corresponding to participation interest in CFC into tax base of a controlling entity – resident of the Russian Federation:
– for controlling entity as an individual – on personal income tax;
– for controlling entity as a legal entity – on corporate income tax.
– In broad terms, the CFC rules would apply in relation to non-Russian tax resident corporations (and other entities) controlled by one or more Russian tax residents. The rules would:
– deny double tax treaty benefits to CFCs;
– instead treat the income of a CFC as taxable in the hands of a Russian controlling party when received by a CFC, regardless of whether an actual distribution to any Russian controlling party took place;
– require Russian tax residents to report their interests in foreign companies to Russian tax authorities.
The Law also introduces a new test of «place of effective management» in order to determine whether a foreign company is a tax resident in Russia.
A foreign company will not be treated as a Russian tax resident (unless it elects to be treated so) if:
– it is treated under the provisions of a double tax treaty to which Russia is a party as being a tax resident in another state;
– it is engaged in activities under production sharing agreements, concession agreements, licensing or service agreements or certain other prescribed agreements with a foreign government; or
– it has a separate branch in Russia.
As for individuals, they are recognized as tax residents of the Russian Federation in the same way as before on the basis of their actual stay in Russia for at least 183 calendar days within 12 consecutive months.
In order to facilitate the repatriation of hidden assets to Russia’s economy, the Federal Law #140-FZ «On the Voluntary Declaration of Assets and Bank Accounts/Deposits by Individuals and on Introducing Amendments to Various Legislative Acts of the Russian Federation» was adopted in June 201577.
The main objective of the Law was to ensure legal security of capital and property owned by individuals, protect property interests of Russian citizens, including property outside the territory of the Russian Federation, as well as, in compliance with the transition to the automatic exchange of information in tax matters at the international level (BEPS legislation).
According to the Law, individuals should declare their foreign property (real estate, vehicles, shares in companies, securities and etc.) and foreign bank accounts. In exchange, a declarant is not subject to criminal or administrative responsibility and is exempt from payment of historical taxes, committed before January 1, 2015. Information provided by a declarant will be recognized as confidential. The Law required those applying for amnesty to fully declare their offshore assets. Upon a declaration, that had to be filled before the end of 2015, there would be no penalty for unauthorised expatriation.
The Law did not cover assets acquired through illegal means, only assets expatriated for tax purposes. The Law was developed in close cooperation with the FATF. However, the latter has certain concerns about lack of disclosure and information sharing. This is a serious matter, since a failure to comply with FATF regulations can get Russia blacklisted. However, Russia’s role within the FATF has been actively positive in recent years.
C.Gurdgiev gives the following classification of Russia’s offshore assets. He presumes that the globally allocated Russian capital, held by private individuals, can be divided into 3 (unequal in volume) types:
– Type 1 – an unknown quantum of assets acquired by using illicit gains from activities in Russia and illegally shifted out of the country. This part is not covered by the Law, but the Russian Government plans to introduce a separate piece of legislation to cover these assets, and it has promised that it will fully comply with FATF.
– Type 2 – an unknown quantum of assets, probably similar to that covered by Part 1 and, together with Type 1 accounting for more than 2/3rds of all Russian-owned assets held abroad, was expatriated to minimize tax exposures. Some of them legally, some illegally. This part is covered by the Law.
– Type 3 – a smaller share of Russian assets abroad is perfectly legal and is not covered by the Law. To-date, FATF has no complaints with Russia on these assets78.
The deadline for returning capital to Russia was originally Dec. 31, 2015, but it was extended until July 1, 2016 by the Federal Law №401-FZ «On introducing amendments to article 5 of the Federal Law „On voluntary declaration of assets and bank accounts (deposits) by natural persons and on introducing amendments to certain legislative acts of the Russian Federation“»79.
Update
On 7 June 2017, over 70 countries, including the Russian Federation signed the Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting («Multilateral Instrument» or «MLI»).
1.3. Растущая роль офшорных финансовых центров в мировой финансовой системе80
Офшорный финансовый центр (ОФЦ) – это, как правило, небольшая юрисдикция, с низким уровнем налогообложения, специализирующаяся на предоставлении корпоративных и коммерческих услуг офшорным компаниям-нерезидентам и инвестиционным фондам. ОФЦ начали оказывать влияние на международные финансовые рынки в начале 1970-х годов. Для их обозначения использовались различные термины, такие как, международный финансовый центр, международный банковский центр, международная банковская структура и офшорный банковский центр. Термин ОФЦ был впервые введен в научный оборот в 1980 году. В последующие годы он получил дальнейшее развитие в докладах международных организаций и научной литературе. При этом такие международные организации, как МВФ, ОЭСР и ЮНКТАД, разрабатывали терминологию в соответствии со своими нуждами. Так, МВФ наряду с выработкой рабочего определения ОФЦ исследует их воздействие на международную финансовую систему. ОЭСР рассматривает ОФЦ сквозь призму уклонения от налогов. ЮНКТАД изучает механизмы осуществления прямых иностранных инвестиций (ПИИ) с использованием ОФЦ.
Как