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The third stage of the "Offshore amnestey": the requirements for redomiciliation of foreign companies to Russia

24.05.2019

Andrey Kirillov
Petr Popov
Pepeliaev Group advises that the State Duma has adopted a set of laws extending until 29 February 2020 the period of the voluntary reporting of individual types of activity and accounts in foreign banks (the so-called offshore amnesty). The final conditions of the new (third) stage of voluntary reporting have become clearer although remaining strict.

We provided a detailed description of the general terms and conditions of reporting after the draft laws were put before the State Duma (details...). The terms and conditions have remained the same, but certain clarifications have been made. 

From 1 June 2019 it will be possible to file a special tax return. 

Initially the set of draft laws provided that the declarant may not have any controlled foreign companies (CFCs) and must return to Russia the funds from any foreign accounts.
The adopted set of laws requires redomiciliation (the change of the location and the country of registration of a legal entity) of the CFCs specified in the tax return to Russia’s special administrative districts (Oktyabrsky and Russky islands located in Kaliningrad Region and in Primorye Territory, respectively). This means that CFCs of which the tax authorities have been notified earlier and regarding which there are no material tax or currency risks requiring a special tax return to be filed at the third stage of the special reporting procedure, may be left unchanged without the need for such CFCs to be redomiciled to the special administrative districts. 

On the other hand, no other methods to deprive the controlled foreign entity of the status of a CFC (for example, if the CFC recognises its status of a tax resident of Russia or manages to liquidate itself before the tax return is filed) will be available for the purposes of filing a special tax return regarding the declared foreign entity. 

The repatriation of money from foreign accounts is mandatory only if the declarant wishes to get rid of the risks relating to such accounts. If the risks are not material or there are no risks at all, it is not necessary to specify the accounts in the tax return and repatriation is not required. 

Help from your adviser

Pepeliaev Group's lawyers have a track record of participating in prior stages of special reporting and are ready to provide legal support in developing a solution for participating in the third stage of the voluntary reporting process, in checking compliance with the prerequisites for filing a special tax return, and in preparing the special tax return and filing it.

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