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New anti-offshore legislation, and the causes of the assets outflow

Offshore jurisdictions are used by business, not only for the optimization of the taxable base, but also for ensuring own safety and legal protection of the assets. However, the existing international practice poses new challenges and objectives for the business. Some of them are associated with the introduction of the anti-offshore legislation.

Anti-offshore legislation

The provisions of laws aimed at withdrawing companies from offshores and creating unfavorable conditions for offshore intermediaries, start to operate in practice, therefore entrepreneurs and businessmen are in search of new solutions. A real change of tax residence and transfer of assets into a tax-free haven are one of the most effective and use-proven tools for business.

The provisions, which are imposed by the international legal acts, provide for a number of the procedures aimed at opposition to offshore companies of the economy of the countries, in particular:

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  • the necessity of providing detailed information and data;
  • the improved system of administration;
  • the necessity of legalization and translation of the primary corporate documents into the national languages;
  • compliance of the business and financial accounting with the new requirements, etc.

The experts and analysts say that the actual change of the tax jurisdiction remains the most effective and use-proven way to save the financial assets. Many entrepreneurs understand that the change of the tax residence is the only way to ensure the confidentiality of information and the foreign international company is the only solution. For this reason, there is an outflow of the capitals into the low-tax jurisdictions.

The current legislation of the most countries provides that a tax resident lose his/her status in the case of being outside the country for a certain period, for example, 183 days. In some cases, the requirements on the number of days are different. Besides, there are also some additional regulations which differ depending on the country. In cases when a physical person loses the status of a tax resident, the rules of the law, which regulate the activity of the foreign companies, are not applied to him.

How to choose the most appropriate jurisdiction and avoid deoffshorization

Practice shows that when selecting a tax-free jurisdiction to register a controlled foreign company a private person, often makes a choice in favor of Cyprus, Switzerland, Malta, Monaco, the UAE, and the UK. Several criteria can be singled out among the key factors influencing the choice of the jurisdiction:

  • tax rate on the incomes of physical persons;
  • availability of the opportunity of the international tax planning (international agreements, etc.).


In the UK, the certain categories of persons are liable only to the taxes on incomes, which are transferred into the country. The Swiss government admits the possibility of contractual tax relationships with the resident. In this case, the tax rate can depend on many factors (number of created jobs, the amount of investments into the national economy, etc.). There is no tax on the most types of incomes for the UAE residents.

The low-tax jurisdictions have always been a double-edged sword. The decision to change the tax status and to withdraw the financial assets can be both the solution to all the problems, and the cause new ones. It should be noted that the modern countries work actively in order to identify the jurisdictions where there is an outflow of the financial assets and the lists of persons who withdraw the assets outside the country.

The accounts in the offshore banking establishments enable to manage the financial assets profitably and what is most important – efficiently, investing them or depositing for drawing the interests. Such accounts remain an effective tool for the secrecy of information, both from the fiscal authorities and from the ill-wishers. The current situation does not suit the countries with a high tax burden, what has led to the fight against offshore jurisdictions.

Despite the global nature of the measures aimed at opposition to the offshore business of the global economy, the bank accounts in the offshore banks are the main instrument for withdrawal and protection of the asset.

Powerful nations of our planet are interested in identifying their unfair taxpayers and returning the financial assets. But there is some objective difficulties and obstacles in achieving all these goals. One of the main problems of such counties is the lack of possibility to oblige all the world's banking institutions to provide the necessary information about their clients. Accordingly, it will be difficult to identify all the residents, who own the foreign accounts.

Deoffshorization in Russia

The term “deoffshorization” has been actively used in Russia since 2013, and the government measures defined by this concept are designed to impose restrictions and prohibitions on the illegal use of offshore companies and foreign companies by Russian residents.

The main tasks of the anti-offshore policy in Russia include:

  • enhance the transparency of offshore companies;
  • identify of real beneficiaries (actual owners of economic entities, assets, and other valuables);
  • expand international information and tax cooperation, etc.

Here are the main reasons that prompted Russian business to move to offshores:

  • the imperfection of domestic legislation;
  • poor investment climate;
  • poor-developed stock market;
  • corruption.

One of the most significant legislative documents adopted recently as part of the implementation of the national program for the opposition to the offshore business of the Russian economy is the law of November 24, 2014 No. 376 (on introducing amendments to the RF Tax Code). The main idea of this law can be put in 2 theses:

  • income received by residents of the Russian Federation in offshore should be taxed by Russian taxes;
  • the obligation to inform tax officials about the fact of direct or indirect participation in foreign companies arises from Russian taxpayers.

The “black list” in this law refers to the list of countries that:

  • provide preferential tax treatment;
  • do not disclose information when conducting financial transactions.

Thus, deoffshorization of the Russian economy is one of the directions of the government policy, designed to strengthen control over economic operations in offshore zones and create favorable conditions for business development in the Russian Federation.


The international analysts and experts recommend approaching even more thoroughly to the choice of the solutions for tax optimization. Despite all the recent changes, the offshore bank accounts and jurisdictions are in high demand in the international arena. An offshore account is one of the most effective methods to preserve the confidentiality of the information.

If you still have questions regarding the possibilities of the offshore jurisdictions and foreign bank accounts, use the feedback form and get an advice.

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