The courts refuse to charge customs duties on the importation of goods, including the amount of dividends paid abroad at their expense. Deloitte, as well as the European Business Association (USA; representing the interests of foreign businesses in Russia), pointed out that the FCS is increasingly trying to overburden the price of imported goods and, ultimately, the amount of VAT and import duties. . But so far, judicial practice is developing in favor of business. Pull & Bear – A subsidiary of Pull & Bear CIS LLC, a European subsidiary (90% of Zara Holding BV), successfully challenged the additional claims in the first instance court, which is inferred from the arbitration proceedings.
The Russian delegation office imported clothes and shoes for sale in chain stores and distributed the profits as dividends to foreign creators. Following the verification, Bryansk customs increased the customs value of the imported goods by the amount of dividends and also collected import duties and VAT. The entire business of the company that justified its decision by the customs office is the sale of goods received from the parent company, so the dividends are linked to the imported goods. The company contends that “dividends according to their economic and legal nature cannot be part of the price of goods sold, nor the income that the seller then sells the goods in the domestic market, and therefore should not be included in customs value.”
The court of first instance ruled that the customs decisions were illegal, and concluded that the dividends were part of the value of the imported goods “not based on the customs, tax and civil law in force.”
Earlier, a similar dispute with the customs office of Bershka SNG LLC (Bershka brand) also ended with the victory of the importer in the first instance court. Both companies presented this issue to the Eurasian Economic Commission (EEA) on the matter, the EEA representative confirmed. On July 12, in the case of LLC Chanel (Chanel brand), the Moscow Arbitration Court also ruled that the decision to include the customs duties of the Moscow customs on the customs value was illegal.
A dangerous trend
The inclusion of dividends in the customs value of imported goods is usually perceived as “nonsense and a mistake” by representatives of importing companies, Tamara Arkhangelskaya, a member of the CIS’s Deloitte Tax and Legal Department. But that practice is becoming more and more a reality, he added. The problem has been around for a long time, but has only been exacerbated recently when the state began looking for other ways to meet its budget, says Vladimir Chikin, a member of Bryan Cave Leighton Paisner. “There is a surge in customs inspections of major importers with foreign participation in different regions. They check the license payments, including the VAT on them, the dividends, ”he said.
In these inspections, customs authorities unreasonably and indiscriminately include paid dividends in the customs value, says Anna Zabrotskaya, head of the Borenius Law Office’s Dispute Resolution Practice. In his view, if such a precedent becomes a common practice, then the customs value of the imported goods will increase significantly. This could lead to a significant outflow of foreign business from Russia, the lawyer summed up.
An FCS representative told Vedomosti about the practice when companies place the same payments in different ways (dividends, interest payments, duty payments, etc.) and when the customs authorities need to know the true economic meaning of the payments discussed. According to him, if a Russian legal entity buys goods from its sole foreign shareholder, then the dividends paid to it “are not really different from the income (profits) subject to the inclusion in the customs value of the goods.” The Supreme Court ruled in its judgment No. 307-ES21-2873 of 7 April 2021 that it is possible to include dividends in the customs value only if their payment is a condition for the sale of goods.
Vedomosti also sent a request to the Ministry of Finance.
Extensive interpretation of the law
The U.S. is “deeply concerned about the introduction of retrospective changes in the application of certain rules by the customs authorities regarding the inclusion of dividends in the customs value of imported goods,” the chairman of the U.S. Customs and Transportation Commission said. EY Vilhelmina Shavshina, head of CIS International Trade and Customs Regulatory Practice … According to him, if the customs authorities have not proved that another payment was made in the form of dividends, no additional price charge. , whose list art. Eurasian Economic Union (BAC) Customs Code (TC) 40. Earlier, the US asked the Ministry of Finance and the FCS to clarify the legality of accounting for dividends in customs value. In addition, the US requested the official position of the EEA.
Conflicts – and in large numbers in general – are caused by the Ministry of Finance, and then by customs, because they interpret the law in a broad way. For example, the Basque Customs Code reads as follows: “Dividends or other payments, if not related to imported goods, are not included in the customs value of imported goods” (Clause 9 of Article 39 of the Customs Code). EAEU). But the Ministry of Finance stated in the letters of instruction that if the importer is wholly a subsidiary of a foreign supplier and all its activities are reduced to the sale of goods supplied by the main company, then dividends should be taken into account in customs value. . In fact, the Ministry of Finance was preparing this position for a meeting of the Foreign Investment Advisory Board in May.
Consequently, the customs authorities consider it reasonable to argue that in situations where companies are primarily engaged in the importation and sale of imported goods, dividends should be included in the customs value, says Arkhangelskaya.
For the past two years, the courts have been assisting importers and ruling in favor of the business, he added. The decision emphasizes that dividends are not linked to imported goods and are not a condition for their sale, so they should not be included in the customs value. At the same time, in the case of importers, the courts state that the goods were not sold to a foreign seller on the condition that they pay dividends and that their payment is not provided for in foreign trade agreements. Judicial practice on this issue is not yet abundant. The development of the situation will depend on the end of the trial. Chikin warns that if importers do not win in the high courts, there is a risk of a massive influx of dividends into customs value.