Minister of Economic Development names factors that will make companies move to Russian offshores
The first companies to enter Russian offshores are those that face pressure on the part of foreign authorities, the Head of the Ministry of Economic Development believes. Also, the first residents of the Special Administrative Region (SAR) will be those that will not entail significant costs.
The first residents of the Special Administrative Regions (SAR) – Russian offshore zones created on the Russian Island in Primorsky Krai and Oktyabrsky Island in Kaliningrad – are ready to become either companies that face pressure on the part of foreign authorities or those for which the change of jurisdiction is not associated with high costs, Minister of Economic Development Maxim Oreshkin states during the Eastern Economic Forum, the correspondent of RBC reports.
“A new regime has been created, and it’s still unclear to people how it works, what needs to be done, there is no practice of re-registration of companies, so, first of all, there are those [companies] that face pressure on the part of foreign authorities. You have just mentioned Deripaska’s holding company, which is now changing its investments,” Oreshkin says at the Financial Center and Offshore in the Far East session.
Other types of residents of Russian offshore may be “those companies that could do it easily,” the Minister believes. “For example, we work with one of the groups in the Far East, in Vladivostok, so that it becomes the first resident here. It does not face large transaction costs,” the Head of the Ministry of Economic Development adds.
“Now it is essential to work out the practice, get the first re-registrations, then this regime will become more intelligible, more transparent, we will get many more companies that want to do it; on the other hand, we understand that the legislation has to be amended,” Oreshkin states.
The authorities do not have the purpose of “creating a black hole where the money will be hidden,” the Head of the Ministry of Economic Development stresses. “All data will be laid open for the state, for inspection bodies, there will be a full account of all flows both for the tax service and Rosfinmonitoring, which are actively working within the FATF mechanism,” the Minister says.
Oreshkin clarifies that the termination of the UC Rusal re-registration in the Russian offshore is expected about a month. “Now we are preparing all by-laws, there will be some clarifications, including legislation, so we are talking about October,” Oreshkin tells journalists.
The UC Rusal board of directors instructed to prepare a step-by-step plan to change the jurisdiction of the company from Jersey Island to Russia. The En+ Group board of directors has already approved the decision to transfer its Cypriot subsidiary En+ Holding Limited to a Russian offshore.
The government decided to create the SAR a month after the US Department of the Treasury put a number of large Russian companies and their owners, En+ of Oleg Deripaska and UC Rusal inclusively, into a sanction list.
Russian President Vladimir Putin signed a package of laws on the creation of Russian offshore zones on August 3, 2018. Only foreign legal entities can apply for residency on the islands. The minimum amount of investment in Russia should be at least 50 million rubles. Individual tax rates for income received by foreign companies in the form of dividends are set at 0%.
