Deoffshorization of Russian economy is in progress

Within the package of measures for deoffshorization of the economy, which the President V.V.Putin has commissioned the Government to prepare by the 15th of July, the Ministry of Finance offers to supplement the law about controlled foreign companies (CFC) with the norm, according to which Russian natural and legal persons, having a share directly or indirectly in an offshore enterprise more than or equal to 10% from its capital, are obliged to report to Russian tax authorities. Countries, which are considered as offshores, will be set in the law about CFC separately.

Taxes in Russia should be paid as well by Russian companies from income of foreign «daughters», as by natural persons - from income of their offshore structures. If an organization doesn’t return the income to the country as dividends, the tax is paid from the part of its undistributed profit, which falls on Russian resident. It is assumed, that the tax rate for legal entities will be 20%, for citizens – 13% from taxable amount, and the rate for dividends is lower – 9%.

A number of experts have found hidden pitfalls in good initiative of the Ministry of Finance; the main problem is that the norm 10% is a low threshold in the ownership of a company. Because in order to dodge taxes, an enterprise, founded for these tasks, should belong logically to a resident for a minimum of 50%, but it will so happen, that we’ll consider those structures as offshores, where market players have invested for investment purposes and which don’t belong to them.

Information agency Credinform is developing the transfer pricing module, which will allow the market players to put a fair market price in controlled companies abroad.