Bloomberg News

Russia Will Fight Tax Dodgers at Offshore Havens, Siluanov Says

May 30, 2012

Russia is seeking to curtail corporate use of tax havens as the government considers changes to taxes on foreign profits by offshore-registered units, Finance Minister Anton Siluanov said.

The authorities plan to “reduce opportunities to evade taxes, which includes the use of low-tax jurisdictions and primarily offshores,” Siluanov told lawmakers in Moscow today.

Russia may overhaul rules on controlled foreign companies, according to a three-year tax-policy outline published on the Finance Ministry’s website. The government may levy the 20 percent corporate income-tax rate on undistributed foreign earnings of companies controlled by Russian residents, the ministry said in the document. The measure would combat efforts to dodge taxes by Russian parents transferring profits to offshore destinations, according to the document.

President Vladimir Putin, who was inaugurated for his third term in the Kremlin this month after serving four years as prime minister, urged Russian entrepreneurs last December to repatriate assets held in offshore accounts and said the government may adjust legislation to facilitate the process. Including the $42 billion estimated to have fled Russia in the first four months, more than $346 billion in private capital left since 2007, the last year of net inflows, central bank data show.

Putin ordered officials on March 5 to prepare rule changes requiring Russian residents to declare and pay taxes on income earned from foreign assets, the Vedomosti newspaper reported today. The Finance Ministry wants to draft a proposal on so- called controlled foreign company taxes in June, the newspaper said, citing an unidentified official. The legislation would be restricted to legal entities and won’t apply to individuals and company owners, according to Vedomosti.

To contact the reporters on this story: Yuliya Fedorinova in Moscow at yfedorinova@bloomberg.net; Scott Rose in Moscow at rrose10@bloomberg.net

To contact the editor responsible for this story: Balazs Penz at bpenz@bloomberg.net


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