Abstract
This article is aimed at generalization of foreign practices of taxation of Controlled Foreign Companies in orderto solve a problem of capital outflow to low-tax jurisdictions and at further elaboration of recommendations onreforming a concept of tax residence in the Russian Federation. The article summarizes elements of nationaltaxation rules set in such countries as France, Great Britain, Germany, USA, China and Brazil. The articledetects shortcomings of the Russian rules concerning Controlled Foreign Companies and suggests ways of theirremedy. It makes a conclusion that taking into consideration the Russian environment the rules concerning CFCbeing elaborated require careful revision with regard to recommendations of Organization of EconomicCooperation and Development which will be made in 2015 within the framework of a “Base Erosion and ProfitShifting” program.
Highlights
Globalization of economy stimulates development of world trade, in most of developed countries in the world lack of proper control and limitation of incoming and outgoing flow of investments has caused the problem of taxable base erosion, referred to as “Base Erosion and Profit Shifting” (BEPS)
This article is aimed at generalization of foreign practices of taxation of Controlled Foreign Companies in order to solve a problem of capital outflow to low-tax jurisdictions and at further elaboration of recommendations on reforming a concept of tax residence in the Russian Federation
3.1 Comparison of Entities Falling within the Scope of the Rules Concerning Controlled Foreign Companies (CFC), the Mechanism of Detection of Control and the Method of Profit Detection
Summary
Globalization of economy stimulates development of world trade, in most of developed countries in the world lack of proper control and limitation of incoming and outgoing flow of investments has caused the problem of taxable base erosion, referred to as “Base Erosion and Profit Shifting” (BEPS). In order that resident companies should pay a tax on profit of foreign companies in the country of their residence, countries have elaborated the rules concerning Controlled Foreign Companies (CFC). In order to solve the problem of BEPS in Russia, an idea of deoffshorization of the Russian economy has been suggested It means working out government measures aimed at raising barriers for companies applying schemes of tax evasion by means of offshore centers. In 2014 the Ministry of Finance of the Russian Federation started elaboration of the rules concerning CFC (The Law of the Russian Federation “About making alterations in the first and the second parts of the Tax Code of the Russian Federation (as regards taxation of profit of controlled foreign companies and of income of foreign entities)”, 2014), giving rise to public debates in scientific and business community
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