The Ministry of Finance developed the "anti-offshore" act

19.03.2014

Yesterday at 18 of March The Ministry of Finance of the Russian Federation published the first "anti-offshore" act about foreign controlled persons (CFC) which will oblige to pay to the company taxes from the income of foreign sub-companies and physical persons - from the income of the foreign structures.

Under this project, the companies should pay from retained earnings of 20%, and the Russian shareholders - 13% of the PIT (a tax on the income of physical persons). Under this act not only firms will be in the offshore entering a black list of the Ministry of Finance, but also the company in the low-tax countries. The probability of this is very high that in the list of such countries there will be also Cyprus.

If the natural person has a part of international company at the rate of 1%, he falls under total control. Also the natural person shall notify on a share Department of Revenue Services, though it is possible to not to pay the tax.

Based on:

http://www.minfin.ru/ru/official/index.php?id_4=21245&from_4=18.03.2014&to_4=18.03.2014

Expert’s opinion

The Ministry of Finance of the Russian Federation decided to transfer tax planning out of borders of our country.

Now international sub-companies are losing profit. If there is no profit, there wouldn’t be any retaining earnings and anything to tax. But of course work for tax services will increase.    

Yaroslav Lomakin ( Managing partner of Honest & Bright” company)