A new Federal law has entered into force. It introduces a number of amendments to the tax legislation in terms of clarifying the procedure for taxation of profit of the controlled foreign companies (Federal law No. 368-FZ dd November 9, 2020).
The concept of a foreign holding company has been corrected. It is understood as a foreign organization in respect of which the following conditions are simultaneously met:
- the share of direct participation of the Russian controlling entity in the authorized capital of this foreign organization is at least 75%;
- the share of this foreign organization in at least one foreign organization is at least 50%;
- the share of this foreign organization in other foreign organizations (if any) is at least 15%;
- the period of ownership of the above shares is not less than 365 calendar days.
It is also specified that the CFC’s notification is submitted by taxpayers-organizations no later than March 20 of the year following the tax period. Individuals submit a notification no later than April 30.
In addition, the procedure for requesting documents from taxpayers is defined. For example, a taxpayer must submit the requested documents within one month from the date of receiving the request.
Also, the specifics of calculating the amount of tax on fixed profit of controlled foreign companies are clarified.
The rules on investment deduction have also been explained. Thus, the taxpayer will be able to amortize the fixed asset in part of the costs of its creation (purchase), which were not taken into account when determining the deduction.