State Duma Deputy proposes to make offshore zone in Crimea

State Duma Deputy proposes to make offshore zone in Crimea
Deputy Aleksey Chepa wants to create an offshore zone in the Crimea

Aleksey Chepa said the initiative was aimed to "fight the sanctions."

State Duma Deputy Aleksey Chepa, the Deputy Chairman of the House Foreign Affairs Committee (from the party A Just Russia), formed a package of bills to create an offshore zone on the Crimean peninsula, Kommersant reported.

The new initiatives suggest creating trusts in the Crimea that would allow their investors to remain anonymous. Thus, entrepreneurs would be able to bypass the Western sanctions.

In addition, the authors of the initiative propose a number of amendments to Tax Code and Civil Code. The proposed to introduce a new type of LLC called "International Company" to the Civil Code, and to add articles "International Trusts" (an organization and trust funds transferred to it by other persons) and "Family Funds" (an organization aimed to manage the assets of the fund's creator, his family "or other persons he indicated"). Such organizations will have to register with the tax authority at their actual location. In the event that such companies are located abroad, they will be recognized as non-residents.

The authors of the bill propose to introduce additional benefits on the peninsula, which would be indicated in the new chapter "International Transit Zone" (ITZ). The ITZ includes certain sections of a free port with specific business regulations.

Another innovation in the Crimea may allow activities that are impossible in the rest of Russia, namely operations of foreign companies, banks and funds without licenses (if they have such in their country). In addition, those who have invested more than 1 million euros in Crimean bonds would be able to obtain Russian citizenship in a simplified procedure.

The initiatives have already been heavily criticized. As the experts pointed out, the potential laws run counter to the G20 and OECD’s work to combat offshore companies and may lead to a break in cooperation on the information exchange project. To these claims, the initiative’s author Aleksey Chepa replied that his bills were aimed at fighting Western sanctions rather than at creating offshores.

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