Foreign control: why billionaires do not hurry to withdraw their business from tax havens

Forbes asked the Russian billionaires, what they were doing in relation to the new law on foreign-controlled companies.
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One of the most important events of 2015 for the business was the entry into force of the law on controlled foreign companies (CFC). The law brought a lot of trouble to entrepreneurs that used in the structuring of business of the company, registered in various, including offshore, jurisdictions. Forbes interviewed 87 Russian billionaires, and tried to find out what they are doing in relation to the new law.

The law amends the Tax Code: any foreign companies, trusts, foundations and other entities without legal personality recognized by foreign-controlled companies, if they are not tax residents, and their controlling shareholders, on the contrary, are Russian residents. The controlling shareholder of the person recognized as a share of more than 25% of the shares. This rule works if all the shareholders - residents of the Russian Federation - accounting for less than 50% in the company. If, however, the share of all shareholders - Russian residents in KMC is more than 50%, the controlling entity and is considered to be a shareholder with a share of more than 10%. The controlling shareholder must notify the tax authorities of their foreign companiesand pay income tax in proportion to their share.

With the help of the law the authorities are pushing entrepreneurs to translate the head structures in Russia. make it quite difficult for big business, it is sometimes impossible.

Our questions are answered 22 official billionaire.

The easiest option to rid yourself of the hassle and do not disclose their foreign company was simply cease to be tax resident in Russia. To do this, a person needs to stay in Russia for more than 183 days a year.

The overwhelming majority of respondents to the question about the change of residence answered in the negative: "There was and still am a resident of the Russian Federation." His non-resident status confirmed four people: Dmitry Rybolovlev (Monaco), Elena Baturina (UK), Gennady Timchenko (Switzerland) and Andrey Melnichenko, which is already 10 years old is not a tax resident of Russia, but pay taxes, are not reported in any jurisdiction. But Vasily Anisimov, who used to live in Switzerland, said of Forbes, which has become a tax resident of the Russian Federation, where he will pay all the taxes.

Only one billionaire on conditionsnonimnosti admitted that the results of 2015 will be tax resident in Malta. According to Forbes, and non-residents will be two of the five major shareholders of Russian companies "Alfa Group" - Mikhail Fridman and Alexei Kuzmichev. They account for over 50% of the shares in the group companies, so that all the rest - Herman Khan, Pyotr Aven and Andrew Kosogova - do not have to notify the tax authorities on the participation of foreign institutions.

Billionaires are often found in London or Geneva, but say with certainty became the non-resident person or another may not.

"Leave a lot of people, but no one did not ask each other about the residency," - says one of the regulars of the London meeting of compatriots.

Not all billionaires are willing to spend half a year outside Russia for the sake of non-resident status. "How to work if you're not six months in Russia? This can only afford retirement. Basically all disclosed. Non-resident - this is an exception, "- said one of the Forbes list of participants. There is an important caveat - the number of days spent outside Russia. "Who, except the the attemptedimateley can correct these 183 days to count? People think every day in Russia, collect boarding passes. I think 80% of the so-behaved ", - says the banker living in London.

Variant of answer "did not change anything, remains the controlling entity CIC, CIC income taxes will pay Russia" chose five people: Alexey Mordashov, Alexey and Dmitry Ananiev Dmitry Mazepin and Dmitry Mason.

The most desirable option for the authorities - transfer of the holding companies in Russia - took advantage of a few, and then only partially. The three billionaires from the list - Vladimir Evtushenko, Gleb Fetisov and Aras Agalarov - almost did not have to do anything. Representative Fetisov said that the businessman has in 2013 transferred the entire business in the Russian consortium "provincial" to be eligible to participate in the elections to the Moscow City Duma in 2014. "Crocus" Agalarov also in Russia.

Vladimir Yevtushenko holds a majority of the AFC "System" directly as an individual. "The vast majority of our companies leading busis in Russia, registered in Russia, and pays taxes in Russia. With regard to companies doing business in other countries (such as India), then on them, we have submitted all the documents in a timely manner prescribed by law "- this was the answer to a businessman.

Part of the assets transferred to the new Russian holdings Alisher Usmanov ( "AF Telecom Holding" and "YueSeM Metalloinvest"), Viktor Vekselberg ( "Renova Holding Rus" and "Renova Legacy Rus"), Gennady Timchenko ( "Volga Group"). Arkady Rotenberg was the direct owner of the Russian company "Stroygazmontazh". Timchenko and Rothenberg moved the business in Russia rather due to the imposition of a sanction.

Businessmen build different bypass circuit, which does not want to openly admit it, someone complains that it is impossible to fulfill the requirements of the law, some people do not have enough time.

"Of course, we all let me correspond. But they want from us is impossible - so we rebuilt a year that created 20 years. I have 550 different companies as I can in one year, all translated into Russian? We need at least four years ", - he saysDean of billionaires.

Mass restructuring holdings and CIC disclosure is not visible yet. "Cases that someone himself revealed little. If the company found in the deep of a tax audit, something about it, of course, be informed, but then subsequently closed and will not be used, - says Catherine Leonenkova, head of tax practice of law firm "Yakovlev & Partners". - The law raises many questions, everything is constantly changing, people simply do not understand the consequences of what they can expect in the future, so do not hurry. "

At the same time, she said, big companies who want to work with the public funds, are forced to open and bring their structures in accordance with the law, because "the State is to ensure that does not give money to those for whom is offshore."

Reveal their CIC must be prepared for surprises - by law they are required to provide the tax audited financial statements of all the companies that make up the chain of ownership of assets. Usually this complex chain, including offshore companies in various jurisdictions,and prepare reports on them is very difficult.

Soon these complexities will be less - the Ministry of Finance prepared a second package of amendments to the law, which the State Duma planned to take to the end of December. "These amendments will facilitate the further conduct of the companies reporting after the disclosure. Legal work on the disclosure does not change, but the statements in the future becomes more adequate, realistic work ", - said one of the members of the Board of RSPP.

One of the most important amendments: CIC will keep accounting records in accordance with IFRS is not only, but also for the standards that are adopted in the country where they are registered.

What threatens to non-compliance with the requirements of the law? An administrative fine in the amount of 100 000 rubles for each undisclosed company. Billionaires can not worry.