Russian minister of finance talks about deoffshorization and Cyprus

17.12.2013

Minister of finance of Russia stated that according to passing a raft of legislation related to Russian business deoffshorization, proposed by Vladimir Putin the budget revenue will increase by dozens of billion rubles. Also Anton Silanov added that Ministry of finance prepared three legislative initiatives against tax evasion of Russian company owners by registering offshores. The first legislative initiative aims to identify where a company actually produces, and if it turns out that it was produced in Russia, then the company must be considered as a tax resident of Russian Federation. The second legislative initiative is the following: if a foreign company resides abroad but is controlled in Russia and doesn’t pay any dividends to its parent company, then according to Anton Siluanov, the ministry of finance must demand the company to pay the taxes needed. Finally, the last legislative initiative links the guarantee of state aid to companies with disclosure of information about the ultimate beneficiary. All the initiatives mentioned above the ministry of finance plans to prepare and submit to the State Duma in the first half of 2014.

Minister of finance assured that Russia does not intend to nullify double taxation agreements with countries it has including Cyprus. Moreover, he explained that Cyprus is not on “a black list of offshores”. Russia already made an agreement with Cyprus about more detailed disclosure of information than it was before. In March of 2013 the Prime Minister of Russia stated that Russia could nullify double taxation agreement with Cyprus in the light of Cyprus crisis in the banking sector. Now there is no any need to do that as Anton Siluanov said. Also the minister of finance added that Russia has no double taxation agreements with classical offshores.

Based on:http://www.minfin.ru/ru/press/speech/index.php?id_4=20604

Expert’s opinion

Everyone remembers the story of Khodorkovsky and PricewaterhouseCoopers (PwC). More than 10 years passed. And legislation was not so progressive. But Khodorkovsky was arrested. So why do they need to pass new laws? Why do they need to propose something already existing?

If there is going to be a law which is passed by decision or instruction of a person, then passing laws or not passing leads to the same- the law is the same. But in case laws will be enforced in full measure without respect of persons, then in Russia the second Maidan will happen because representatives of Russian business will fight for their rights. And there will be deputies and public servants.

Do not break laws and pay taxes.

Yaroslav Lomakin ( Managing partner of Honest & Bright” company)