In March 2014 the Russian Ministry of Finance published a draft anti-offshore law which is currently submitted for consideration by The State Duma (parliament) with the decision expected to be made by the end of 2014. Russia is aiming to clamp down on the use of foreign offshore tax shelters in a new tax policy as part of President Putin's "deoffshorisation" campaign which was launched in 2012. With an estimated $800bn - $1trillion worth of assets being transferred to various offshore zones around the world, the draft law is a part of a series of measures undertaken by the Russian President to bring money onshore to Russia. The black list of jurisdictions will include various offshore countries (such as BVI, Belize, Seychelles and Panama) as well as low tax havens including Cyprus.
The new law is intended to introduce amendments to the Russian Tax Code which are aimed at Russian companies and individuals (tax residents in Russia) owning a controlling stake in foreign companies (Controlled Foreign Company ("CFC")), and as a result of that receiving so-called "passive gains" (such as dividends and royalties) without the CFCs distributing the respective gains back to Russian shareholders. Under the draft law such passive gains will be subject to tax in Russia – 20% for companies on undistributed profits and 13% for individuals on all income. Not only large shareholders who own or control 25% or more in a CFC will be subject to the new law – Russian individuals who directly or indirectly own 10% or more in a CFC (except for public CFCs) will be subject to Russian tax on income from such CFC. A Russian individual who owns at least 1% in a capital of a CFC will be under an obligation to notify Russian Tax Authorities about his or her shareholding, but income from such shareholding will remain being exempt from Russian income tax.
The policy is likely further to prompt those who are aiming to create offshore tax structures to find alternative methods such as trust vehicles in order to avoid thresholds set by the proposed new laws, further sidestep the drive to increase Russian tax revenue and keep their affairs secret from the Russian authorities.