EN
This article deals with the causes and results of international tax avoidance through the controlled foreign companies (hereinafter referred to as KSZ) as well as the way of combating with this phenomenon. The main cause of the tax avoidance through KSZ is differentiation in the level of companies income taxation among the countries and territories from all over the world. As a results many of taxpayers decide to transfer their income from a residence country to the company established in preferential tax jurisdiction. This may lead taxpayers to increase an after tax return. By contrast, the main results of the tax avoidance via KSZ is an erosion of tax base leading to an enormous loss of tax revenues in KSZ's shareholders home country. Consequently, in order to curtail the abuse of companies established on an international level for the sole purpose of deferring taxation, some countries decided to introduce special anti-avoidance measures called controlled foreign companies legislation (hereinafter referred to as KSZ rules). In nutshell, KSZ rules can be defined as specific anti-tax avoidance measures that grant the right of shareholders' country to attribute certain income generated by KSZ to its shareholders and subsequently levy tax on it. The KSZ rules may be applied either by regarding the company as a transparent entity (disregarded legal entity/piercing the veil approach), or deeming a distribution of the undistributed profits generated by foreign company to the shareholder (deemed dividend approach). It should be noted that without the KSZ rules, taxation of income generated or received by a KSZ by the shareholders'country is deferred until the distribution of profits by the KSZ. Furthermore, if the KSZ is established in a jurisdiction that does not impose taxes or imposes taxes at the very low rates, for instance tax haven, or in a state or territory with lenient tax regime and the dividends are never distributed to the shareholders, the income is not subject to tax eventually.