/ world today news/ Russian authorities have agreed to disclose data on the accounts and taxes of foreign citizens to their governments. TASS reports that in mid-May, at the forum of the Organization for Economic Cooperation and Development (OECD), Russia joined the system for automatic exchange of tax information according to the CRS (Common Reporting Standard) international standard. “Russian Diary” inquired about whom this decision affects in the first place.
Who will the new agreement affect?
As of 2017, the collection of financial information on the accounts of foreign individuals and legal entities in Russian banks will begin. In 2018, the information will be transmitted to the tax authorities in the countries participating in the agreement. So far, the contract has been signed by 82 countries, including Argentina, Belgium, Bulgaria, Great Britain, Germany, India, Spain, Italy, Korea, Portugal, France, Croatia. The full list of countries that have joined the CRS is published here:
Besides, it is not mandatory for Russia to exchange information with all the countries that have signed the agreement. Formally, the country must notify the countries with which it would like to exchange information as soon as possible, and the procedure will start only with mutual agreement.
What information will the banks pass on to the tax authorities?
According to the bill, which has already been prepared by the main tax department of Russia – the Federal Tax Service, banks and financial institutions must report on the investment income of their clients, on the sale of shares, on the balance of accounts, interest on deposits, bonds. But for this it will be necessary to clarify in advance who is the final beneficiary of the account or the securities.
If I am a foreign citizen, but I receive a salary in Russia, should I be worried?
If you are a resident of Russia, the information about your accounts is not subject to collection and analysis. But each country has its own rules for determining residency. To be considered a Russian resident, a foreigner must have a temporary residence or work visa and have settled in the country for at least a year, receive income and pay taxes in the Russian Federation. But there are also criteria that can serve as criteria for the person to be recognized as a resident of several countries (dual citizenship). Then you will probably have to pay taxes in your home country as well. For example, US citizens, regardless of where they earn income, are required to pay taxes in America.
How will the information be collected, are there forms to be filled out?
If you have less than $1 million in your account, the bank may only need information about your residency, that is, where you are registered and where you pay your taxes. If you have more than $1 million in your account, the bank may need more detailed information. Then its employees can call you and ask clarifying questions. And the data from accounts of legal entities with a balance of less than $250 thousand are not subject to analysis at all. And if you have decided to open a new account, you will have to fill out a special form, in which the questions mainly relate to residency.
What impact will this have on large foreign businesses operating in Russia?
If the foreign company operates in Russia through a subsidiary or affiliate that pays its taxes in Russia, the bank will not collect data. Only the accounts of holdings and trusts will be of increased interest, since with such forms of ownership the ultimate owner is not obvious. With a trust, there is a person to whom the property is transferred for trust management. And with the holding structure, there is a fragmented network of subsidiaries. In their regard, the main goal is to clarify who is the main controlling person, the ultimate beneficiary. This information will also be sought by the banks.
Why did Russia join the tax information exchange agreement?
The main goal is the fight against offshore companies, namely access to information about Russian owners of accounts in foreign banks. All those who agree to exchange data with Russia will receive information not only about their residents, but will also be obliged to share similar data about Russians.
In the preparation of the material, the comments of experts from E&Y, PWC, data from the OECD were used.
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