Industry News

What to expect from Russian anti-offshore law?

According to the latest data Financial Ministry of Russia agreed to soften the bill on controlled foreign companies (CFC). The term CFC provides for the implementation of the following three conditions: the entity is not a resident of the Russian Federation; control of the company is carried out by the Russian Federation residents; foreign structure without legal entity, controlled by individuals under tax residency of the Russian Federation.

The bill will affect those companies that derive a profit from Russia under the guise of passive income in order to reduce the taxable base, however, there will be a special test applied to companies to help calculating the proportion of active and passive income, where active income should exceed 50 per cent. Subsidiaries of Russian companies are expected to give the state treasury 20% of retained earnings.

It has been previously reported that the bill should be finalized by December 1, 2014 and enter into force on the January 1, 2015.

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