Russia enacts anti-offshore tax legislation
MOSCOW, Nov. 25 (Xinhua) — Russian entrepreneurs must report to tax authorities about their ownership of shares in the off- shore jurisdictions, according to the law signed by President Vladimir Putin on Tuesday.
The new law introduces an amendment to the Russian Tax Code that will force Russian owners of foreign-based companies to inform the Federal Tax Service of their incomes.
The bottom level of the income to be declared has been set at 50 million rubles (about 1.1 million U.S. dollars) in 2015.
The law, dubbed “anti-offshore”, introduces the concept of ” controlling party”, whose share of a company exceeds 50 percent in 2015 (25 percent since 2016).
The “controlling party” will be obliged to submit a tax declaration, a financial statement on the controlled foreign company and audit results. Taxes will be calculated with regard to the offshore company’s income.
If a company has several Russian owners, each of them must declare the income if individual share exceeds 10 percent.
A separate provision in the law lists criteria that can classify a foreign company as a Russian tax resident.
If a tax resident fails to declare total foreign income, the fine would reach 20 percent of the tax evaded, in addition to the existing criminal punishment for tax evasion.
Russia takes a leading position among the developed economies by the volume of its offshore business residents.
Experts estimate the law would return to the Russian budget up to 45 billion U.S. dollars annually.
Earlier in November, Russian Central Bank estimated the Russian economy will lose 99 billion U.S. dollars in 2015, 60 billion in 2016 and 38 billion in 2017.
