The document clarifies the procedure of recognition of the taxpayer as the controlling person in a foreign company if it owns more than 10% and the share of all tax residents of the Russian Federation in the organization exceeds 50%.
MOSCOW, 27 Jan. The state Duma adopted in the second reading the draft bill clarifying the rules on the taxation of profits of controlled foreign companies (CFC). The third reading is scheduled for January 29.
The changes to the document eliminates the possibility of re-taxation of dividends received from CFC’s profit that has already been tax effected. Exemption from taxation will be given not only to the controlling persons of the liquidated foreign companies, other shareholders, participants, shareholders, founders, recognized as controlling persons, subject to the requirements of the liquidation procedure.
The term of liquidation of a CFC is increased to 1 January 2018. The deadline for the completion of the liquidation of a foreign organization without tax consequences is set not from the date of cessation of action of legal restrictions in the course of the year, and after the cessation of such restrictions. Eliminates the need to confirm the value of the property received in the liquidation, in the form of its actual payment, in order to avoid undue increase in value (capital gain) and avoiding the acceptance of property to accounting at a higher cost.
The draft law specifies the procedure of recognition of the taxpayer a controlling person in cases where he owns a share of more than 10% and the share of all tax residents of the Russian Federation in the foreign company exceeds 50% if the taxpayer has sent a notification about the CFC. Not recognized by the controlling person participates in the CFC through participation in Russian public companies.
The deadline for filing citizens and tax residents of the Russian Federation notification about participation in foreign companies increased from one to three months. And for individuals who were not a tax resident of the Russian Federation at the moment of occurrence of the grounds for the submission of such notifications from 1 February to 1 March of the year following the calendar year in which such entity was a resident.
Profit (loss) of the CFC, determined according to the financial statements of the company and denominated in a foreign currency, less the amount of dividends (distributed profits) will be subject to recalculation in roubles with application of the average foreign currency rate to ruble of the Russian Federation set by the Central Bank of the Russian Federation, determined in the period in which such prepared statements for the financial year.
The draft law specifies conditions for the application of exceptions to the CFC that are involved in mining on the basis of the agreement on production sharing. Allow for the possibility of exemption from taxation upon the conclusion of such an agreement not only with the foreign government, but including the Russian Federation.
Specified rules and exemption from taxation of CFC’s profit, which is the Issuer of the negotiable bonds, in connection with the placing which have any debt obligations of Russian and foreign organizations in front of these foreign companies. At the same time clarifies the rules of tax and other controlling persons against foreign structures without forming a legal entity in connection with the transfer of the rights of beneficiary between close relatives.
The reasons for the adoption of the law
The Chairman of the Committee on budget and taxes Andrey Makarov reminded the journalists that the law establishing “barrier that use low-tax jurisdictions for the disposal of the tax base from the country” entered into force on 1 January 2015.
“It’s been a year, gained the first experience of application of the law. Identified those issues that can be interpreted in two ways, identified additional loopholes that allow you to take profits out of the country”, — continued the head of the budget Committee.
Conversely, according to him, “revealed the complexity, and even ambiguity, in the way of business to perform the act”. “Finally identified those issues that may not be transferred to honest taxpayers,” — continued the Deputy.
On the basis of accumulated annual experience and prepared a bill passed by the state Duma on Wednesday in its second reading. Makarov hopes that with the adoption of this law will be a legislative mechanism that will put a reliable barrier to the withdrawal of the tax base of the country. “This is especially important today, when budget revenues are declining, and, of course, addressing issues associated with tax administration, are becoming of paramount importance”, — stressed the head of the Duma Committee.
He noted that “the main goal of the law is in any case not to interfere with bona fide taxpayers to carry out their activities and at the same time put a barrier in the way of unscrupulous taxpayers”. “And, finally, the main thing is what the President said (the Russian Federation): we need to turn the “offshore page ” our economy”, — said Makarov.