Rules of taxation of controlled foreign companies: A comparative study

Abstract

This article is aimed at generalization of foreign practices of taxation of Controlled Foreign Companies in order to solve a problem of capital outflow to low-tax jurisdictions and at further elaboration of recommendations on reforming a concept of tax residence in the Russian Federation. The article summarizes elements of national taxation rules set in such countries as France, Great Britain, Germany, USA, China and Brazil. The article detects shortcomings of the Russian rules concerning Controlled Foreign Companies and suggests ways of their remedy. It makes a conclusion that taking into consideration the Russian environment the rules concerning CFC being elaborated require careful revision with regard to recommendations of Organization of Economic Cooperation and Development which will be made in 2015 within the framework of a “Base Erosion and Profit Shifting” program.