Canada - English

Russia Takes Aim at Offshore Companies and Tax Avoidance 

Global Tax Adviser

 

April 22, 2014

 

Alex Feness
GTA, International Corporate Tax

 

Russia has proposed draft legislation to prevent the use of offshore companies for tax purposes. The draft legislation has been available for public comment since March 18, 2014.

Among other changes, the reforms propose:

 

  • Taxing undistributed profits of controlled foreign corporations (CFCs) resident in "blacklist" jurisdiction
  • Implementing residency criteria for corporations (similar to the common law concept "central management and control")
  • Taxing an indirect transfer of ownership in real estate located in Russia (through the sale of shares of companies more than 50% of whose assets directly or indirectly consist of real property located in Russia).

 

As a result, taxpayers should:

 

  • Analyze existing foreign entities and estimate the potential tax effects of these proposals
  • Assess the additional costs associated with complying with the proposed CFC rules
  • Determine whether a restructuring is possible to mitigate the potentially adverse effects of the proposals.

 

For more information, contact your KPMG adviser.

 


 

Information is current to April 22, 2014. The information contained in this publication is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act upon such information without appropriate professional advice after a thorough examination of the particular situation. For more information, contact KPMG's National Tax Centre at 416.777.8500

Publications

Canadian companies may be interested in these recent publications: