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The Government of the Russian Federation works out a set of measures aimed at offshore business prevention. Officials work on bills “On foreign controlled entities” and “On legal entities fiscal residence”.

DATE: February 13, 2014 | AUTHOR: atlawyers

The first bill establishes the rule under which the foreign subsidiary of the Russian company, located in offshore, or an individual who controls it will be required to pay established in Russia income tax at the rate of 20% of undistributed profit of their subsidiaries. Percentage ownership of parent company in a subsidiary (including affiliates and any direct and indirect participation) must exceed 20—25%. It has not yet been decided if the law affects offshore countries only or low-tax jurisdictions as well.

The second bill “On legal entities fiscal residence” provides formal recognition of foreign companies controlled from Russia as Russian tax residents. These companies shall be required to pay tax at the Russian rate or pay the difference between the Russian tax and the tax rate established in the country of incorporation.

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