the Finance Ministry wants to close a loophole that allows you to display dividends to offshore without taxes is to pay them as if the money was meant for the Russian company, and to use existing in Russia the benefits of. Such amendments to the Tax code the Ministry of Finance has published on

the Bill has not yet been considered in the government, said a spokesman for the Ministry, he is now publicly discussed and coordinated with other agencies.

While such a cross-cutting approach did not become popular — to save on taxes allow a standard mechanism for the agreements on avoidance of double taxation by which capital is pumped in transit through low-tax jurisdictions offshore. But next year, these usual mechanisms will be destroyed at the instruction of President Vladimir Putin, Russia will begin to revise agreements and increase in them the tax rates on dividends and interest to 15%.

the Agreement with countries that will not agree to such changes shall be terminated, and then the tax rate will be 15%.

In this regard, the popularity of “cross-cutting” approach could grow, said the consultants. For this foreign structure should declare that the actual recipient of income is not she, but another person, for example, a Russian company. And then you can use Russian rates, including a zero tax rate on dividends. This exemption applies if 50% of “daughter” belongs to the Russian company at least one year. Many have already begun to use such “cross-cutting” approach, said KPMG partner Anna Voronkova.

But the Ministry of Finance decided to play in advance. The proposed amendments exclude from the Tax code the ability to use a zero rate for dividends paid to a foreign company, if the actual right to them belongs to tax residents of Russia. In this case, these dividends will be withheld tax at a rate of 13%. Amendments should exclude a situation when the Russian company transfers the income of foreign companies, and the tax is not paid, explains partner, EY Marina Belyakova.

the Amendments were developed in accordance with the direction, which was marked by Putin: to protect the national tax base, explains the representative of the Ministry of Finance. This trend was set and a plan of the OECD to combat tax base erosion (BEPS), he notes, in many countries such measures are already applied.

During the work on amendments the text was even stricter: in the first version of the preferential rate on dividends is preserved for companies registered in the Russian offshore — special administrative regions in Vladivostok and Kaliningrad. In the latest version of the bill, and this benefit was excluded.

Impact they can ��reduplicate consultants. For example, the Russian participants of joint with foreign companies have to pay dividends 13% tax, says PwC partner Ekaterina Lazorina. A Cyprus company is often used for structuring joint ventures, tells Voronkova, including using them to take out loans in Russian banks for the purchase of Russian assets (including as banks easier to structure deposits under English law). For service credit, the Russian company pays dividends to Cyprus and the Cyprus company is already calculated with the Bank, explains Voronkova: if the changes are approved, you will have to increase dividends to service such a loan.

Use end-to-end approach may be risky now, says partner “PUC examination” Rustam Vakhitov. If the foreign company voluntarily agreed that they have no right to received dividends, it can be claimed from past periods, the accrued fines, he warns.