The Ministry of Finance has prepared to amend the tax law, with the amendments, if approved, helping Gazprom avoid the additional tax burden related to the debt of its Swiss subsidiary - Nord Stream 2 AG (operating company of the Nord Stream 2 gas pipeline) - Russias RBC channel quoted the draft law On amending Articles 164 and 165 of the Russian Federation Tax Code.
According to RBC, the Russian Finance Ministry proposed expanding the definition of bad debt in the tax law to include interests arising from debts of foreign organizations included in income.
The regulation adds that the obligation to pay taxes on income paid to foreign organizations will not be the responsibility of tax agents if that income is the interest debt that has been eliminated, RBC wrote.
The Russian media agency also listed a number of necessary conditions for the amendment to come into effect: The debt cancellation is carried out on the basis of an agreement approved by a foreign court within the framework of the financial restructuring process of that foreign institution; the lender and the borrower belong to the same international corporation; and that organization is subject to sanctions or restrictions from foreign countries from 2022.
The revised draft was approved by the government's legislative committee at a recent meeting. The amendment to the provisions of the tax law is expected to be considered for the first time at the Russian State Duma (lower house).
The Nord Stream 2 pipeline was completed at the end of 2021 but has never been put into operation. In 2022, the German government suspended final procedures to grant a license to put the Russian gas pipeline into operation. On September 26, 2022, a sabotage incident occurred, damaging a branch of Nord Stream 2 and both branches of Nord Stream.
Nord Stream 2 is wholly owned by Gazprom, but the project has received loans from many European partners, including OMV (authernia), Wintershall Dea and Uniper (Germany), Shell (Netherlands, UK) and Engie (France), with a sponsorship level of up to 50% of the total cost, or about 4.5-5 billion euros.
Bankruptcy proceedings with Nord Stream 2 AG began in 2022 and ended in May this year with a settlement agreement. However, details of the deal regarding the operator of the gas pipeline connecting Russia and Germany were not disclosed.
Professor Mikhail Yumaev, lecturer at the Faculty of Taxation and Tax Administration of the Russian Government's University of Finance, said that Nord Stream 2 AG's interest debt should be included in Gazprom's revenue.
According to Associate Professor Alexey Kostin, who is in the same department as Professor Mikhail Yumaev, the amendment to the tax law helps Gazprom not have to pay income tax on bad debts of the operator of the Nord Stream 2 gas pipeline if it meets the set conditions.
