The government of the Russian Federation: deoffshorization of the Russian economy will not be

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Правительство РФ: Деофшоризации российской экономики не будет

The government finally abandoned the idea of forcing companies from offshore to Russian jurisdiction, informs “Interfax” citing a source familiar with the related report of the first Vice-Premier Igor Shuvalov, Russian President Vladimir Putin.

According to the Agency, the Ministry of economic development and the Ministry of Finance has prepared a draft government resolution on approval of the criteria for determining systemic institutions of the Russian economy and their subsidiaries, which shall be under the jurisdiction of the Russian Federation, however, during “public consultations”, it was concluded that the use of coercive measures of the translation of a wide range of strategic organisations within the jurisdiction of the Russian Federation will create significant risks for the economy as a whole.

The report Shuvalov noted that the risks will occur due to the weakening competitive position in world markets and the fulfilment of contracts in the foreign field. In this regard, the adoption of common criteria “system” organizations named in this document “unreasonable”.

“Interfax” reports that the next report of the President done in pursuance of his instructions on the promotion of translation in the Russian jurisdiction system-forming organizations of Russian economy. This document supplements the presentations made in 2014-2015.

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As noted in the report, along with the “prior measures” designed to encourage voluntary use of the Russian jurisdiction, also adopted amendments to the laws “On joint stock companies” and “On limited liability companies”.

With this in mind, the report said, the government considered it sufficient at this stage, adopted in the 2014-2016 action incentive in order to increase the attractiveness of the jurisdiction of the Russian Federation of organizations of the Russian economy.

“Interfax” recalls that in the fall of 2015, the Russian Union of Industrialists and entrepreneurs (RSPP) expressed confirmed, the company informed the position that the forced de-offshore-isation shall apply only to enterprises of the military-industrial complex or the companies in which the share of state defense order more than 50 per cent of revenue over the three-year period.

“The introduction of a requirement for compulsory registration in the Russian Federation to other companies from the list of backbone organizations is inappropriate,” – said in a letter to the President of RSPP Alexander Shokhin, the Ministry to which the Agency refers.

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The head of the organization uniting the representatives of big business stressed that a number of systemically important companies are foreign subsidiaries engaged in core activities outside Russia, and this is due to their place of registration. In addition, some subsidiaries are enterprises with participation of foreign capital in connection with their transfer to Russian jurisdiction may result in the termination of cooperation, providing for the expansion of the Russian economy to other markets. In this regard, the RSPP was proposed in the first place, the stimulation of the transfer in the jurisdiction of the Russian strategic companies.

The first requirement of deoffshorization of the Russian economy, Russian President Vladimir Putin said in his Message to the Federal Assembly in 2013. Then, it was said that the companies with Russian assets that are registered in a foreign jurisdiction, in particular, should be denied the opportunity to receive state support, state contracts and loans of the Vnesheconombank.

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