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The Ministry of Finance proposed to reduce tax rates for residents of Russian offshores
The Ministry of Finance proposed to change the regime of special administrative regions (SAR). Among the proposals - a reduction to 5% of the rate on corporate income taxes on a common base, as well as on dividends, interest and royalties.
As reported "News", the ministry also proposes to reduce to 10% the rate of corporate income tax and personal income tax on dividends paid by international holding companies (MHCs) to Russian organizations and individuals, as well as foreign organizations and citizens from non-public MHCs.
Special administrative regions are territories created to return Russian and attract foreign business from foreign jurisdictions. They have existed since 2018 on the Russky Islands in Vladivostok and the Oktyabrsky Islands in Kaliningrad. Companies created before January 1, 2018, whose controlling persons have not changed since January 1, 2017, can register in the CAPs.
Currently, the Ministry of Finance is proposing to soften these conditions. So, a company can be created before January 1, 2020, by the time of the move, it must have existed for at least three years, and the controlling persons must remain at least 75% unchanged by the time of the move compared to the controlling persons acting on January 1, 2020.
However, new obligations are being introduced for those wishing to become residents of Russian offshore companies. In particular, the company will have to make investments in the ATS for at least 300 million rubles, the share of earnings from passive activities of the company should be more than 90% of the total amount of income. The management will need to hire at least 15 employees, rent an office with an area of at least 100 sq. meters, and from each payment of income to an individual to transfer 2% to the fund to support children with rare diseases.