Tax Disputes in 2025: Transaction Reclassification and Withholding Tax

Russian tax authorities continue to prioritise scrutiny of cross-border transactions during audits. Some of the common claims include disallowance of profit tax expense deductions and imposition of withholding tax obligations on payments to foreign companies where such payments are reclassified as ‘passive’ income.

Key court outcomes favouring tax authorities indicate that taxpayers must pay special attention to producing comprehensive transaction documentation and developing defence files proving a genuine business purpose of transactions and compliance of transfer pricing mechanisms with arm’s-length principles.

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