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Tax amnesty for special administrative regions (SAR) residents prolonged for a year

Updated on 25 February.

Chief of the Federal Tax Service Mikhail Mishustin announced the official extension of the tax amnesty for a year – until March 1, 2020.

Updated on 13 February.

On February 12, 2019 The Ministry of Finance expanded the circle of persons to whom the tax amnesty applies. Capital amnesty after March 1, 2019 will be valid not only for individuals who re-register assets in special administrative districts (SAR), but also for individuals who return money to the Russian Federation.

On 06 February 2019 on the forum «Business Russia» the President of the Russian Federation (later in text – «RF») Vladimir Putin suggested to prolong the tax amnesty for one year for those entrepreneurs who reregister their foreign companies in special administrative regions (later in text – «SARs») – on Russky island in Far East or Oktyabrsky island in Kaliningrad.

Suggestions by the President include:

  • tax exemption for foreign citizens who control the companies, provided they become tax residents of the RF;
  • order to the Government to develop proposals for promotion of private investment into start-ups;
  • assistance to business in returning money to Russia with the help of foreign exchange bonds.

The first wave of tax amnesty was launched in July 2015 and ended in June 2016. The second wave was launched on 01 January and is going to end on 28 February 2019. During tax amnesties, citizens of the RF could declare their foreign assets free from all liability and tax. According to Anton Siluanov, the Minister of Finance, the business has declared more than 10 billion euros during tax amnesties.

If the President’s proposal comes into force, the validity of the tax amnesty will be prolonged up to 01 March 2020. The tax rebate applies to those persons who transfer their capital to Russia, as well as those who register their business in SARs. Only companies which have been registered abroad before 2018 can become residents of SARs. They are granted lower tax rates and lower control. Only the controlling company, as well as controlling bodies and courts of the RF, will be able to get access to the information about the company’s beneficiaries. A foreign company will not have to pay asset and dividend taxes, and if an international company pays dividends itself, the dividend tax is going to be 5%.

Persons using the tax amnesty are free from tax, administrative and criminal liability for some economic crimes and may not pay tax on declared assets.

Nadmitov, Ivanov and Partners Law Firm is ready to provide consultations on tax amnesty, drafting of special declarations, notification about participation in controlled foreign companies, redomicilation of international companies into special administrative regions, structure of international holdings and international tax planning, questions of factual recipient of income.