Russian companies will be offered a way to register in special administrative regions (SARs), so-called “Russian offshores,” to circumvent European claims of unfair tax competition. About this with reference to the amendments to the second reading of the bill on amendments to the Tax Code writes RBC.
Currently, the RAA rules require that a company registering in them relocate from a foreign jurisdiction. Then it acquires the status of an “international holding company” (IHC) and can count on a preferential tax regime. In fact, the conditions set are aimed at the return of companies with Russian roots.
After the adoption of the amendments, a Russian company will also be able to obtain the status of an MHC. To do this, it must be created before January 1, 2018 and at the time of the application be registered on the territory of one of the SARs in Vladivostok or Kaliningrad.
In this case, the relocation will be possible only if the region in which the company was registered earlier has no objections to it. The reason for refusal may be the amount of income tax paid to the budget of the region. If it exceeds 1 percent of the total income of the subject of the federation in at least one year out of the last three years, then the authorities can block re-registration. This condition actually closes the road to the SAR, and hence the right to tax cuts for the largest Russian companies, on whose payments regional budgets largely depend.
A separate condition is set for the controlling persons of companies. They must receive such a status, that is, buy back more than 15 percent of the shares, before January 2017. The controlling person may be an individual, a sovereign state fund, as well as companies whose shares are traded on the Russian market or foreign exchanges of OECD countries. If the company decides to merge with another that does not have the status of an MHC, or if it changes its controlling person, it will lose its right to benefits.
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It was necessary to go for a revision of the parameters of the ATS because of the threat of falling into the gray list of countries for tax purposes, which is maintained by the European Union. The gray list is called due to the fact that Europe recognizes the country’s desire to bring its own tax legislation into line with international standards.
If the EU understands that no changes are taking place, then the country will be blacklisted, which already implies tighter tax controls. Including the payment of dividends to Russia may be taxed. In this case, the “Russian offshores” themselves lose their meaning, because the companies that moved to them will have to pay a second tax.
In November last year, the Russian authorities, under pressure from the EU, already abandoned the idea to reduce the income tax for residents of the SAR to five percent. The Ministry of Finance admitted that the only consequence of such a rule would be the recognition of Russia as a violator.
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