How will deoffshorization 2026 affect business?

• A foreign company remains a legal instrument for a Russian resident. However, something has changed: ownership is no longer cheap and inconspicuous, and its value is now measured in terms of money, reporting, and legal time.
• The baseline figure for the new regulation is 15 percent. A profit tax rate in the country of incorporation below this level partially covers the exemptions for CFCs, and transactions with such counterparties exceeding 120 million rubles per year are considered controlled, even between independent parties.
• The UAE has been removed from the Ministry of Finance's list of offshore zones as of January 1, 2026, and the withholding tax on dividends, interest, and royalties has been reduced to 10 percent.
• Traditional island jurisdictions are losing not so much benefits as infrastructure: the BVI, Bermuda, Gibraltar, and Turks and Caicos Islands have been removed from the Federal Tax Service's automatic tax exchange list as of December 22, 2025.
• Fines are no longer symbolic: 500,000 rubles for notifying a CFC, 500,000 rubles for unverified profits, 1,000,000 rubles for documents requested by the tax office.
• A working strategy isn't searching for a new safe haven, but rebuilding the structure around real operations: where are the people, where are the decisions, where is the revenue.

Deoffshorization 2026: How it Affects Business

The short answer to the question that worries foreign company owners: deoffshorization doesn't prohibit you from having a foreign structure; it deprives you of the opportunity to do so for free and silently. The government no longer fights the very fact of registering a company abroad; it consistently raises the price of opacity. If a structure relies on real operations, personnel, and contracts, it works and generates profits. If it existed solely for the sake of low rates and invisibility, 2026 makes it unprofitable.
We at IT-OFFSHORE analyze such structures daily and see a recurring pattern: a company was registered 6 or 8 years ago for a purpose that no longer exists, yet expenses and risks continue to accrue. Below is what has truly changed and what can be done about it.

What has changed in the rules for owning a foreign company?

The changes over the past year have not been sweeping; they have been made through targeted amendments to the Tax Code. The main package is Federal Law No. 425-FZ of November 28, 2025, some of whose provisions came into effect on January 1. These amendments have redefined the economics of owning a foreign legal entity.

Exemption of CFC profits now pegged to a 15 percent rate

Previously, active foreign holding companies exempted their profits from tax in Russia based on formal ownership structure criteria. Now, a requirement has been added to the third paragraph of clause 7 of Article 25.13-1 of the Russian Tax Code: in the country of permanent residence of such a holding or subholding company, the profit tax rate must be no less than 15 percent.
The practical effect is simple. A holding company in the British Virgin Islands or the Seychelles, which previously qualified for this status, will lose this exemption starting in 2026. Holdings in Cyprus, on the other hand, are being handled. Effective January 1, 2026, Cyprus raised the corporate tax rate from 12.5 percent to 15 percent, exactly matching the global minimum. The difference between 14.9 percent and 15 percent ceased to be arithmetic and became legal.
We would also like to remind you about the effective tax exemption. It applies if the CFC's actual tax burden is at least 75 percent of the weighted average Russian rate. With the basic corporate income tax rate at 25 percent, the benchmark has shifted upward, and many entities that easily passed the audit at a 20 percent rate are no longer eligible.

Transactions with low-tax countries were automatically subject to oversight

The second amendment affects even those who do not have a CFC at all. Effective January 1, 2026, under subparagraph 3 of paragraph 1 of Article 105.14 of the Russian Tax Code, a transaction is considered controlled if the counterparty is registered or is a tax resident of a country with a profit tax rate equal to or lower than 15 percent. Interdependence is no longer required. The threshold is 120 million rubles in income from transactions with one party per calendar year.
Previously, this criterion was tied to the Ministry of Finance's list of offshore zones, and it could be circumvented by selecting a country off the list. Now, the criterion is mathematical. It includes Cyprus with its 15 percent rate, because the wording is "equal to or lower," the UAE with its corporate rate of 9 percent, Hong Kong with its two-tier scale, Ireland, and Georgia under certain regimes. For a Moscow-based trading or IT company purchasing from a supplier in Dubai or paying for development in Yerevan, this means a new obligation: notification of controlled transactions and the willingness to justify the market price. The deadline for filing notifications for the past year is May 20.

Minimum Tax for International Group Members

The third section concerns large businesses. A Russian member of an international group of companies is required to pay an additional tax up to the effective rate of 15 percent if the parent company is located in a country that has implemented Pillar II rules, the group's consolidated revenue exceeds €750 million for the last two years, and the Russian member's effective rate, taking into account all incentives, is below the threshold. The additional payment is distributed as 5 percent to the federal budget and 10 percent to the regional budget.
An important detail that is often overlooked: stabilization clauses for investment projects do not apply to these rules. A company with agreed-upon preferences may receive additional tax where it thought the issue was closed for years to come.

