Current Issues of the Fulfilment of Obligations by Tax Agents when Withholding Tax through the Example of Foreign Partnerships

The presented study examines the practical aspects of the fulfilment of obligations by tax agents – residents of the Russian Federationwhen paying revenues to foreign partnerships.
Aim. The study aims to determine whether the principle of one-time taxation is observed when paying revenues to foreign partnerships.
Tasks. The author analyzes the specific aspects of the legal capacity of foreign partnerships for tax purposes and considers applying the doctrine of beneficial ownership to the process of determining the withholding rate and benefits provided for by double taxation agreements.
Methods. In order to achieve the above goal and accomplish the stated objectives, the author uses the general scientific dialectical method of cognition and private-scientific methods: complex and systems analysis, comparative legal, normative, and formal logical interpretation of the law, systems analysis method.
Results. The study reveals an ambiguity in the interpretation of the tax agent’s obligations when withholding tax, its correlation depending on the recognition of partnership by an organization for tax purposes and by a transparent organization for tax purposes. It appears that tax agents – residents of the Russian Federation are currently denied the opportunity to calculate and pay the required tax as they do not have the necessary information about their partners — beneficial owners of income, and therefore there is no actual way for them to calculate the correct tax rate. Furthermore, foreign partner organizations do not qualify for the benefits provided for by double taxation agreements, which violates the principle of one-time taxation.
Conclusions. It appears that currently there is only one way to minimize the risks of tax agent, and that is to timely notify the tax authorities about each actual payment of revenue to foreign partnerships.

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