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Law on Profit Tax for International Companies

The lawyers of FBK Legal prepared an overview of changes in the laws on the profit accounting procedures for controlled foreign companies, the rules of calculation and payment of the profit tax for companies and the income tax for individuals. The overview is expected to assist the business community to take into account and to use correctly the novelties introduced by the Law on the profit tax for foreign companies controlled by Russian tax residents.

The Law was signed on 25 November by the Russian Federation President. It follows from the law that if a foreign company carries out no operations on the territory of Russia but, however, the Russian residents gain profit from such company’s operations the tax residents – physical and legal persons – are subject to new tax obligations on the income gained in the foreign tax jurisdictions.

According to the authors of the overview Dmitry Paramonov, attorney at law, Tax Consulting Practice, supervising the international tax planning projects in the company, and Maria Lukasevich, the lawyer of FBK Legal, the application of the law will lead to the de-offshoring of the economy, to the loss by foreign tax residences of the benefits the Russian business is used to and also to creating equal conditions for those who do business in Russia.

“The law was adopted, but still there are questions left,” state the lawyers. “The legislator will have to specify a lot. We intend to keep on preparing practical recommendations on the international tax planning, including in relation to the new law”.

Presentation of “Foreign company income tax