An IT-OFFSHORE Practitioner's Perspective

Over the past 18 months, dozens of owners have approached us with the same request: "Find a jurisdiction that doesn't have any of this." There are no such jurisdictions left, and selling them would be dishonest. What remains are jurisdictions where your specific model works profitably and predictably. The difference is fundamental. A UAE company for trading with Asia, an Estonian LLC for reinvesting profits, a Hong Kong structure for settlements with Chinese factories—these are different instruments for different purposes, and they should be selected based on the business, not the tax rate in the advertising table. We begin our work not with a registration price list, but with an analysis of where the money is coming from, who signs the contracts, and where the people are physically located. Sometimes the consultation results in a recommendation not to open anything.

How deoffshorization is changing the economics of ownership

Owners typically calculate a company's value as the sum of registration and annual renewal fees. The actual value is calculated differently, and it is this that determines whether the structure is worth its existence.

Fixed Tax and Its New Price

The personal income tax regime for CFCs' fixed profits is available to individuals and allows them to pay a fixed amount without proof of actual financial results. Starting in 2025, the amount depends on the number of companies: 5 million rubles for one CFC, approximately 10 million rubles for two, approximately 15 million rubles for three, approximately 20 million rubles for four, and 25 million rubles for five or more. The upper limit does not increase, regardless of the number of companies.
This regime applies for a minimum of five tax periods; the tax is paid even in the event of a loss or complete inactivity, and all exemptions under Article 25.13-1 of the Tax Code are not available under this regime. Hence, a simple rule: a flat tax is justified when foreign assets are highly profitable and is absolutely disadvantageous for the owner of several dormant companies. If you have four inactive companies, it's cheaper to liquidate them than to pay for five years for the privilege of not reporting them.

Expenses that aren't visible at the outset

The ownership budget consists of an annual fee, secretary and agent services, a legal address, report preparation, audit (if required), translations and apostilles, banking services, and compliance. Added to this is the Russian component: preparing notifications, calculating CFC profits according to Chapter 3.4 of the Russian Tax Code, and handling tax inspectorate inquiries.
When a company generates 3 million rubles in profit per year, and the total cost of its maintenance and support approaches 1.5 million, the question of feasibility disappears. We calculate this cost before registration and present the figures for a specific jurisdiction, not as an average.

Jurisdictions: Who Gained and Who Lost

The map of international structuring has changed more dramatically over the past two years than in the previous decade. Moreover, this shift has been both in favor and in favor—some countries have become more convenient for Russian business, while others have fallen out of favor.

The UAE has been removed from the list of offshore zones

The agreement on the elimination of double taxation between Russia and the UAE, signed on February 17, 2025, entered into force on July 18, 2025, and is applicable from January 1, 2026. The withholding tax rate on dividends, interest, and royalties is capped at 10 percent, up from the previous 15 percent for dividends, and up to 25 percent for interest and royalties. Royalties are interpreted broadly and include payments for the lease of industrial and commercial equipment.
Subsequently, the Ministry of Finance removed the UAE from the list of offshore zones for transactions concluded from January 1, 2026. This opens the application of a zero tax rate on income from UAE subsidiaries for Russian holding companies, and CFC profits in the UAE can now be supported by audited financial statements. At the same time, the 9% corporate rate leaves the UAE counterparty within the scope of controlled transactions—there is a benefit, but it does not negate the reporting requirement. Details on company forms are available on the UAE registration page.

Cyprus Raises Rate and Retains Role as a Holding Platform

The Cyprus reform, passed by parliament on December 22, 2025, raised corporate tax to 15%, reduced the defense contribution on dividends to 5%, abolished the deemed distribution tax, extended the loss carryforward from 5 to 7 years, and retained the IP Box regime. For holding and licensed entities, the overall package is neutral or beneficial, while for simple trading companies, the burden has increased. The restriction remains the same and falls outside Cyprus's tax jurisdiction: most provisions of the agreement with Russia have been suspended by Decree No. 585 of the President of the Russian Federation dated August 8, 2023, along with 37 other countries. Therefore, a Cyprus company in 2026 is a working instrument for transactions within and outside Europe, but not a channel for preferential payments from Russia. We have compiled the current parameters on our page on company registration in Cyprus.

Island jurisdictions are losing infrastructure

By Order No. ED-7-17/883@ of the Federal Tax Service dated October 14, 2025, effective December 22, 2025, Bermuda, the British Virgin Islands, Gibraltar, and the Turks and Caicos Islands have been excluded from the list of countries eligible for the automatic exchange of financial information. Moldova, Mongolia, Kenya, Uganda, Thailand, Papua New Guinea, Senegal, Trinidad and Tobago, and Sint Maarten were simultaneously added to the list.
This may sound like a technical development, but the consequences are significant. Exemptions requiring information exchange no longer apply to companies from the removed jurisdictions, and profits must be confirmed with audited financial statements, including the corresponding expenses. Traditional offshore jurisdictions haven't been banned; they've become expensive to maintain and weak in defending their position against inspectors.
We're also keeping another date in mind: a special list of offshore zones comprising 40 countries, approved by Order No. 35n of the Ministry of Finance dated March 28, 2024, applies to the tax periods of 2024, 2025, and 2026. Relying solely on this list to plan your structure three years in advance is currently unwise.

