The order of taxation of controlled foreign companies said

© RIA Novosti / Vladimir Travelagency. Archival photoThe order of taxation of controlled foreign companies said© RIA Novosti / Vladimir Trefilov

Russian President Vladimir Putin signed a Federal law that clarifies the procedure of taxation of controlled foreign companies (CFC) and also releases casino from the status of a tax agent. The document published on the official portal of legal information.

The law on deofshorizatsii Russian business, which introduced the concept of the CFC, was adopted in the fall of 2014 and provided for the establishment of a mechanism to tax the profits of offshore companies. According to the law, a CFC is a foreign structures, controlling persons which are tax residents of the Russian Federation. The law requires supervisors to submit to the tax authorities notification of their participation in such CFC.

In 2017 the Russians first had to file a notification on controlled foreign companies. The deadline expired on March 20. On the basis of the information provided in the notification, the tax authorities determine whether a taxpayer to pay personal income tax for the relevant period. The penalty for failure to file notice within 100 thousand rubles.

Before that, in the context of the capital Amnesty, which ended in 2015, citizens could declare their foreign assets and companies, liquidate them and return the money to Russia, — in this case they were exempted from taxation.

Clarification on KIK

The adopted law, in particular, clarifies transfer rules for the future losses of a CFC during the three years immediately preceding 2015. The total amount of the loss transferred to the future periods will be determined by netting the amounts of income (loss) before tax according to financial statements of a CFC during the three financial years preceding 2015. Moreover, this amount may be included losses from the revaluation of financial assets.

To establish a uniform procedure for the calculation of profit (loss) from operations with financial assets are determined by universal principles of calculation of financial result from these operations. Income from disposal of financial assets will decrease on the price of acquisition or the value of financial assets according to the accounting of the beginning of 2015 if the related assets were acquired prior to the beginning of the period.

In addition, the procedure of calculation of financial indicators of the controlled foreign company that is a party to foreign of CGT (consolidated group of taxpayers). This establishes a closed list of principles of distribution of tax foreign REAG to its members, as well as eliminates the need for repeated submission of documents proving the conditions for exemption of the profits of such group from taxation in the framework of a multilevel ownership chains in Russia.

The law clarifies and peculiarities of taxation in transactions between interdependent persons. In particular, it is established that the provisions on taxation in transactions between interdependent persons do not apply in the case of an agreement on pricing. The procedure for concluding such an agreement establishes the Ministry of Finance. Provides for the accounting of income (profit, earnings) regardless of whether it leads to the reduction of the amount of tax or increase of the amount of loss, in the cases provided for by the pricing agreement.

Also clarifies the exemption from taxation of CFC’s profit that is involved in mining projects under agreements to production sharing or other similar agreements. The document allows not to take into account CFC income when determining the tax base of the controlling entity, if this profit is directed on formation of obligatory reserves stipulated by the legislation of the foreign state.

Also establishes a uniform procedure of taxation of natural persons, regardless of the method of disposal of property (property rights) received in the liquidation (termination) of a CFC. At the same time clarifies which functions on the territory of Russia, does not lead to the recognition of foreign entities as Russian tax residents.

Amendment on casino

In addition, the law exempts casinos from the status of a tax agent. In fact, it takes a casino the duty to deduct the tax from winnings of more than 15 thousand rubles.

In November a law was passed which established a new procedure for the payment of personal income tax for citizens participating in gambling activities on the territory of Russia. It involves the payment of tax on lottery prizes of less than 15 thousand rubles a player, and if win exceeds 15 thousand rubles, the tax is withheld by the tax agent, that is gambling.

The document leaves this rule only for winnings in betting offices and totalizators. In the case of winning prizes from the organizers and other gambling games, casino, the tax must now be paid by the player independently regardless of the size of the prize.

Deputy Minister of Finance of the Russian Federation Ilya Trunin during the consideration of this amendment in the state Duma explained that Russian casino, of which there are five, there were problems related to the withholding income tax on winnings. For example, in the far East, the key players are foreigners, for which income tax is 30% (in Russia – 13%). To hold the winnings 30% «means just that to close the casino», explained the Deputy Minister.

Other changes

The law also stipulates that when determining the tax base for tax on profit for the investors of the SEZ in Kaliningrad region are not taken into account the subsidies received to Finance expenses on investment projects.

Finally, the law on customs regulation in the Russian Federation is supplemented by special provisions in connection with the Treaty on the customs code of the Eurasian economic Union, signed at Moscow on 11 April 2017.

Under these provisions, the legislative and other legal acts of the Russian Federation, governing relations in the field of customs, from the date of entry of this Treaty into force are applied in the part not contradicting this agreement. If such acts are inconsistent with the provisions of the contract, the customs legal relations will be governed by the regulatory legal acts of the Ministry of Finance.