Guide To The Russian Deoffshorization Law

The Federal Law No 376-FZ dated 24 November 2014 "Concerning the Introduction of Amendments to Parts One and Two of the Tax Code of the Russian Federation (Regarding the Taxation of the Profit of Controlled Foreign Companies and the Income of Foreign Organizations)" (the Law) was signed by President Putin on 24 November 2014. It is expected to enter into force on 1 January 2015. The Law introduces significant changes to the rules governing the reporting and taxation of participation interests by Russian tax residents in controlled foreign companies (CFCs) resulting in the profit of a CFC being imputed as taxable profit of a Russian tax resident controlling such a CFC at the usual Russian tax rate being 20 per cent for legal persons and 13 per cent for natural persons. An overview of the key provisions of the Law is provided below.