Information Exchange: Why Counting on Invisibility Doesn't Work

The argument "our country doesn't exchange information with Russia" is becoming less and less common, and this reflects reality. Even where automatic exchange doesn't exist, information is obtained through other means—through bank compliance, specific requests, payment data, and open beneficiary registries.

What the Tax Service Sees Without a Single Request

Through the automatic exchange channel, the Federal Tax Service receives the account holder's identification, balances, turnover, and certain types of income. This data is then compared with submitted notifications and declarations. Discrepancies between the existence of a foreign account and the absence of a CFC notification are detected algorithmically, without the involvement of an inspector.
The absence of a country from the automatic exchange list does not provide relief. For CFCs from jurisdictions that do not provide exchange, the law imposes stricter requirements for income verification and eliminates some exemptions. Switzerland, the UK, and the US do not exchange financial information with Russia, and this works against the owner, not in their favor.

Account Reporting and Currency Rules

Russian currency residents must annually submit reports on the movement of funds and other assets in foreign accounts, including brokerage accounts and accounts with other financial institutions. The deadline for individuals is June 1. Notification of participation in a foreign organization must be submitted within three months of the date of participation. Organizations must submit CFC notifications by March 20, and individuals by April 30.
It's worth keeping the following penalties in mind: 50,000 rubles for failure to notify participation for each company, 500,000 rubles for failure to submit or an inaccurate CFC notification, 500,000 rubles for the absence of documents confirming profit or loss, 1,000,000 rubles for failure to submit documents upon request of the tax office, and 20 percent of the unpaid tax, but not less than 100,000 rubles, for failure to include CFC profits in the database. A one-day delay in notification costs more than a year of company support.

What should a structure owner do right now?

There's no one-size-fits-all solution, and anyone who offers one in a single paragraph is skimping on your situation. But the sequence of actions is the same for a Moscow-based trading company, a foundation, and an IT developer with foreign clients.

Audit: 6 questions about the current structure

Start with an honest inventory. What task is each legal entity solving today, not five years ago? What is the corporate income tax rate in the country of incorporation, and does it meet the 15% threshold? Does this country exchange financial information with Russia? Do turnovers with foreign counterparties exceed 120 million rubles per year per entity? Have all notifications been submitted, and have confirmations been preserved? Who actually makes management decisions, and where is they located?
The last question is the most inconvenient. If the director of a foreign company is located in Moscow and signs contracts from there, the risk of having a permanent establishment or Russian tax residency recognized as the company ceases to be a theoretical one. A formal nominee service doesn't solve this problem and, in some cases, exacerbates it.

Three scenarios and how to choose between them

The first scenario is to preserve and strengthen. Suitable when the company has real operations behind it: employees, an office, contracts with local and regional clients. The work is limited to establishing an economic presence, accurate reporting, and preparing documentation for controlled transactions.
The second is to change jurisdiction. This is logical when the model itself is viable, but the country of incorporation is no longer suitable: it has dropped out of the automatic exchange, is subject to a suspended agreement, or has lost banking access. Hong Kong, Singapore, the UAE, Kazakhstan, Armenia, Serbia, and Georgia are all suitable jurisdictions—the choice depends on the geography of revenue and the bank's requirements. A separate option is redomiciliation to the special administrative regions on the Russky and Oktyabrsky Islands with the status of an international holding company.
The third is to close. This is the most undervalued and often the most profitable. Liquidating three dormant companies saves money, the risk of fines, and time on reporting. We regularly recommend this approach when the figures show that the structure has been operating at a loss for a long time.

How we handle such projects

We don't start by selling the company. The first step is to analyze your model: where the money comes from, who the counterparties are, which banks have already rejected you and why, and what obligations to the Russian tax authorities have already arisen. The second step is to calculate the total cost of ownership using two or three options, specifying exactly what you receive and how you pay. The third step is registration or restructuring with account opening and integration of processing, and, if necessary, licensing for financial, crypto, or gambling activities.
For clients in Moscow, meetings and work are available during Moscow time. Call +7 495 001-22-29. Documents, apostilles, and shipping are arranged remotely; in-person presence in the country of registration is generally not required. Ready-made companies with open accounts are available in the ready-made solutions section, and you can learn more about our approach and team composition onthe company'spage.