Treaty principal purpose test and domestic business purpose rule for transboundary income in the russian tax law

Abstract

For twenty-five years, the main purpose test has been present in Russia bilateral tax treaties, but has not been applied. In the case of disputes over the use of bilateral tax treaties, the tax administration applied an internal rule of business purpose. The Federal Tax Service of Russia in 2018 noted the growing role of this internal rule for international taxation. However, with the implementation of the BEPS plan, the treaty rule of the principal purpose test enters into Russian international tax law, and it begets questions. How similar are the Russian domestic rule and treaty rule? Is it possible to apply the practice of applying an Russian domestic rule to a treaty rule?