On May 2016 The Federal Tax Service of the RF (FTS of the RF), participating in the Organization for Economic Co-operation and Development (OECD) forum on tax administration, signed multilateral agreement on the automatic standardized exchange of taxpayers information by tax authorities of different countries. According to the agreement, FTS of the RF will get information on Russian residents running a business abroad. The tax information exchange with tax authorities of other countries will start from 2018 based on data for 2017.

Realization of that agreement required entering of several statutory and regulatory provisions to the legislation of the RF. In particular, there will be new sections in the Tax Code: on presenting to the tax authorities of documentation on international groups of companies and оn international contracts implementation concerning taxation and mutual administrative support of taxation.

As a result, data collection vehicle for automatic exchange with other countries will be established by statutory and regulatory provisions. This information will be provided by Russian financial organizations and international groups of companies. Besides, providing information by the Tax Service of Russia as part of automatic exchange does not regarded as disclosure of tax secret.

According to the definition in the Tax Code, International group of companies (IGC) will be considered as a group of organizations or foreign structures without forming a legal entity, associated to each other through participation and control, and for that group consolidated financial statement is made. This group must consist of at least one organization that is a tax resident of the RF.

Participants of the group, that total revenue is more than 50 bln RUB, are obliged to present to the tax authorities a notification on participation in that group and country information. Besides, on demand of the tax authorities, global and national documentation should be provided during three months.

The notification should content name, basic state registration number and identification number of every participant of the group. IGC should present country data in the form of report and include the following information:

• total revenue for financial year broken down by transactions with subsidiaries and other parties;
• profit/loss before taxation for financial year;
• accumulated earnings to the end of financial year;
• accumulated profit tax and sum of paid profit tax;
• amount of the authorized capital and tangible assets;
• average number of employees.

The Tax Code will also content a section describing the vehicle for automatic exchange of financial information with foreign countries for tax purposes. As part of this procedure financial organizations will be obliged to present financial information on clients, beneficiaries and controlling bodies and entities to the tax authorities. For that purpose financial organizations should ask clients for related information.

In case of refusal of providing information, a bank have a right to terminate a contract unilaterally or, if this is a first contract, to reject its conclusion. Besides, the legislation prescribes administrative punishment in the form of penalties for the violation of providing information. Sum of penalties will vary from 50 th to 500 th RUB depending on violation.

The Directive of the Central Bank of Russia as of 22.09.2014 №3386-D regulates the rules for calculation of the foreign participation amount (quota) in share capitals of insurance companies and the list of compulsory documents for obtaining permits of the Bank of Russia for disposal of stocks or shares in the share capital of insurance companies in favor of foreign investors and/or their subsidiaries.

Annually the Central Bank of Russia makes calculations of amount (quota) of foreign participation in share capitals of insurance companies as of January, 1st. It is done before March 1st of the year following the accounting one on the basis of data on share capital of insurance companies disclosed in the Report for shareholders (participants) or other affiliated parties (Report).

The amount of the foreign capital in the share capital of insurance companies is calculated as a ratio of total capital, owned by the foreign investors and their subsidiaries in the share capital of insurance companies, to total share capital of insurance companies.

In its turn, total share capital of insurance companies is a sum of share capitals of companies having insurance licenses.

Total capital of the foreign investors and their subsidiaries in the total share capital of insurance companies is calculated on the basis of the data from the above-mentioned Report by stock or share denomination in the share capital of the foreign investors and their subsidiaries.

The procedure regulating the obtaining permits on increase of the share capital at the expense of foreign investments or on disposal including by selling own stocks or shares in the share capital to the foreign investors is established by the same Directive of the Central Bank of Russia №3386-D as amended by the Directive of the Central Bank of Russia as of 29.07.2016 №4091-D.

In order to obtain the permit it is necessary to submit to the Central Bank of Russia the statement attaching documents according to the list particularized in the Directives of the Central Bank of Russia. Among the documents from the list are: copies of charter documents and confirmation of the legal registration of the foreign investors or private persons stating their addresses; written consent of the foreign supervisory body to investor participation in the share capital of the insurance company in the territory of the Russian Federation or report of absence of necessity for such consent; accounting (financial) statements of the foreign investor attaching audit report, if available; copies of licenses and special permissions of the foreign investor, confirming its insurance activity and accounting (financial) statements over the last five years; original consent of anti-monopoly authority to transaction or document of absence of necessity for such consent; data on shareholders or participants of the insurance company on each legal entity stating ultimate beneficiaries - private persons.

In the Directives there is a detailed list of documents for permit of share capital increase at the expense of foreign investors’ subsidiaries.

The same set of documents should be submitted by the Russian shareholders or participants to get the right for disposal of stocks and shares owned by them in the share capital of the insurance company at the expense of foreign investors or their subsidiaries.

The similar procedure of obtaining permits is related to disposal of insurance companies stocks at the expense of unlimited range of persons in tenders with potential participation of foreign investors or their subsidiaries.

The above-mentioned statements and documents might be submitted to the Central Bank of Russia in electronic form through “My account” on the official web-site of the bank or in paper format following the rules set for such documents.

It is necessary to legalize the documents submitted by the foreign state authorities or other public organizations in the procedure outlined in the domestic legal system, unless contrary to international treaties with the participation of the Russian Federation and states at the place of registration of shareholders and participants – non-residents. The copies of the documents made up in a foreign language are to be followed up by certified translation.

According to the data of the Central Bank of Russia from the Unified State Register of Insurance Entities as of October 1st, 2016, there were 390 organizations having valid insurance licenses countrywide. According to Information and Analytical System Globas-i, among these organizations 50 companies (13% of the total amount) have the foreign equity in the capital structure including: 18 companies have 100% of foreign participation, 17 companies – from 80% to 99,99%, 3 companies - from 50% to 80%, 8 companies - from 25% to 50% and 4 companies - to 25%.