Egorova O.Ya., Milogolov N.S. Tax Residency of Individuals and Legal Entities: International Experience and the Concept's Development Options in Russia

Abstract: The rules for defining the residency determines the scope of the tax jurisdiction of a state and fiscal conditions for foreign and domestic investors and companies. In their research the authors provide an analytical review of foreign states' approaches to defining the residency of individuals and legal entities and danalyze the concept of residency in terms of international tax policy. The authors also make recommendations regarding development the residency concept in the Russian Federation. They study the connection between rules for defining the tax residency, CFC rules, and non-residents' income taxation system in terms of OECD double taxation avoidance, and Russian tax legislation in part of approaches to the definition of residency. The authors make several important conclusions, for example, that developed countries tend to choose the territorial taxation system. The other conclusion is that due to the international tendency towards automatic information exchange between countries, it is advantageous to avoid the status of Russia's residents even though tax rates are rather low in Russia for individuals who are potential residents of countries with lower individual tax rates or no tax rates at all (such as Saudi Arabia or particular offshore jurisdictions) or countries where CFC rules do not apply. 

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