Regularization of Private

Clients’

Undeclared/Untaxed Funds

Undeclared Funds vs. Undistributed

Revenues

Current Reporting Obligations on Foreign Accounts

Residency status (for reporting purposes):

Is defined by the RF Currency Legislation;

Generally includes Russian citizens, except those who are away for no less

than 1 year (uninterrupted stay outsider of Russia without crossing the border)

General Rule: RF residents shall report to Russian tax authorities:

on opening

(closing) bank

accounts/deposi

ts abroad;

on changing bank

accounts/deposits

details;on all

transactions of

foreign bank

accounts (or

deposits);During 1 month period

During 1 month period

Current Rule: Dividends and Interest are Taxed

Only if Actually Paid

Foreign Legal

EntityForeign Jurisdictions:

Cyprus, Malta, BVI

Switzerland, etc.

Russian Federation

Withholding tax/ if

any

Personal income tax:

9% for dividends

13% for interests

Dividends/Interests

Use of Capitalization Funds. Common Rules.

• RF tax resident owns units/securities distributed by the fund and;

• RF tax resident actually receives any income upon sale/disposal of units

RF tax resident is liable for RF tax only

WHEN

• Fund’s units are owned by foreign entities;

• Russian sourced income from the sale/disposal of units

Foreign Companies could be potentially

liable for RF tax WHEN

Tax rates for income received from transactions with securities in the RF:

•13% for the RF residents

• 30% for non-residents

Use of Capitalization Funds. Specifics of Securities and

Financial Instruments Taxation.

Actual expenses for

acquisition of

securities/financial

instruments

Market value of the

securities/financial

instruments

Material

gain

Personal

income tax:

•13% for the

RF residents

• 30% for non-

residents

Material

gain

Paid

Personal

income tax

Expenses reducing

personal income

from sale

In case of further sale of securities

•Tax base for securities transactions is the financial result: income from

sale of securities after deduction expenses for their purchase.

•Tax rate: 13% for the RF residents, 30% for non-residents;

I.

II.

III.

Use of Life Insurance Products: Taxation only Upon

Distributions

Russian national

Foreign

Insurance

Company

Funds transfer as payment for

insuring life/property/etc.

Proceeds from insurance policy

upon certain events (death,

disability, elderly age, etc.)

Income generated during the term

of such insurance policy

Use of Life Insurance Products.

General Rules:

Income generated during the term of insurance policy is taxable at a rate of 13% as

income received from foreign sources;

Insurance payments are taxable at a rate of 13% (para 2 and 3 of art. 208 of the RF Tax

Code);

Tax exemption is applied to the following payments (para 2 and 3 of art. 213.1 of

the RF Tax Code)

Insurance payments upon a certain

age/period of the insured person or in

other events if:

(i) the insurance payments are

paid by the taxpayer

(ii) insurance payments do not

exceed the sum of his paid

premiums;

The difference between these

amounts will be included in tax base.

Insurance payments upon events:

-Death

-Injury to health; and (or)

-Reimbursement of medical

expenses of the insured person

(exception – payments for

sanatorium treatment);

Dividends: Russian Tax upon payment from Cyprus

CYCyprus

RussiaDividends

No Withholding Tax

9% Personal income tax less

WHT paid in Cyprus

Interest: Russian Tax upon Payment from Cyprus

CY

Cyprus

Russia Interests

No Withholding tax

13% Personal income tax

Currency Control

Foreign

Jurisdiction

RussiaDividends

Foreign Legal

Entity

Currency

Transaction

Currency Control:

All transactions shall

be made via

Authorized banks

Otherwise

Fine in the amount up to the sum

of illegal currency transaction

Limitation Period for Tax Offences

An individual can not be brought to responsibility (fines) for tax offences if 3

years expired before such decision left was made, beginning from:

the next day after the end of the tax period during which the offence was

committed (effective for offences under Art. 120, 122 of the RF Tax Code);

the date of its commission (for all other offenses);

Within the framework of the field tax audit the reviewed period can not

exceed 3 years from the date, when decision on the appointment of such audit

was made (5 years for taxpayers participating in regional investment

projects);

Tax liability ceases in the following cases:

Payment of taxes;

Death of an individual taxpayer;

Liquidation of the taxpayer (legal entity);

Other cases provided by the law;

Relief of Tax Liability

The corrected tax return is

submitted:

after deadline for such

submission expired, but

before expiry of deadline

for tax payment

Relief of tax liability

Provided that the taxpayer did not know

about:

discovery of tax underpayment by the tax

authorities

the appointment of the field tax audit

The amended tax return is

submitted:

after deadlines for

submission of tax return

and for tax payment expired

1. Provided that the taxpayer paid the

underpaid taxes before he became aware of:

discovery of tax underpayment by the tax

authorities

the appointment of the tax field audit

2. Provided that the tax payer paid the

underpaid taxes and such underpayment was

not identified in course of the field tax audit

Relief of tax liability

Relief of tax liability does not exclude implication of criminal liability.

Thank You For Attention!