Russian tax law change offers opportunities
Significant changes to Russia’s tax code could lead to an increased use of corporate and trust entities based in the Channel Islands in the structuring of Russian corporate and private wealth arrangements.
The changes, dubbed the ‘de-offshorisation law’, are intended to tax profits made by controlled foreign companies and other non-Russian structures in a similar manner to that seen in many countries around the world.
In addition, the new rules, which came into effect on 1 January, require the disclosure of beneficial ownership interests in non-Russian structures and provide a framework under which a foreign structure might itself become tax resident in Russia.
‘What these new controlled foreign company rules mean is that undistributed profits made by a foreign company, trust or other structure, which is controlled by a Russian tax resident, will be liable to profit tax in Russia, and in certain circumstances the entities themselves may be deemed Russian tax resident,’ said Collas Crill group partner Nicholas Davies.
‘We believe that this will see an increased use of structures such as cell companies, foundations and trusts for Russian tax planning going forward, and jurisdictions like Guernsey and Jersey, which have a reputation for the quality and flexibility of such products and the on-island services that accompany them, will ultimately benefit.’
Mr Davies said that the new Russian tax rules offered both opportunities and challenges to the Channel Islands.
‘Russia and the wider CIS region continue to be a significant source of business for those involved in the structuring of offshore corporate, finance and private wealth arrangements in the Channel Islands, but it’s important that they understand the implications of these tax code changes, as well as the effect of sanctions and the current economic and geo-political environment that Russia finds itself in,’ he said.
Source: guernseyPress – Russian tax law change offers opportunities
