Russian government approves draft law on controlled foreign companies

Russian government approves draft law on controlled foreign companies

Russian government has approved the draft law on taxation of profits of controlled foreign companies, introduced last week by deputies.

The Government’s opinion is aimed at softening and further elaboration of issues regarding two important rules of the bill: the first one is in respect of interest of Russian resident in offshore to be recognized as a ‘controlling person’ (in the bill the share of participation is 50% but only for the years 2015-2016, however since 2017 the threshold will be lowered to 25% or to 10% if persons recognized as residents of the Russian Federation, together own more than 50% of a ‘controlled foreign company’) and the second one is in respect of the criterion of the effective corporate income tax rate the excess of which leads to payment of taxes in Russia.

Experts believe that the above opinion means that the country's top leadership is ready to reach out to business which called the recently announced governments’ approval of tough version of deoffshorization in terms of current sanctions to be irrational, however, the responsibility for making a final decision is vested in the State Duma.

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