State Duma backs idea to create tax havens in Russia for oligarchs affected by sanctions

State Duma backs idea to create tax havens in Russia for oligarchs affected by sanctions
The parliamentarians hope that Russian businesses will no longer be in foreign lands

The dedicated committee recommended that the draft be adopted in the first reading.

The State Duma Committee on Budget and Taxes gave a prior approval on the bill to create offshore centers in Russia that would have a special tax regime for Russian businesspeople affected by the sanctions. The deputies are poised to take the initiative in the first reading.

The document is scheduled to be considered Wednesday, July 18. The bill envisages the creation of zero-taxation zones on the Russky and Oktyabrsky Islands located in Primorsky region and Kaliningrad region, respectively. The initiative is expected to allow oligarchs to stop relying on foreign offshore territories.

Zero rates will be levied on dividends that international companies pay to their majority shareholders. To pay a zero tax a person would have to make sure they have owned at least 15% of the dividend-paying company for at least a year before the payment decision.

Besides, Russian businesspeople will be allowed to move their foreign outfits home, including offshore ones, while preserving their legal form; the company may be assigned an international status in this case. It is assumed that residents of the zones will only pay taxes on the profit they made in Russia.

It should be noted that the Central Bank did not support the initiative arguing residents of such offshore territories would be able to perform transactions with foreign currencies and securities without restrictions or the required revenue repatriation. It would be challenging to track dishonest entrepreneurs in this case, the Central Bank pointed out.

On April 6, the US extended sanctions on Russia; the list included 26 people and 15 companies. Following the initiative, investors started trading Russian assets, which provoked the "black Monday" in the Russian market, when the country’s wealthiest people lost about $16 billion in one day.

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