International Tax Policy: the Russian Federation, the European Union and «Double Standards»

Abstract

The article analyzes the reasons why the European Union classifies the Russian Federation as an offshore state (including Russia in the next edition of the list of non-cooperative tax jurisdictions). The study determines the objectives of introducing the legal design of an international holding company into the domestic tax legislation and the tasks for which it is used. The paper proves that classification of special economic districts «Oktyabrsky Island of the Kaliningrad region» and «Russian Island of the Primorsky Territory» as low-tax jurisdictions aimed at assisting foreign organizations in tax evasion is unfounded. The paper examines legal innovations introduced into the Tax Code of the Russian Federation in order to exclude Russia from the European list of offshores. It is established that their application will potentially have a negative impact on the amount of budget revenues, and will also lead to the erosion of the foundations of state policy on deoffshorization of the Russian economy. The author gives negative assesment of haste adoption of amendments to the Tax Code of the Russian Federation and their insufficient elaboration during the legislative process. The paper compares the states and territories classified as offshore by the Russian Federation and the European Union and describes low-tax jurisdictions associated with the major EU members, as well as the UK and Switzerland. The paper highlights a transit nature of the economies of a number of European Union members (the Republic of Cyprus, Malta, the Grand Duchy of Luxembourg, the Kingdom of the Netherlands, etc.) when moving financial assets from high-tax jurisdictions to low-tax ones. The above allows the author to come to unsatisfactory conclusions concerning «integrity» of the international tax policy of European states. The author used analytical and comparative legal methods to perform the study.