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Beginning from 2021, tax regulation of controlled foreign companies amended and fines sharply increased

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and practices in Russia

14.01.2021
Beginning from 2021, tax regulation of controlled foreign companies amended and fines sharply increased


FEDERAL TAX SERVICE

INFORMATION

FROM 2021, TAX REGULATION OF CONTROLLED FOREIGN COMPANIES AMENDED

The Federal law dated 09.11.2020 No. 368-FZ "On amending the first and second parts of the Tax Code of the Russian Federation" specified provisions on a new tax regime for paying tax on income of individuals from fixed profits of controlled foreign companies, as well as amendments regarding the usual procedure for payment of tax on profits of controlled foreign companies and liability measures for tax offenses.

1. Payment of tax on fixed profit of controlled foreign companies

Taxpayers - individuals may calculate the tax on fixed profit of controlled foreign companies, not depending of the number of controlled foreign companies such person controls. Furthermore, the taxpayer is entitled not to submit documents confirming the amount of the profit of controlled foreign companies.

For the first time, the tax on fixed profit of controlled foreign companies ma be paid by individuals as early as in 2021 at the end of the 2020 tax period.

The fixed amount of profit of controlled foreign companies is specified by the Tax Code and amounts to:

- for the tax period of 2020 - 38,460,000 rubles

- for tax periods starting from 2021 - 34,000,000 rubles.

At the same time, the taxpayer - individual continue to be responsible for the submission of an annual notice on controlled foreign companies. For more information on the new tax regime for paying personal income tax on fixed profit of controlled foreign companies, you can find out in the section "Controlling Persons and controlled foreign companies".

2. Amending the time for submission of the notice on controlled foreign companies and increasing tax liability

From the year 2021, the notice on controlled foreign companies shall be submitted by taxpayers - individuals within the time period not later than April 30.

For taxpayers - organizations, the deadline for the submission of the notice on controlled foreign companies has not been amended, remaining as the time period not later than March 20.

The fine for failure to submit such notice in due time amounts to 500,000 rubles. In order to eliminate an unintentional failure to submit the notice on controlled foreign companies in due time and occurrence of tax liability, the Federal Tax Service of Russia recommends that taxpayers Ц controlling persons should take care of the performance of their tax duties in advance.

3. Controlling persons of controlled foreign companies who do not calculate tax on fixed profit thereof are required to submit supporting documents

From 2021, taxpayers - controlling persons who do not calculate the tax on fixed profits of controlled foreign companies, are obliged to submit to the tax authority documents confirming the amount of profit (loss) of the controlled foreign companies, regardless of whether they have the obligation to pay tax on profits of controlled foreign companies.

Starting from the 2020 tax period, organizations are required to submit such documents along with the declaration on tax on profit, and individuals are required to submit such documents along with the notice on controlled foreign companies.

In connection with the increase in the amount of fines pursuant to paragraph 1.1 of article 126 of the Tax Code of Russia the Federal Tax Service, asks taxpayers to pay attention to the timeliness of the presentation of supporting documents provided for by the Tax Code of the Russian Federation.

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