The guarantees apply to actions committed before January 1, 2018, and to some offenses committed up to the date of filing the declaration.
The opportunity to "justify oneself" is particularly relevant in the framework of the automatic exchange of information, which allows Russian tax authorities to obtain information on foreign accounts and companies controlled by Russian tax residents.
Russian President Vladimir Putin proposed to extend the capital amnesty for at least a year (until 2020), but only for those who transfer funds to Russia and register business in special administrative areas. The draft law on the extension of the capital amnesty should appear in the near future.
Individuals and legal entities recognized as Russian tax residents, directly or indirectly owning more than 25% of a foreign company (more than 10%, if the share of Russian residents in the company in the aggregate is more than 50%), as well as individuals having control over a foreign company (structure), are obliged to report it to the Russian tax authorities and pay taxes on its retained earnings. Such a company would be recognized as a controlled foreign company (CFC).
In unincorporated structures, such as a fund or trust, the founder is recognized as the controlling person by default. At the same time, if after the establishment of the company he did not reserve the rights to receive and dispose of the property and profit of a foreign structure, he would not be a controlling person.
At the same time, when acquiring a CFC, a new buyer may be required to report and pay tax on CFC profits for the period when he was not its owner.
However, under the CFC regime, there are a number of preferential provisions that allow not to pay or reduce the amount of tax on retained earnings of the CFC in the Russian Federation.
For failure to submit documents on CFC, fines are provided, which could reach up to 350 000 rubles per year for one company (not including fines for non-payment of tax).
- Risk analysis of recognition of a foreign company as a CFC;
- Analysis of tax implications and risks in relation to the CFC ownership including analysis of the opportunity to apply tax concession and exemptions;
- Preparation of documents required for annual reporting on the CFC;
- Submission of documents to the tax authorities on behalf of the controlling person by the power of attorney.
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CFC tax-free liquidation
Individual beneficiaries of foreign companies get opportunity to liquidate the CFC and obtain all its assets, including cash, without tax consequences.
Individuals who have paid personal income tax on the amount of income received in the liquidation of the CFC in the previous periods, have the opportunity to return it within three years from the date of payment of the tax.
In order to receive the tax-free liquidation benefit, the individual beneficiary should:
- Complete the procedure of liquidation of a foreign organization (structure) before March 1, 2019 or to take a decision to liquidate the company before July 1, 2018;
- Submit to the tax authority the tax return, reflecting the income generated and attach to the tax return correspond documents.
- Preparation of the documents required for application of the tax exemptions for submitting to the tax authorities;
- Submit documents to the tax authorities.