The Ministry of Finance of the RF has put forward an initiative to extend the term of limitation for currency offense from 1 up to 3 years. If the norm will be accepted at the legislative level, it will allow to replenish the budget by more than 220 bln RUB annually at the cost of imposed penal sanctions (about 1,6% of revenue side of the budget as of the year 2014).
Today the penalties for illegal exchange transactions make approximately 75-100% of their size. However, taking into account that it is possible to hold somebody accountable for breaching the legislation only during one year from the moment of its committing, the budget doesn’t receive an essential part of compensation. Whole proceeding procedure is longstanding on its own: it is necessary to inform a violator about place and time of hearing of a case, serve a summons, join him/her to the case etc. As the result, in 2012 the violators shirked responsibilities because of the extension of the term of limitation almost in every second case.
The majority of detected violations in monetary terms is connected with fraudulent import. Parties transfer funds to non-residents using fraudulent documents, in most cases - false delivery notes, executed in the states-members of Customs Union.
The violation can occur also through contractor’s fault, for example, a buyer delays cash transfer, and for placing of currency gain out-of-time a resident faces a penalty. The extension of the term of limitation should relieve this problem partially, because to delay payment for 3 years seems to be improbable. And in case such episodes will happen, then the reputational component as an unreliable partner will play the defining role for the market. Beyond that, an extended term will allow to conduct deeper investigations and find out the ultimate beneficiaries in a transaction.
The government introduced in the State Duma a bill on ratification of a Convention on mutual administrative assistance in tax matters. The Convention exists since 1988. At the moment around 70 states has signed it. In 39 of them it has already come into effect.
In Russia the Convention was signed as far back as 2011. It gives an opportunity to get assistance while collecting tax payables within the territory of the participating countries and sharing the tax information.
The majority of debtors to Russian budget are in the common law countries. Than follows the largest Russian foreign trade partners.
According to explanatory note, the effective debt of the legal entities to the Russian budget in Canada amounts to RUR 1,38 billion, in Turkey – RUR 1,22 billion and in the USA - RUR 1,10 billion. Accession to convention will help to return the part of this debt to the budget.
Apart from coming into effect of the Convention, the British beneficiary register will become the helping hand for Federal Tax Service of the RF in struggle with the offshore companies. Great Britain is the first country in EU that is going to make a list of the final profit beneficiaries of its companies. The register will contain information about the name, date of birth and nationality of the beneficiaries. At the same time, there will be data on the entities that hold more than 25% of the company’s share or control its activity other ways. The main goal of the register is to enhance the confidence to the British business.
However, the Ministry of Finance of the Russian Federation wouldn’t wait for English colleagues to create the register. Thus in April, 2014, the authority published the letter, where it is stated that intermediary company can’t be the final income beneficiary. As a result, Russian companies will have to prove who the final beneficiary is. Intermediary company should ask the income receiver for the confirmation that he is a beneficiary owner. However, this information might be denied by the data of receiver financial statements.