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Russia: New regime for paying individual income tax on CFC profits

Russia: Paying individual income tax on CFC profits

The tax law of the Russian Federation has been amended to allow individuals who are controlling persons of foreign companies (CFCs) to pay individual income tax not based on the actual profit of each CFC, but based on a fixed amount of profit of all CFCs, regardless how many there are.

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The amount of fixed profit will be approximately RUB 38.5 million for 2020 and then RUB 34 million for 2021 and later years. Thus, the amount of individual income tax on this CFC fixed profit under the new regime will total approximately RUB 5 million.

This new CFC profit tax regime can be applied as early as the tax return for 2020, but the controlling person must submit by 1 February 2021 a notice to the tax authority of the election to pay individual income tax on fixed profits by 1 February 2021.

This new tax regime does not apply with regard to controlling persons that are legal entities.


For more information, contact KPMG’s Global Head of International Tax:

Rodney Lawrence | +1 (312) 665 5137 | rlawrence@kpmg.com

The KPMG name and logo are trademarks used under license by the independent member firms of the KPMG global organization. KPMG International Limited is a private English company limited by guarantee and does not provide services to clients. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation. For more information, contact KPMG's Federal Tax Legislative and Regulatory Services Group at: + 1 202 533 4366, 1801 K Street NW, Washington, DC 20006.

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