The Ministry of Finance of the Russian Federation shall exclude Hong Kong from the “blacklist” of offshore companies

Moscow. September 21. INTERFAX.RU – the Finance Ministry has drafted an order on the exclusion of Hong Kong from the “blacklist” of offshore zones in connection with the ratification of the governmental agreement on avoidance of double taxation, reported “Interfax” a source familiar with the Ministry of Finance prepared a draft order.

The agreement between the governments of the Russian Federation and Hong Kong for avoidance of double taxation and prevention of evasion from taxes on income was signed in January 2016, ratified and entered into force in July 2016. Bilateral agreement and Protocol shall apply in respect of the Russian tax starting from 1 January 2017.

Intergovernmental agreement with Hong Kong includes, in particular, provisions that do not allow to refuse to provide the requested information only on the basis of the lack of interest in such information from the requested party for its own tax purposes and on the basis that such information is held by banks and other lending organizations.

The Federal tax service of Russia order N IIM-7-17/527@ 30 September 2016 from 1 January 2017, excluded Hong Kong from the list of States and territories not providing exchange of information for tax purposes with the Russian Federation. According to the Tax code of the Russian Federation, the profits of a controlled foreign company are tax exempt if its permanent location is a state (territory) with which an international Treaty of Russia on the issues of taxation.

The Ministry of Finance will be amended in order N108н of 13 November 2007, which approved the list of States and territories providing preferential tax regime of the taxation and (or) not providing disclosure and provision of information when conducting financial operations (offshore zones).

Currently minfinovsky the list of offshore zones includes 42 areas. It is an independent state, separate internal administrative entities that are subordinate to the territory.

It is expected that the order will come into force on 1 January 2018, but not earlier than one month after publication.