Academic journal article Asian Social Science

International Tax Planning Methodology and Best Practices of Russian Economy Deoffshorization

Academic journal article Asian Social Science

International Tax Planning Methodology and Best Practices of Russian Economy Deoffshorization

Article excerpt


The purpose of the article is identification of the international tax planning methodology and methods of deoffshorization of the modern Russian economy in order to determine the direction of their improvement, taking into account the need to ensure the economic security of Russia. The article defines the tax planning objectives, content and technology. The article defines a place of the tax planning in the system of tax management. There is a definition of concept and content of the international tax planning as the tax planning method. We have analyzed the different techniques of the international tax planning, most commonly used by the Russian organizations, including the method of offshore. Using the analysis of current statistical data, we have assessed the impact of the international tax planning with the use of low-tax jurisdictions on the economies of capital donor country. There is an estimation of the Russian economy offshorization extent and effects in terms of the economic security. We have analyzed and characterized the tax methods of the Russian economy deoffshorization. The article provides specific recommendations on improving the new Russian methods of the offshore tax regulation and correction of the international tax planning methods under the new conditions - with respect to the improvement of the Russian CFC rules, the new rules on legal entity residence, and the beneficial owner.

Keywords: the international tax planning, the "treaty shopping", the Russian economy deoffshorization, the controlled foreign companies, the beneficial owner, the information exchange, the BEPS plan

1. Introduction

The tax planning is carried out in order to optimize tax payments (Babanin & Voronina, 2006), and individual taxes may be lowered for social support of the population and small businesses, and some taxes may be raised in connection with the current economic situation in the country.

The tax planning technology consists of the following procedures (Beskarovayny, 2006): analysis of the legal and regulatory information on the operations carried out; assessment of tax obligations imposed on the organization in transactions; optimization of operations including the tax liabilities; preparation of necessary documents and their background for the operations exercising and support; calculations and tax payment if necessary.

The tax planning involves "gating" the behavior of the taxpayer under elected favorable tax regime and therefore, in many cases, calls for business form or even content change. First of all, such changes shall deal with the features, which focus the tax laws in determining the tax liabilities of individuals and legal entities.

Firstly, it is the taxation object; these are transaction, property, income. Changing this object to the extent according to the circumstances, the taxpayer can choose a more advantageous tax mode and type.

Second, you can replace the taxation subject, i.e. the taxpayer. For instance, the organization may change its legal form from LTD to JSC. Changing the taxpayer subject may also be provided as a result of the reorganization of the legal entity.

Third, you can go from one tax jurisdiction to another. So the person, who retrieves his/her core business in any country, will be a non-resident in relation to the tax jurisdiction of the country, which allows the specified person to choose the taxation at-source mode.

Fourth, you can change the circumstances surrounding a particular taxable activity. In particular, it is possible when using various types of deductions, discounts, write-offs and other benefits, allowed in the determination of taxable income in order to calculate income taxes (Lipatova, 2011).

The tax planning may be considered as one of the main functions of the financial management. Figure 1 defines a place of the tax planning in the tax management system.

The tax planning as an integral part of the tax management helps to reduce the absolute number of payments in the budget by using the difference in the taxable bases and tax rates, tax exemptions stipulated by law, and similar factors, which are independent of the organization and are set by the state. …

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