By the end of this year, the government will introduce to the State Duma a number of innovations that can contribute to the offshoring of the Russian economy. In this respect writer RBC with reference to the relevant plan of the authorities.
The document is titled “Plan for the Implementation of Additional Measures to Accelerate the Transfer of Business Assets in Key Sectors and Branches of the Economy to the Russian Jurisdiction”. It was developed by the Ministry of Economic Development and approved by First Deputy Prime Minister Andrei Belousov. The document was prepared on behalf of Russian President Vladimir Putin, who mentioned this in a message to the Federal Assembly in February 2023.
The government’s offshorization plan includes four blocks of measures – tax incentives, protection of Russian shareholders, simplification of relocation to private areas and fine-tuning of international funding.
Ilya Torosov, First Deputy Minister of Economic Development, stated that the innovations are aimed at increasing the attractiveness of the Russian ATS, which are two regions with a special regime in the Kaliningrad region and Primorsky Krai. According to him, this will help solve 90% of current problems in corporate governance.
A large block in the new measures is devoted to tax incentives for businesses.
The first part includes compensation to businesses if they break double taxation avoidance agreements with hostile countries. The Cabinet of Ministers plans to submit such a draft law to the State Duma in October 2023, specific measures have not yet been determined. The Ministry of Finance and the Ministry of Foreign Affairs have proposed suspension of the deals in response to the sanctions. A presidential decree suspending these agreements (including some EU countries, the United Kingdom, Singapore, Switzerland, Japan and the United States) has yet to be signed. Retained partner Donat Podniek acknowledged that it is possible to introduce the possibility of unilateral deduction in Russia of income tax paid in countries that have suspended the agreement.
The second block of tax measures provides for the introduction of a “special tax regime” associated with the purchase of shares by individuals and legal entities with neutral tax consequences. The measure makes possible the tax-free transfer of Russian assets from a controlled foreign company. Residents of Russia will be able to take ownership of their assets through these companies. Furthermore, the new regime could include, among other things, expanding the benefits of imposing a zero income tax rate when selling assets (interest/shares) in domestic companies only to sanctioned persons.
Other measures include introducing a special regime for taxing personal funds and adjusting the tax regime for international funds in the PA to eliminate double taxation. Authorities are also developing mechanisms for companies to more actively sign up for SAR.
ATS appeared in Russia in August 2018 on the Russky (Primorsky District) and Oktyabrsky (Kaliningrad Region) Islands. The main purpose of their creation was the removal from the sea of foreign entities controlled by citizens of the Russian Federation and having assets in Russia, including as an anti-sanction measure.