By year’s end, a government package will be sent to the State Duma featuring several initiatives meant to shift more of the Russian economy into its own jurisdiction. This summary, drawn from official planning documents, outlines the core ideas behind the plan.
The plan is titled “Plan for Implementing Additional Measures to Accelerate the Transfer of Business Assets in Key Sectors and Branches of the Economy to the Russian Jurisdiction.” It was prepared by the Ministry of Economic Development and approved by First Deputy Prime Minister Andrei Belousov, with the backing of the President in his February 2023 Federal Assembly message.
The strategy lays out four clusters of actions: tax incentives, protection for Russian shareholders, simplification of relocation into private sectors, and tuning of international funding channels.
Ilya Torosov, First Deputy Minister of Economic Development, explained that the innovations aim to boost the appeal of Russian ATS districts, notably the Kaliningrad region and Primorsky Krai, which maintain special regimes. He suggested that these steps could address a broad range of corporate governance challenges and streamline operations across the economy.
A central chunk of the new measures focuses on tax incentives for businesses operating under the plan.
The first component proposes compensation for businesses when they face double taxation restrictions with certain states. The Cabinet plans to present this draft law to the State Duma in due course, though concrete measures have yet to be finalized. In response to sanctions, the Ministry of Finance and the Ministry of Foreign Affairs have floated suspending relevant treaties. A presidential decree suspending select agreements with some EU countries, the United Kingdom, Singapore, Switzerland, Japan, and the United States remains under consideration. Acknowledging the need for flexibility, a leading tax official hinted at the potential for unilateral income tax deductions in Russia for payments tied to jurisdictions that suspend their treaties.
The second block envisions a “special tax regime” connected with shares bought by individuals and legal entities, designed to yield neutral tax consequences. This regime would enable a tax-free transfer of Russian assets out of controlled foreign companies and allow Russian residents to reclaim ownership of such assets. It also contemplates expanding benefits such as zero income tax on selling assets like interest and shares in domestic companies to sanctioned entities under certain conditions.
Additional measures include a unique regime for taxing personal funds and adjustments to the tax framework for international funds entering the private sector to prevent double taxation. Authorities are actively developing mechanisms to encourage a greater number of companies to engage with the planned regime for asset transfers and investments.
The ATS concept has existed since August 2018, operating in two island zones: Russky Island in Primorsky Krai and Oktyabrsky Island in Kaliningrad. The primary aim has been to remove foreign entities, controlled by Russian citizens and holding assets in Russia, from the broader maritime environment and to act as a safeguard against sanctions impacts.
As the government proceeds, observers note that the plan seeks to strengthen domestic capital channels while offering a structured route for asset relocation, with an emphasis on clarity, oversight, and national control over strategic assets. The evolving framework emphasizes safeguarding state interests and ensuring governance remains aligned with Russia’s broader economic strategy. Attribution: Official planning documents and public statements by the Ministry of Economic Development and the Office of the President.