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AT Lawyers Filed One of the First “Fixed Profit of CFC” applications

DATE: December 28, 2020 | AUTHOR: Александра Пронина

Lawyers of Alimirzoev & Trofimov filed one of the first applications on behalf of a private client to switch to taxation over to “fixed profit of CFC”. The application was accepted by FTA No. 29.

Under the amendments approved by the President on 9 November 2020 (Federal Law No. 368 “On Amendments to Part One and Part Two of the Tax Code of the Russian Federation”), individuals who own controlled foreign companies (CFC) will have the right to pay taxes on the fixed amount of income of the CFC, which will amount to approximately 5 million rubles annually, regardless of the actual income of the CFC. For such payment, the controlling person is exempted from the obligation to report on the profit of the CFC.

Thus, the AT client in 2021 will have to pay for the first time 5 million rubles of personal income tax on income in the form of fixed profit of a CFC irrespective of the actual financial results of the controlled companies for 2019 (according to their financial statements).

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