Tag Archives: Russia CFC

Russia's new CFC rules: All #offshore profits (are deemed to) run to and through Russia

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The article referenced in the above tweet from Norton Rose, provides an introduction to Russia’s CFC (“Controlled Foreign Corporation”) rules. The Russian CFC rules include both:

  • an attribution of income for purposes of taxation; and
  • penalty laden reporting requirements.

 
There are presently huge incentives for Russian high net worth individuals to to break “tax residence” with Russia and find more favorable jurisdictions. It is a “perfect storm”. These incentives include:
• The “De-offshorisation” initiative of the Russian government, including introductions of CFC rules that came into force on January 2015
• The enforcement of pre-existing rules established by Russian Federal Law Nr. 173-FZ “On Currency Regulations and Currency Control” (CCL) by amending RF Administrative Offence Code (AOC) in February 2013 (Russian FBAR coupled with “Russian citizenship reporting“)
• The adoption of the OECD’s Common Reporting Standard (CRS) in May 2016 and what that means for those with “tax residency in Russia”