Introduce CRS Standards for the Automatic Exchange of Tax Information into International Practice and Improve the Legal Regime on Controlled Foreign Companies

Abstract

Countering crime in taxation area is one of the crucial tasks since this type of offence encroaches upon the economic principles and the power of the state, promotes development of corruption ties and therefore is deemed to be among the most dangerous perils to the national financial security. The Tax Policy Centre of the Organization for Economic Co-operation and Development has launched a system, within the framework of the Automatic Exchange Portal, for disclosure of schemes aimed at circumventing the single standard (CRS) for automatic exchange of information on taxpayers’ accounts. The law on the place of residence (location) is applicable in terms of international private law pertaining to OECD information exchange rules. The legislation on controlled foreign companies proved to be the legislators’ response, in most of the developed countries, to minimization of taxation in offshore zones, having the purpose to prevent tax evasion through offshore companies established in jurisdictions with minimal taxation. On 27.12.2017, within the framework of the course for counteracting offshore structures and obtaining unreasonable tax benefits, certain amendments were introduced in Federal Law No. 376-ФЗ, with specification of conditions for classifying a foreign company as a controlled foreign company; setting the criteria for recognizing individuals and organizations to be controlling entities; introducing a procedure for taxation and exemption of controlled foreign company’s profit from taxation. In this regard, it is necessary to draft a number of laws aimed at development of mechanisms for return of capital to the Russian jurisdiction and regulation of legal norms intending to release business representatives from paying the 13-percent tax in the event of termination of their business abroad.