The government will offer tax incentives as part of deoffshorization – Kommersant

The Ministry of Economy has developed a plan to deoffshorize business. It involves tax incentives, protection of shareholders, simplification of relocation and fine-tuning the regulation of international funds.

Familiarized with the document RBC. Deputy Economy Minister Ilya Torosov told the publication that the initiatives “are aimed at increasing the attractiveness of Russian special administrative regions” (SAR) in the Kaliningrad region and Primorsky Krai. They will be carried out through “expanding the mechanism for managing a Russian entity, bypassing a controlled foreign company (CFC), judicial procedure for the separate payment of dividends (profits) and other measures.”

“The new set of initiatives will solve 90% of the existing problems in corporate governance, and we expect their adoption this year,” Mr. Torosov added. He recalled that some measures have already been submitted to the State Duma.

What the ministry proposes in terms of deoffshorization:

• tax incentives for the transfer of assets to Russian jurisdiction, in particular compensation to businesses in case of termination of double taxation agreements with unfriendly countries. The bill, which provides for “compensatory measures in tax legislation” to minimize losses, is planned to be introduced by mid-October;
• “special tax regime” to receive shares with neutral tax consequences. Russian residents with assets they own through a CFC will be able to take ownership of them without taxes and additional conditions. In addition, the “special tax regime” may also include the extension of the exemption for the application of a zero income tax rate when selling the assets of Russian companies not only to sanctioned persons;
• adjustment of the ATS. In particular, a special regime of taxation of personal funds may be introduced and the tax regime of international funds may be changed to avoid double taxation;
• stimulation re-registration of business in the SAR. Introduction of a mechanism for non-recognition of decisions of foreign courts, the possibility of re-domiciliation decision being recognized by the board of directors or beneficiaries and other measures;
• protection of the rights of Russian shareholders of holding companies. Among them are the development of a mechanism for the separate payment of dividends, a mechanism for the transfer of public and non-public foreign holding companies to Russian jurisdiction, as well as the expansion of a mechanism for restoring corporate governance by Russian companies, bypassing the CFC.

President Vladimir Putin called for deoffshorization business during the address to the Federal Assembly in February. Mr. Torosov in May toldthat the Ministry of Economy is working on a plan for deoffshorization.

About what measures the ministry had previously proposed – in the material “Kommersant” “A new path will be paved to “Russian offshores””.

Leonid Uvarchev