Tax Messenger

Pillar 2: "Second Wind"

30.05.2025

At 14:05 on 29 May 2025 a draft federal law containing amendments to the Tax Code of the Russian Federation ("the Tax Code") was published on the Federal Portal of Draft Regulatory Legal Acts. The amendments envisage the introduction of an additional profit tax for certain Russian members of international groups of companies ("MNE groups"). The amendments are related to international tax reforms, and specifically the implementation of the Pillar 2 model legislation regarding the global minimum tax. The idea behind the bill is to protect the Russian tax base in situations where a Russian subsidiary of an MNE group enjoys tax benefits or other incentives, with the difference between tax at the actual effective tax rate (ETR) and at the minimum 15% ETR (under the Pillar 2 rules) to be paid by a parent or intermediate foreign holding company (the IIR rule) or another foreign group company (the UTPR rule). Accordingly, the bill would help prevent the payment of additional tax to the budget of foreign jurisdictions. The mechanism is set out below.

The MNE group meets all the following conditions:
- The parent company of the MNE group is located in a foreign state (note that no distinction is made between friendly and unfriendly jurisdictions).
- (i) The parent company / intermediate holding companies are tax residents of one of the states (territories) included in a special list published by the Ministry of Finance of Russia (to be approved separately) whose laws establish minimum effective taxation rules in accordance with the OECD Model Rules establishing a global minimum level of taxation for MNE groups (Global Anti-Base Erosion Model Rules (Pillar Two)) or (ii) the MNE group includes at least one member that is a resident of one of the states (territories) included in a special list published by the Ministry of Finance whose laws establish extraterritorial taxation rules in accordance with the OECD Model Rules[1].
- Income (revenue) of the MNE group according to its consolidated financial statements for each of the two financial years preceding the current tax period exceeds or may exceed the ruble equivalent of EUR 750 million.
The ratio of the aggregate amount of income tax of a Russian member of the MNE group (excluding tax in respect of equity participation in other organizations – the so-called "participation exemption") to the total of that member’s profits and losses as determined in accordance with the provisions of Chapter 25 of the Tax Code of the Russian Federation, is less than 0.15.

Thus, if the above conditions were met, Russian members of an MNE group would have to calculate income tax at the standard rate of 15% for the tax period in accordance with the special procedure outlined above (taking into account the participation exemption) rather than the standard procedure provided for under Chapter 25 of the Tax Code. In this regard, we understand from the text of the bill that this procedure would apply to each relevant Russian member of an MNE group individually.

Furthermore, it may be concluded from the published text of the bill that the special tax treatment for certain Russian members of an MNE group would not affect MNE groups whose parent companies are Russian residents. In the case of companies redomiciled to SARs, it is likely that adjustments would have to be made to the text of the bill.

At present, the bill is undergoing public consultation and independent anti-corruption appraisal.

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[1] At present, the special lists referred to above have not yet been published. We understand that they will be drawn up and approved by the Ministry of Finance of Russia at a later date