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Russian offshore zones on Russky, Oktyabrsky Islands to open in autumn, vows minister

July 10, 14:49 UTC+3 MOSCOW

Russia’s special administrative regions, pegged as alternatives to foreign offshore zones, will be launched on Russky Island in the Far East and on Oktyabrsky Island in the Kaliningrad Region

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MOSCOW, July 10. /TASS/. Russia’s special administrative regions, pegged as alternatives to foreign offshore zones, will be launched on Russky Island in the Far East and on Oktyabrsky Island in the Kaliningrad Region in September-October 2018, Economic Development Minister Maksim Oreshkin said Tuesday.

"The mechanism will be launched in September-October," he replied when asked about the starting date of the special administrative regions in the Far East and Kaliningrad Regions.

The investment inflow on the islands is expected to exceed $1 bln, First Deputy Head of the United Russia faction and one of the project’s initiators Viktor Pinsky stated. "According to our estimates, the influx of investment may surpass $1 bln," he said on Tuesday.

The State Duma (lower house) intends to adopt a package of legislative initiatives required for setting up Russian special administrative regions by the end of the spring session, Pinsky added.

Positive for business

Moscow is creating special zones on islands as part of a strategy towards the de-offshorization of Russian business.

These ‘Russian offshores’ will offer a special tax and administrative mechanism allowing companies to move to a Russian jurisdiction within a short period of time with minimum costs and fully reserved rights and obligations, Oreshkin revealed.

"Earlier de-offshorization, transferring a business from a foreign jurisdiction to a Russian one was associated with very high costs. It was necessary to liquidate a company in one jurisdiction and set it up in another. All companies’ debt obligations had to be repaid, which seriously disrupted a normal business process. Currently, a special foreign company arrangement is being formed that makes it possible to move a working holding structure from one jurisdiction to another with its operations fully preserved," Oreshkin explained.

"We do not expect a very high number of re-registrations during the first stage, though a number of groups, certain companies that will be re-registering, will set an example for other firms. I think that a successful re-registration, if it occurs for certain holding structures, will be a good example for others," he added.

According to Oreshkin, companies that will register in the special administrative regions, will not be given tax breaks. The mechanism is not being established for particular companies and is not directly connected with sanctions against Russian businesses, he noted.

Registering businesses in the special administrative regions will help create "a minor amount" of additional funds for the Russian budget, the minister noted, adding that companies that will register there will get an opportunity to be listed on Russian exchanges.

 

About the bills

 

A package of bills related to the creation and the regulatory aspects of special administrative regions on Russky Island in the Far East and on Oktyabrsky Island in the Kaliningrad Region was submitted to the State Duma on June 15.

The authors of draft legislations expect the 'Russian offshores' to become an alternative to foreign ones, and attract investments.

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