How can companies, transactions and offshore accounts get caught under the spotlight of the tax authorities?

Dear readers, we invite you to read our information! Once again we provide you with information on countering offshore zones, in view of the fact that the year has become a landmark in this direction and actions are backed up not just with words but with concrete deeds. The world community and, in particular, the Russian Federation use the maximum influence in the sphere of countering illegal offshore schemes, thus increasing the budget revenues from taxation, and also preventing the withdrawal of significant funds from the country.

To achieve this goal, there are many tools and means. They do not always bring results, but there are always reserve options.

The first is legislation on combating offshore schemes in the complex. The law regulates the control over the activities of foreign firms, their reporting on the presence of business there, and when the necessary requirements are fulfilled, taxes are paid. An example is a foreign company that is mostly owned by a Russian tax resident, but most of the company's profits come from inactive sources. If the firm's profit is more than 50 million rubles in current year (in the future the profit threshold will drop to 30-10 million rubles per year), taxes will have to be paid both in the country of doing business and in Russia.

But there are exceptions when the firm is actively working for 100% without attracting passive income, as well as using some forms of irrevocable trusts.

There is an opportunity to legally avoid paying unnecessary taxes in Russia. To do this, it is sufficient to terminate the status of a tax resident by living abroad for the period established by the country.

With the above mentioned method, it is possible to report the activity of the company voluntarily. The authorities are not yet in a position to quickly obtain information on the provision of declarations by such companies. This made it possible for firms to remain shadow ones and wait for further developments.

The situation could be remedied by a tax amnesty, which provided an opportunity to return the assets of firms to the white zone when declaring property without charging taxes. But Dmitry Medvedev, Prime Minister, believes that this process does not bring results, as it is rather slow. In this direction, the idea of amending the relevant legislation was submitted to speed up the process. Such a development could facilitate the work of tax structures and become a reliable tool, taking into account the realities and needs. Such an approach may negatively affect stability, reduce the predictability of resident actions, but there will be the possibility of experiments with the format. If one fails, you can apply another option.

At the moment, tax services have their own experience in this issue, including information from direct participants, i.e. owners of firms and foreign accounts, which are also required to present declarations, and information obtained from conducting official investigations, as well as information received from international sources.

Let's consider all options.

Reporting on the possession of an offshore company or account voluntarily is not illegal and may be encouraged. Some owners of such assets have already started the process of publicity during the fixed period until April 1, but notices about the need for mandatory payment of taxes turned out to be erroneous, and the process stopped.

However, with the voluntary declaration of income, the legitimacy of the companies' activity remains, and such an approach is absolutely obligatory for all. Many company owners do not rush to fill in the declarations, and expect an extreme or deadline period when it will be possible to declare everything without serious consequences by paying a small penalty for delay. The downside of this decision is that the term of this law is coming to an end, and the tax amnesty ends at the end of this year.

Such a dilemma can turn into a rather big trouble, since if such negligent owners are revealed using own resources, sanctions can turn from fines and administrative penalties into criminal cases and rather large fines. Even though deviators quickly study legislation and act quickly and cautiously, tax structures do not give up and the process becomes more powerful and faster every day.

Undoubtedly, this issue can not be resolved without international cooperation. Many people are skeptical about this because of sanctions and confrontation with the West, in fact, not everything is so bad, and cooperation is inevitable. The agreement on the exchange of information in the OECD format, which is actively supported by Russia, has already been initiated. There are developments in creating own version of the FATCA, which is not yet of sufficient strength, but time is running and the future is not far off.

Foreign accounts are no longer in information security, as some measures have already been undertaken for the authorities to find out about them. At the moment, Switzerland has raised a requirement to transfer funds to its banks exclusively from the territory of the Russian Federation, and this will confirm the payment of taxes. In fact, the Swiss banks insist that the tax rules are respected not only in their banks, but in any other country, in particular in Russia. In addition, information was received that a deposit threshold of 5 million francs was set at the bank for Russian citizens.

It is worth noting that all loopholes for circumvention of tax payments with the help of offshore companies are no longer a secret. To date, due to various means, and in particular the FATCA system, information from various sources makes it possible to restrict the activity of deviators in the old schemes. In the event that the owners do not take measures in time, the opportunity to become a criminal with obtaining a well-deserved punishment is high enough.

You can make a decision only yourself: declare income, evade payment or make an optimization of activities. Our specialists will help you make the right decision by providing professional assistance, taking into account the actual situation to date. The situation in this area of activity varies with astronomical speed, the reliability of yesterday information, tomorrow may be irrelevant. Given the realities of the present, it is necessary to make the choice of the best available solutions and not to save on the security of your business.