The Federal Taxation Service has indicated that the number of reported controlled foreign companies in Russia increases annually. The latest statistics show the absolute record with soaring figures by 21%, as evidenced by 45.6K controlled foreign companies.
We shall remind our readers that a controlled foreign company (CFC) is an organization or a foreign structure without a legal entity, not recognized as a Russian tax resident, which controlling person is a tax resident of Russia.
What is the reason of the sudden sharp increase in the number of CFCs? Experts point out several factors. As assumes Evgeny Vlasov (Head of the tax practice at GSL Law & Consulting), one of the factors is the opportunity for Russian business representatives to take advantage of the benefits provided by the fourth capital amnesty, which began in 2022.
Sergey Sergeyev (Senior Associate at Better Chance) is convinced that another cause for the strong performance is the presidential decree of September 2022 on transactions with stakes in Russian LLCs. As follows from the decree, if the following conditions are simultaneously met, then the foreign entities are not obliged to obtain a permit from the government for control over foreign investments when making transactions:
1.The entities are controlled by Russian individuals or legal entities.
2. The information is disclosed to tax authorities under Russian law.
According to Sergeyev, global changes in the worldwide and Russian economy have also played a role, "In recent years, Russian business has been actively exploring the foreign perimeter and creating companies in the Middle East, China and Hong Kong for the purpose of interaction with foreign counterparties".
TKM International Consulting team provides legal protection, consulting services as well as protection of intellectual property of companies operating in Russia, Ukraine and CIS countries.
Source: https://www.rbc.ru/economics/09/04/2024/6613b1c69a7947a32d3d8191?from=short_news