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The author of the bill on exemption from taxation of foreign tax residents under sanctions, the head of the Duma Committee on budget and taxes Andrey Makarov explained the meaning of his initiative. According to him, the legislators do not aim to make relief to the owners of the assets in the offshore
Approved by the Committee on budget and taxes of the state Duma the amendment to the Tax code that gives fallen under foreign sanctions and forced to stay in Russia for individuals to evade the recognition of a tax resident, is not in order to make relief to the owners of foreign companies and assets offshore, assured the head of the Committee Andrei Makarov.
According to him, the anti-offshore legislation in force in Russia for two years and initiate the adoption of incentives only at the end of this term would be “simply meaningless”.
“When now associated with the law Cicam [controlled foreign companies], with anti-offshore legislation is nonsense,” — said Makarov (quoted by “Interfax”).
The Deputy explained that the amendment to the Tax code should help to avoid double taxation for those citizens who are companies or other assets in Europe, but due to sanctions are forced to constantly live in Russia. Under the current legislation, having lived in Russia for more than 182 days in a year one becomes tax resident and must pay taxes.
“In European legislation the residency is determined by domicile. In the case of domicile, that is, if they have company, they can recognize a resident of the country where there is an enterprise, firm or company,” — said Makarov.
He also noted that in a normal situation associated with the possibility of double taxation disputes should be resolved through negotiations with the relevant authorities of the two countries.
“Do you think, perhaps today, in terms of sanctions, according to these people about something to negotiate? I’m afraid not. So in this case it is absolutely technological amendment, which says that in a situation with the sanctions the issues of residency are defined thus: a person who has such issues and paying taxes, notify the tax service” — said Makarov.
The day before, on March 13, the Duma Committee on budget and taxes approved by Makarov amendment to the Tax code, under which are placed under personal sanctions of individuals are exempted from paying taxes in Russia, even if they have the status of tax residents.
The list of States and their associations, unions and institutions whose sanctions will give the Russians the right to free themselves from the status of a Russian tax resident, would be the government.
Interviewed by “Kommersant”, the experts stated that the meaning of the amendment could theoretically be only to free the people under sanctions from filing reports on controlled foreign companies (CFC).
“It turns out this kind of compensation to the victims for the homeland patriots-residents of foreign States”, — said the interlocutor of the edition. Another possible purpose of the amendment, called the attempt to pre-empt a new wave of sanctions — in case someone will fall under new sanctions and will return to Russia, he will be able to regain the personal income tax, internally paid to them in Russia.
13 March 2017, the European Council extended by six months the validity of the restrictive measures imposed in 2014 on a number of individuals whose actions, according to European authorities, have caused harm to the independence, sovereignty and territorial integrity of Ukraine. In total, this sanctions list of the EU are 150 citizens of Russia and Ukraine.