Vladimir Putin signed a deoffshorization bill for the Russian Federation

On 24 November 2011, Vladimir Putin approved a bill that amends the Code of the Russian Federation to require tax payers to inform tax authorities about their participation in foreign companies–the so-called deoffshorization law.

The law changes the tax code for foreign companies and organizations. The full version of the “Amendments to the first and second chapters of the Code of the Russian Federation (taxing the profits of controlled foreign companies and the income of foreign organizations)” is available at the information page. 

The amended law, which comes into effect on 1 January 2015, provides for a “controlled foreign company,” which is an organization or entity that the tax authorities do not legally recognize. Before 1 January 2016, the “controller” is a person or entity holding 50 percent or more of the capital of a foreign company and 25 percent after 1 January 2016. Furthermore, as of 1 January 2016, the controller is a Russian citizen who, with his spouse and minor children, owns more than 10 percent or more of a foreign company when half of the company’s owners are Russian taxpayers.  

The law requires controllers to inform the tax authorities about their ownership of shares in controlled companies and to declare their earnings from these companies. The minimum profit subject to declaration in 2015 will be RUB 50 million, and the amount will be RUB 30 million in 2016 and RUB 10 million in 2017. Authorities will fine individuals who fail to report their foreign holdings or who make false statements RUB 50,000 for each incident. The fine for legal entities neglecting to provide information about their shareholders will be 100 percent of the amount of the tax on the entity’s immovable property, based on a proportion of the unreported holdings.

The link to the Russian version of this posting on the ART DE LEX website is: http://artdelex.ru/rus/news/prezident-podpisal-zakon-o-deofshorizatsii-v-rf.