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The number of countries transmitting information about tax residents to Russia has increased

The organization for economic cooperation and development (OECD) continues to fight tax evasion and illegal profit-withdrawal schemes. One of the methods is the automatic exchange of information about foreign accounts, which Russia has been participating in since 2018. Tranio experts told about the news concerning persons holding foreign accounts.

In most cases, investments abroad involve the creation of foreign companies and opening accounts in foreign banks. Invoices may be required to purchase real estate or pay for utilities.

Tax authorities can get information about their residents in several ways. One of them is through the automatic exchange of financial information about the availability of accounts opened in another country. In this case, the tax service receives data upload about all residents at once.

Information is transmitted about individuals to the country of their tax residence.

This rule also applies to companies that have foreign accounts:

If more than 50% of the revenue comes from passive sources (such as dividends or rental income), the data is sent to the country where the organization is a taxpayer, as well as to the countries of residence of its beneficiaries.
If more than half of the income is generated by active activities, the information is sent only to the state at the place of tax residence of the company.
The tax service can also get data about a specific resident. Data is received on the basis of individual requests: if the tax service has reason to believe that a resident has undeclared income abroad and funds were obtained illegally, a request is formed and sent to the tax service of the country where they may previously be held.

The possibility to request such information exists within the framework of agreements concluded: for example, the Convention on mutual administrative assistance in tax matters of 25 January 1988 or agreements on the avoidance of double taxation concluded between countries.

Key points about automatic data exchange in Russia for 2018-2019
58 countries provided Russia with financial information about the accounts of Russian residents in 2018 for the past 2017;
In 2019 and 2018 more than 70 jurisdictions passed information on foreign accounts and assets of Russians to the Federal tax service of Russia;
Russia sent information about non-resident accounts to 50 countries in 2018 (for 2017);
For the same period last year in 2019, Russia transmitted information to 58 jurisdictions. Austria, Switzerland, and Latvia were added to the list of partner countries.
In early 2019, the Head of the Federal tax service Mikhail Mishustin said: “during 2019, the data received will be embedded in the risk profiles of the Service for effective use in control and analytical work. In this regard, work has already begun on the creation of the project “system of identification of persons and risk profiling of information received within the framework of international automatic information exchange”.

The OECD presented the preliminary results of the launch of the financial information exchange program in the summer of 2019. According to their analysis, in 2018, the participating countries transmitted information about 47 million offshore accounts, the total value of which is 4.9 trillion euros. So the tax authorities were able to Supplement the budget with fines, taxes and penalties for 95 billion euros.

According to the Organization, with the introduction of automatic exchange, the number of deposits that people hold in tax havens has decreased by 20-25%.

News of financial information exchange between Russia and foreign countries for 2019
The UK refused to exchange data with the Russian Federation. One of the officially announced reasons is doubts that the received information will be used within the law, and not for other purposes;
The Swiss Parliament allowed the transfer of information to Russia, the first exchange between the countries began in September;
Participants of the CIS countries, including Russia, signed a Protocol on the exchange of information. The document provides that now the tax authorities of the CIS countries will automatically provide and receive information about the income of individuals and legal entities, as well as information about certain types of property and its owners.

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