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notifications of the transition to a special tax regime for CFCs since 2020. In total, 557 people declared their CFCs in 2019.
From 2021, these companies can choose between the standard reporting procedure (the minimum threshold for declared profit in Russia is RUB10mn per year, the tax rate in excess of 13% for individuals, and 20% for legal entities) and a special rate to pay a fixed sum of RUB5mn and then not submit reports, but the deadline for this deal expired on February 1.
According to VTimes, in 2020 tax authorities collected about RUB4bn in tax on income from CFC profits using the regular mechanism, and another RUB1.3bn will be received from the RUB5bn fixed price option.
Putin personally proposed to simplify the system of collecting taxes from the CFC last year. In exchange for exemption from declaring foreign property, businessmen were offered the option of paying a flat fee.
All experts interviewed by The Bell immediately called the new taxation system a gift for the richest. In addition to the financial benefits, the main appeal is the option to submit the payment without the need for extensive reporting on accounts, residency and the simple communications with the tax service.
The new regime for tax officials, on the one hand, eliminates the need to understand the intricate patterns of ownership of foreign assets by Russian businessmen, but on the other hand, it deprives them of access to this information.
The new scheme is beneficial for those whose annual income starts at RUB40mn per year and who keep at least $10mn in CFCs with an expected return of 5%. These CFCs are in the majority, experts told The Bell. In the current situation, the fixed tax will be useful to the owners of CFCs who received paper profits from restructuring or foreign investments in 2020, as well as IT entrepreneurs who are forced to pay taxes on license income.
6.1.4 Budget dynamics - National Projects
The government has still not published the updated the 12 national projects, nor the National Goals Strategy that supersedes it.
The latest announcement was a decree issued February 3, allocating responsibility for a Strategy of Socio-economic Development to 2030. This will preserve the National Projects in the period to 2024, but also build a longer-term growth strategy through to 2030. There will be five main operational centres within the government as follows, with the responsible Deputy Prime Minister in brackets:
73 RUSSIA Country Report March 2021 www.intellinews.com