Vasiliev, I.V., Karpov, V.A. Deoffshorization – the strategy for the economic repatriation of investment flow to the Russian Federation

Abstract: The article contains analysis of the current situation regarding the use of offshore companies in order to avoid taxation and movement of the taxation center from the Russian Federation to the states with beneficial taxation. The article ref lects upon the measures taken in legal and tax practice of foreign states against abuse of offshore by physical persons and legal entities in order to minimize taxation. The authors make a number of propositions on economic measures, which should facilitate transfer of taxpayers into the sphere of legal business and due payment of taxes. As the practice shows, the key factors in support of the use of offshore companies within foreign jurisdictions include physical accessibility and convenience of jurisdiction, minimal requirements (absence of such requirements) towards disclosure of information on beneficiaries of the companies, simplified accounting, free access to cheap credit resources through the stock circulation in the foreign markets, as well as meticulous protection of banking and audit secret. However, at the top of the list is so-called ‘comfortable” taxation, which means absence of taxes on profits from the activities of foreign resident companies. Among the economic measures aimed to facilitate the transfer of bad-faith participants of foreign economic activity into the sphere of legal business and tax payment, it is necessary to establish the mechanisms of taxation of income of controlled foreign companies in the Russian Federation; to introduce the “offshore” tax and to create the mechanism for divulging the information about Russian beneficiary owners for the tax and customs bodies; legislative provisions for the term “ offshore zone”. Finally, the complex of such economic measures shall guarantee the f low of capitals from the offshore to the Russian Federation, it shall support the balance of payment and Russian currency.

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