At the Business Russia forum, President Vladimir Putin supported the idea of extending capital amnesty for 2020, which should encourage businesses to actively transfer their resources to the Russian Federation. Initially, it was assumed that such conditions would be valid until March 1, 2019, but, as it turned out, businessmen do not mind taking the opportunity provided to them to relieve themselves of responsibility for violations of tax, currency and economic laws. In this regard, the president considers it appropriate to develop a new bill, under which the amnesty of capital will be extended until 2020.
Prerequisites for extending the term
The outflow of capital is one of the key problems of the Russian economy. In the absence of applicable legal norms guaranteeing the inviolability of private property, entrepreneurs are forced to register their assets abroad and transfer production there. To stop the outflow, it was decided to allow businessmen to voluntarily declare all their foreign assets (securities, real estate) in the manner prescribed by applicable law. At the same time, the state was not interested in the source of funds and even exempted individual citizens from criminal or administrative liability.
And this decision turned out to be extremely successful, which can become the basis for extending the amnesty of capital until 2020 for individuals: only for the period from July 1, 2015 to June 30, 2016 (the first stage), more than 7 thousand declarations from citizens were received and processed that have foreign assets. And although there is no data on the results of the second stage, which ended on February 28, 2019, in secret conversations, tax officials say that this process is very popular and the third stage needs to be launched, given that over that time more than 10 billion euros were declared in bank accounts.
Russian business abroad is under constant pressure, facilitated by economic sanctions. And at the moment, acceptable conditions have been created for his comfortable transfer to the Russian Federation without paying taxes and fines.
Due to the fact that not all companies managed to complete all the necessary operations before the end of the second stage and there are still those who wish to transfer assets to Russia, the government decided that in such a situation it is worth thinking about extending the amnesty of capital until 2020. Additionally, it is considered the possibility of exempting citizens from personal income tax on profits received from foreign companies if they become tax residents of the Russian Federation in 2019. But businessmen have the right to hope for loyalty only if the business is transferred and registered in special administrative regions where all the necessary conditions are created for companies returning under Russian jurisdiction.
Special Administrative Areas
The sanctions in 2018 did not pass without a trace for the Russian economy: several large companies (including En +, owned by Oleg Deripaska) fell under their influence, as a result of which it was decided to create special areas (ATS) in the Kaliningrad region and Primorsky Territory with acceptable conditions for business development.
A mandatory requirement for a “change of registration” of a company registered abroad is an investment of at least 50 billion rubles. into the economy of the region.At the same time, they will be able to not pay taxes on the sale of assets even when receiving dividends, and when they are paid, the tax rate will be only 5%. An additional bonus of capital amnesty is complete confidentiality, and this condition will continue in case of extension of this period until 2020.
Currently, there are two registered residents in special districts: Finvision Holdings - a shareholder of Vostochny Bank, which moved to Russky Island from Cyprus, and Adanimov Trading Limited is listed on Oktyabrsky Island.
Third stage
Apparently, the extension of the capital amnesty for 2020 is a settled issue, since a bill is already being prepared on changing the originally set deadline. And a kind of driver of the third stage will be sanctions, which only intensify against the backdrop of the negative attitude of foreign partners to Russian business. The introduced requirement for an economic presence, which was adopted in a number of offshore jurisdictions at the end of 2019, will play a role: under pressure from the EU, such zones established requirements for residents not only to open offices in their territories, but also to hire employees to carry out business activities. And since there is a high probability that other offshore zones will follow this example (that is, it will not be possible to simply transfer from one zone to another), Russian companies will willingly support the government’s initiative and take the opportunity to transfer capital to the Russian Federation with minimal consequences and losses.
Moving to the Russian offshore is also an opportunity for companies to close without paying taxes and reduce their financial losses. It is possible that over time they will even be able to rely on certain tax benefits, for example, they will receive the right to transfer assets to individuals or conduct internal restructuring without fiscal payments.
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