Offshore companies are classified according to lists – Kommersant FM
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The Ministry of Finance proposed to approve a special list of 40 offshore zones, which included the United Arab Emirates, Bahrain, Monaco, Liechtenstein, the special administrative region of China Macau and the Seychelles. We are talking about countries and territories that provide preferential tax treatment and allow you not to disclose data on financial transactions. The order should come into force on January 1, 2024 and will be valid until 2026. Starting from the new year, an updated blacklist of offshore companies will also be launched. Previously, the Ministry of Finance included unfriendly countries in it as a mirror measure; as a result, the list doubled. And Russian companies with structures in Cyprus, Malta, and the Netherlands are faced with an unexpected increase in the tax burden.
Probably, now the Ministry of Finance is trying to mitigate the negative consequences for such players, explained Taxadvisor partner Dmitry Kostalgin: “Since the classic list has greatly expanded to include unfriendly countries, and Russian companies cannot rebuild so quickly, a narrow list is being introduced for a while, which seems to say that such a possibility applies during the transition period. This means that an organization can apply all these four tools: zero dividends, exemption for an active holding company, a subholding company, the possibility of adjusting profits and the status of a controlled foreign company (CFC).
Previously, a federal law was adopted that allows the Ministry of Finance to establish an alternative list of these offshore jurisdictions. It will be in effect urgently for 2024-2026. That is, a three-year period has been given, and then time will tell whether this order will need to be extended or not.
At the same time, those outside these 40 jurisdictions were mainly companies that were registered, including in European unfriendly zones. The blacklist works for everyone, it doesn’t look at the passport. Taxation conditions have worsened because this company cannot distribute dividends at zero, raise them here in Russia, apply a zero rate, adjust CFC profits, or transfer property here free of charge. It turns out that this narrow list is, let’s say, more special and seems to have mild consequences.”
In the fall of 2023, Forbes wrote that some provisions of the “old version” of the blacklist could be extended until the end of 2026. This way, companies will retain some benefits, for example, they will be able to avoid paying taxes on dividends received from abroad and on assets transferred free of charge. Vladimir Putin also raised the topic of deoffshorization. As the publication wrote, at a November meeting with entrepreneurs, the president gave several instructions related to taxation and called for improving the mechanism for transferring assets to Russia.
The new temporary list of offshore companies nevertheless creates serious inconveniences for many entrepreneurs, noted Dmitry Kirillov, adviser to the law firm Lidings: “To a large extent they overlap. In fact, this special list includes classic offshore companies that have existed for many decades; they have moved from the large list to the new small one.
The position of the company, which was already on the extended list, does not worsen, because it was already not very good. Problems may arise for organizations that were not previously on the big list. This applies to countries such as the United Arab Emirates and Bahrain.
On the contrary, we have Oman in the expanded list, but it is not in the new one. What’s the subtlety here? We had an agreement with Oman on the avoidance of double taxation; accordingly, it was removed from the list for this reason.
But, for example, Bahrain and the UAE appeared in order, in my opinion, to disincentivize Russian companies to do business from these jurisdictions.
At the same time, a double taxation avoidance agreement is also being discussed with them. The Ministry of Finance is simply trying to put relations with these states on a more understandable basis. That is, we have, on the one hand, a carrot, and on the other, a stick in the form of including these countries in the special list. At the moment, it will be less profitable for Russian companies to create some foreign structures there that will receive income and then transfer it here to Russia, until 2026.”
The State Duma is also considering a bill to adjust the regime in the so-called Russian offshore companies. At the beginning of December, the document was amended to provide extensive benefits for companies in special administrative regions (SARs). To receive them, a business must deposit 300 million rubles. to the budget of the Kaliningrad region or Primorsky Krai.
According to the latest data from the Ministry of Economic Development, since the beginning of the year, 156 international companies have re-registered in special administrative regions. This is twice as much as in 2022. So, for example, VK “moved” there from the British Virgin Islands, and HeadHunter from the Seychelles.
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