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FEATURE: Capital amnesty bill in the making
RBC, 16.03.2015, Moscow 13:18:17.Government officials and businessmen have drafted a bill on capital amnesty proposed by President Vladimir Putin in his address to parliament on December 4, 2014. The bill will be discussed at a meeting chaired by First Deputy Prime Minister Igor Shuvalov at the beginning of this week, a federal official and a representative of Shuvalov's office told RBC. The government officials have yet to adopt a unified stance on the capital amnesty procedure, three federal officials said. The bill currently under discussion calls for an amnesty for Russian and foreign citizens, and persons without citizenship, as well as Russian and foreign legal entities. Taxpayers will have to fill in a special form and declare their taxable assets and activities that were not declared previously, as well as unjustified expenses and other cases of the reduction of tax amount the taxpayer was obliged to pay, and cases of failure to pay a tax on property located abroad, including the property that is no longer owned by the taxpayer as of the tax return date, and information about foreign sources of income and foreign property obtained in violation of the law. The special form may contain data not only on the taxpayer but also on other persons. This provision possibly aims to extend capital amnesty guarantees to other persons related to a disclosed asset or a transaction, EY tax and law partner Marina Belyakova commented. For example, if an owner discloses information about a foreign organization that received income from Russian sources, tax risks may arise for such sources. The tax return must be filed once before June 30, 2016 and information provided in it must relate to the period before January 1, 2015. "Amnesty will apply to all tax crimes committed before the presidential address on December 4," business ombudsman Boris Titov said in February. "Before filing a tax return taxpayers will be required to estimate and make a declaration payment amounting to 1% of undeclared asset value or unpaid taxes." Government officials and central bank employees who hold an office for ten years before the tax amnesty law takes effect will be subject to an inspection by the Federal Financial Monitoring Service. The same applies to their relatives and former spouses. The service will be also obliged to start an investigation of declared cash and property in a country that does not exchange tax information with Russia or included in a list of Financial Action Task Force (FATF). Additionally, an original provision requiring law enforcement agencies to inspect assets worth over $5m was removed from the updated version of the bill. The value of an asset in itself cannot be the reason for an investigation, a federal official commented. "The $5m threshold would render the campaign unpopular among large businessmen. Since the amnesty is announced by the president as part of a backshoring effort that targets primarily large Russian groups and owners of large assets this effect would be undesirable," Belyakova opined.
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