present Code, information on the sums of incomes paid out to foreign organisations and of taxes withheld for the previous reporting (tax) period to the tax body at the place of its location in accordance with the form established by the Ministry of Taxation of the Russian Federation.