Passing of a very well-known Russian draft law on taxation of profits of controlled foreign corporations and income of foreign corporations (the CFC draft law) is to be postponed. The CFC draft law would lead to a so-called deoffshorization of Russian economy. The general aim behind the said draft law is to motivate foreign companies which authorized capital or its part belongs to Russian legal entities and/or natural persons, to transit to Russian jurisdiction.
This week the Ministry of Finance and Ministry of economic development received an instruction from the Prime-Minister of Russian Federation to review the law once again and to complete it. According to the information published on the website of the government, the new text of the CFC draft law would have been ready before 30 of June. The passing of CFC draft law is to be postponed due to the fact that Russian Union of Industrialists and Entrepreneurs has addressed its comments concerning crucial provisions of the draft law. The necessity to change the CFC draft law became obvious after the meeting on 18 of June organized with the board members of Russian Union of Industrialists and Entrepreneurs. The main provisions of the CFC draft law that are subject to revision relate to accordance of the definitions used in the draft law to the existing legal system, requirement to clarify the list of persons that fall within the purview of the draft law. Various departments of the ministries were ordered to find effective solutions in relation to the following: implementation of system stimulating transfer of companies to Russian jurisdiction, increase of profit level that is actually an indicator of a company falling within the provisions of law as well as other aspects.