From 4 August 2014, all Russian citizens will be required to provide the authorities mandatory notification about their foreign citizenship or residency status or risk criminal liability, according to a legal alert issued by Baker & McKenzie.

From 4 August 2014, all Russian citizens will be required to provide the authorities mandatory notification about their foreign citizenship or residency status or risk criminal liability. A legal alert by Baker & McKenzie, the law firm, spells out what the rules mean.

Under the law signed on 4 June by the president of the Russian Federation, all Russian citizens regardless of age living in the country who hold foreign citizenship, a residency permit or any other right allowing them to permanently live outside Russia, are required to report their residency status within 60 days of acquisition. Citizens who already hold foreign passports or residency permits when the law comes into force must also notify the Russian Federal Migration Service by 2 October.

The move comes shortly after the birth of FATCA, where citizens of the US must declare their financial accounts held internationally to the Internal Revenue Service or face a 30 per cent withholding tax.

The law firm said the implications for Russian citizens who fail to notify the RFMS of foreign citizenship or residency are potential administrative liability fines of up to RUB 1,000 (£17), or the harsher prospect of criminal liability, which carries a fine of up to RUB 200,000 (£3,411.40), or equal to a person’s total salary or other income for a period of up to a year. Alternatively, punishment for criminal liability could also come in the form of compulsory community service of up to 400 hours.

Unfortunately for Russian citizens, the legislation does not give guidance as to when non-compliance with the reporting obligations is subject to either administrative or criminal liability. According to Baker and McKenzie, a possible interpretation of the law suggests that “filing of the notification with the violation of procedure is subject to administrative liability, while non-filing of the notification at all is subject to criminal liability”.

As well as this, the country is set to introduce anti-tax avoidance measures by the end of 2014, including controlled foreign company rules and the beneficial ownership concept.