Business community to have a say on Russia’s 'deoffshorization'
MOSCOW, February 14 (RAPSI) – Russian President Vladimir Putin vowed during a meeting with a business leader Alexander Shokhin Friday that recommendations advanced by the country’s business community with regard to 'deoffshorization' will be taken into account, Prime business news agency reported on Friday.
Shokhin, Russian Union of Industrialists and Entrepreneurs leader, said during a meeting with the president that the business community will file its recommendations with the federal government.
“We are working on suggestions on Russian ‘de-offshorization’ at this point,” Shokhin said. He added that the business community supports the idea expressed earlier by Putin that while a company may be registered in any jurisdiction it wants, the capital should stay in Russia. As an option, companies registered in offshore zones may enter into special non-evasion agreements with the Russian tax authorities. Such companies may preserve their rights to take part in Russian state procurement bids, Shokhin said.
While addressing State Duma lawmakers in December, Putin said that companies registered in foreign jurisdictions while operating in Russia should be banned from government support, as well as participation in state procurement bids and contracts with entities in which state holds an interest.
At the meeting with Shokhin, the president stated that all of the recommendations must be thoroughly considered.
Companies may choose English law to govern contracts and may be free to opt for foreign litigation, but should pay taxes in Russia, the president said. If a company wants to participate in state procurement bids, it should reveal its beneficiaries in order to be cleared of suspicions, he added.
The problem of offshore zones was spearheaded by Putin in June 2013, when he announced on the heels of the G8 summit that Russia would tackle the problem by drawing up a national plan to deal with such tax havens.
“Legal entity X is registered in Cyprus, and then it turns out that what is registered in Cyprus is a subsidiary of what is registered on the Cayman Islands… It’s like a Russian matryoshka doll,” he said. "It is unclear what is at the end of it."
Russia’s Investigative Committee reacted in November with the proposal of a legislative ban on business that serves no other purpose other than obtaining tax exemptions in offshore jurisdictions, and the imposition of criminal liability on such business.