Press centre News

On March 16, 2015, the Russian Union of Industrialists and Entrepreneurs (RSPP) organized its annual tax conference as part of the Russian Business Week*. The conference, De-offshorization: Application and Improvement of the Controlled Foreign Corporations Law, focused on the so-called anti-offshore legislation aimed at bringing back capital fr om foreign tax havens. The law introduces the controlled foreign corporation (CFC) rules that will lim it deferral of income tax by using offshore low taxed entities.

The conference was attended by Chairman of the State Duma Budget and Tax Committee Andrei Makarov, Director of the Finance Ministry’s tax and customs fees department Ilya Trunin, Deputy Head of the Federal Tax Service Sergei Arakelov and others.

Projects manager of VEGAS LEX Tax Practice Yury Ivanov spoke about some of the problematic aspects of disclosing foreign entities controlled by Russian companies or owners. He discussed some gaps in Russian CFC laws, which formally allow Russian companies to avoid disclosing some of their foreign affiliates; the possibilities of tax and law-enforcement authorities to track down those undisclosed entities to control them; and the development of international information exchange practice.

The conference participants took an interactive vote on the greatest concerns caused by the new tax regime for the controlled foreign corporations; the “potential tax or legal penalties for previous years” appeared on top of the list. Many participants also seemed quite concerned over “facing potential lawsuits during the transition period.”**

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*This event provides an effective opportunity of “comparing notes” between businesses and government agencies with regard to new legislation, and of identifying ways to improve it further.

**Source:  Russian Business Week website.