Category Archives: Russian reporting requirements

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

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

Citizenship-based reporting: Russia’s “citizenship reporting” requirements – will the United States be next?

Prologue – A law firm perspective …

As reported by Chelco Vat:

The law does not make dual citizenship illegal; it is merely a reporting requirement.

Federal Law No. 142-FZ on Amendment of Articles 6 and 30 of the Federal Law on Russian Federation Citizenship and Individual Regulations of the Russian Federation, which took effect on 4 August 2014, makes it a criminal offence for Russian nationals to conceal dual citizenship or long-term residence abroad.

Hmmmm … ONLY a reporting requirement you say …

The perspective of an individual subject to the citizenship-reporting requirement …

The above tweet references an article in the New York Times discussing Russia’s law that requires all Russians with a second foreign citizenship report that foreign citizenship to the Government.
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Citizenship-based reporting: Mr. #FBAR as a role model for President Putin and the Russian government

 

It has been widely reported that American actor Steven Seagal has joined American boxer Roy Jones in becoming a citizen of Russia. By becoming Russian citizens, Mr. Seagal and Mr. Jones are now subject to Russia’s Currency laws, which include the requirement to report their non-Russian bank accounts to the Kremlin. Messrs Seagal and Jones may admire Russia. That said, it’s clear that the Kremlin admires the U.S. Treasury in general and Mr. FBAR – America’s most important citizen – in particular.

Citizenship-based reporting: Mr. FBAR as a role model for President Putin and the Russian government …

 

Although Russia has “residence-based taxation” it has “citizenship-based reporting”.
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