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Introduction of a fixed income tax CFC in the Russian Federation


On November 9, 2020, the Federal Law was published, which amends Parts one and two of the Tax Code of the Russian Federation. The adopted amendments directly affected the issue of taxation of controlled foreign companies (hereinafter referred to as CFC).

The Law contains provisions on a fixed tax on CFC profits. Individuals who have sent a timely notification to the tax authority about the transition to a new tax payment procedure are entitled to pay the tax on the fixed profit of a CFC. The fixed amount of profit is set at 38,460,000 rubles for the tax period of 2020, and 34,000,000 rubles for subsequent tax periods starting from 2021, regardless of the number of CFC'

It should be borne in mind that when sending a notification for such a tax payment in 2020 or 2021, it is mandatory to pay a fixed amount for 3 years, and in the case of a later submission – 5 years. It is possible to stop paying if an individual has abandoned all of their companies registered abroad.

The new law also provides for the introduction of a fine in the amount of 500 thousand rubles for failure to submit to the tax authority documents confirming the amount of profit (loss) of a controlled foreign company within the prescribed period or the submission of such documents with deliberately false information.

Failure to submit the requested documents to the tax authority on time, entails a fine of 1,000,000 million rubles.

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