On 19th February 2018, a
legislative package on the extension of the tax capital amnesty and the
tax-free liquidation of foreign companies came into force.
On 19th February 2018, a legislative package on the extension of the tax capital amnesty and the tax-free liquidation of foreign companies came into force:
- Federal Law No. 33-FZ "On Amendments to the Federal Law "On the Voluntary Declaration of Assets and Accounts (Deposits) by Individuals in Banks and on Amendments to Certain Legislative Acts of the Russian Federation" (hereinafter referred to as Law No. 33-FZ);
- Federal Law No. 34-FZ "On Amendments to Part One and Two of the Tax Code of the Russian Federation and Article 3 of the Federal Law "On Amendments to Parts One and Two of the Tax Code of the Russian Federation (regarding the taxation of profits of controlled foreign companies and the income of foreign organisations)" (hereinafter referred to as Law No. 34-FZ);
- Federal Law No. 35-FZ "On Amendments to Article 76-1 of the Criminal Code of the Russian Federation" (hereinafter referred to as Law No. 35-FZ).
The main provisions of Law No. 33-FZ extended the term of "capital amnesty" by establishing the second stage of voluntary declaration within the timeframe from 1st March 2018 to 28th February 2019. When submitting a special declaration during the second stage of the declaration, the guarantees provided for by Federal Law No.140-FZ as of 8th June 2015, "On the voluntary declaration of assets and accounts (deposits) in banks and on amendments to certain legislative acts of the Russian Federation" the acts committed before 1st January 2018.
An individual who submitted a special declaration during the second stage of the declaration were given the right to indicate in the declaration information not only about open accounts (deposits) in banks located outside of the Russian Federation, but also information on accounts (deposits) closed on the date of the declaration, provided that such closed accounts were opened before 1st January 2018.
Individuals who submitted a declaration during the first stage of voluntary declaration were given the opportunity to repeatedly present a special declaration during the second stage of the declaration. In this case, regardless of the content of the declaration, its presentation in the second stage will not be recognised by the submission of the revised declaration.
The declarant is entitled to present a special declaration of his choice to any tax authority or to the Federal Tax Service of the Russian Federation, so the place of residence (in its absence, the place of temporary stay) of the declarant does not matter.
Amendments have been introduced to the form of the declaration and the procedure for issuing its copy to the declarant by the Federal Tax Service of the Russian Federation; the maximum period for issuing a copy of the declaration to the declarant has been established as 14 calendar days from the date of receipt of the written application.
Law No. 34-FZ establishes that the notification of a Controlled Foreign Corporation and/or notification of participation in foreign organisations are not considered to be submitted in violation of the deadline if such notifications were submitted together with a special declaration. At the same time, the declarants may again face a problem related to the need to submit notifications exclusively at the place of residence of the shareholder, which excludes the possibility of submitting a special declaration together with notifications to the Federal Tax Service of the Russian Federation.
The submission of a special declaration during the second stage of the declaration exempts from the collection of taxes related to declared property or accounts (deposits) in foreign banks, except for taxes payable in respect of profits and/or property of the Controlled Foreign Corporation.
Law No. 34-FZ extended the "liquidation benefits" stipulated in para. 60 of art. 217 and para. 10 of art. 309.1 of the Tax Code of the Russian Federation: the use of these methods of transferring to the shareholder of the property is possible provided that the liquidation procedure for the foreign company is completed before 1st March 2019. The new wording of para. 60 of art. 217 of the Tax Code of the Russian Federation no longer includes the exclusion of funds from the property for which a tax-free transfer to a shareholder is possible upon liquidation of a foreign company.
Law No. 35-FZ extended the term of exemption from criminal liability in case of revealing the fact of the crime committed by the declarant before 1st January 2018.
Analysis of Laws. Conclusions and recommendations
In order to implement the initiatives of the President of the Russian Federation, the extension of the term of "capital amnesty" is envisaged in 2018. The voluntary declaration programme was already conducted in Russia within the timeframe from 1st July 2015 to 30th June 2016, on the basis of which individuals were given the opportunity to voluntarily declare their property, foreign accounts and Controlled Foreign Corporations.
The purpose of the adoption of Law No. 140-FZ as of 8th June 2015, which established the right of the declarant to voluntarily declare assets and accounts (deposits), was the receipt by the state of information on the income and property that are subject to taxation, of which it was not previously known. In return, the declarant was offered a number of guarantees in the form of not being held criminally or administratively liable, as well as exemption from payment of taxes for past periods.
As a result of the adoption of the legislative package on the second stage of the "capital amnesty", the declarants received the right to extend the term of the provided guarantees and benefits.
Declarants, who submitted a special declaration within the first stage, as well as those who will file the declaration for the first time, were entitled to submit a declaration during the second stage of the amnesty within the timeframe from 1st March 2018 to 28th February 2019.
Specialists of Schekin and Partners Law Firm are ready to provide advice on the application of new rules concerning the second stage of "capital amnesty", as well as to provide legal assistance in the conduct of disputes on this issue.