The Federal Tax Service (FTS) has published a Letter No. ED-3-13/1427 on 4th April 2016 for describing the time limits for submission to the tax authorities of notifications on controlled foreign companies (CFCs) and the necessary documents substantiating the exemption of CFC profits in Russia. On the basis of section 3.1 of article 23 and section 2 of article 25.14 of the Tax Code, taxpayers are needed to submit the notifications on CFCs on or before 20th March of the year following that in which the person controlling the CFC accounts for the profits of the CFC. According to section 1.1 of article 223 and section 4 of article 271 of the Tax Code, a Russian company controlling the CFC must account for the CFC’s profits at 31st December of the year following the year in which the financial statements of the CFC are prepared and approved according to the law of the state in which the CFC is incorporated. The FTS clarified that if a taxpayer is introduced as the person controlling the CFC as of 31st December 2016, the taxpayer must submit the required notifications by 20th March 2017 at the latest. The FTS also noticed that the person controlling the CFC must submit tax returns filed by the CFC for the relevant tax period, calculations of the effective corporate income tax paid by the CFC and the average corporate income tax paid and a residency certificate for the relevant tax period. Note that, all the documents must be translated into Russian and submitted to the tax authority within the time limit set for submission of the notification.
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