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Russia’s deoffshorisation law and Cypriot companies
The Russian Deoffshorisation Law and the introduction of Controlled Foreign Company (CFC) rules which aim to prevent the shift of profits in preferential tax jurisdictions and re-route funds back to Russia could shudder the domination of Cypriot companies in Russian structures. Taxand Cyprus provides an overview.
The Russian Ministry of Finance has recently clarified the criteria based on which the profits of a Cyprus company shall be exempted from Russian taxation. The Ministry has clarified that companies whose large majority of income (more than 80%) is active shall be exempted.
However, the active companies’ test is not expected to be straightforward, with the list of passive income to include dividends, interest and royalties as well as rental and lease income and income from the provisions of consulting, marketing, legal and other services.
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