No report: it will be easier for owners of foreign companies to pay taxes

No report: it will be easier for owners of foreign companies to pay taxes

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The tax becomes fixed

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So, from 2021 the authorities plan to change the rules of taxation of income for the owners of the CEC: to introduce a fixed tax in the amount of 5 million rubles without submitting additional reports. This will make the administration of the CEC easier and will most likely reduce the tax burden of this category of taxpayers with a significant amount of profit. If at the end of the reporting period the CEC tax is less than RUB 5 million, it will be possible to submit reports and pay a smaller amount.

The procedure will be easier

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Previously, the tax base (and, accordingly, the amount of tax) was calculated on the basis of submitted notifications and statements in the year following the year in which the income was recognized as CIC profit subject to personal income tax or income tax. In other words, the profits of controlled foreign companies were not automatically taxable in Russia but only under certain conditions.

. Since the amendments imply simplification of the procedure of administration of this category of taxpayers and introduction of a fixed rate, we can assume that an automatic tax regime will be introduced based on the submitted notifications. In other words, it will no longer be necessary to submit documents for foreign organizations to confirm the amount of profit. However, this will be required if the actual profit tax is less than 5 million rubles. For example, the profit of a foreign company will be less than 38,461,000 rubles. (for individuals for personal income tax payment 13% of this amount is less than 5 million rubles) and less than 25,000,000 rubles. - for legal entities for payment of profit tax.

Affects for beneficiaries

Preparation of CIC reports and calculation of the tax base is an objectively time-consuming process, which often involves inaccuracies that distort information about liabilities. The innovations that are planned to be introduced will undoubtedly allow beneficiaries of foreign companies to avoid unpleasant consequences due to such cases. In addition, if income from controlled companies is significant, a fixed rate will reduce the tax burden.

However, for other companies that are not so profitable and do not meet the criteria for payment of a fixed payment of RUB 5 million, it is likely that additional conditions will be introduced for the calculation of liabilities. The terms of CIC profit tax exemption, if it is less than RUB 10 million, are also preserved for the time being.

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Mikhail Begunov

Major specialisations

Pharmaceuticals, FMCG, Information technology, Manufacturing companies

Member of the Chamber of Tax Consultants, Lawyer at the Moscow Chamber of Advocates

Biography