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Putin's aide comments on "de-offshorization"

Sergei Glazyev said all arguments in favor of offshores are a pretense
Presidential aide Sergei Glazyev ITAR-TASS/Ruslan Shamukov
Presidential aide Sergei Glazyev
© ITAR-TASS/Ruslan Shamukov

MOSCOW, December 12, 16:23 /ITAR-TASS/. Presidential aide Sergei Glazyev said all arguments in favor of offshores are a pretense, because offshores are a haven for tax dodgers in the first place.

Glazyev said he could not understand why Rosneft's transaction to buy the TNK-BP company had to be effected through an offshore. "It's absolutely unclear why it had to be done through offshore, using such risky places as Cyprus; they could have lost everything," Glazyev said.

He noted however that the state had no plans to revise the transaction. "I don't think there'll be attempts to make it right retroactively. When it concerns state-owned companies, the state has many levers to influence them."

Glazyev estimates the scope of "offshorization" of the Russian economy at 500 billion rubles. "It's tremendous; some 500 billion rubles of accumulated capital go through offshores," he said. "Many companies collect revenue in Russia, and then channel the money to different offshores."

Commenting on President Vladimir Putin's initiative to strip foreign companies of state support, the aide noted: "many companies registered in offshores participate in various relations with the state, wholly or partially. This involves government contracts, various programs, land use and public utilities' services."

"If the main idea of offshore business is not to pay taxes, the question is why the state should support such business," he went on.

The offshores owning Russian assets can be encouraged to transfer to Russian tax jurisdiction through signing tax agreements, Economic Development Minister Alexei Ulyukayev said in comments on Putin's proposals that foreign companies having Russian assets should pay tax under Russian tax rules.

"If a company's asset is in Russia, there’ll be no problems with identifying the taxable base (to stimulate companies towards transfer to Russian tax jurisdiction); a tax agreement should be signed. There are many opportunities to stimulate companies through state contracts or loans; it's necessary to make it advantageous to them," the minister said.

Leader of the Civil Platform party Mikhail Prokhorov also supported Putin's proposal to de-offshorize business, yet he warned that one " should not let himself be carried away by these measures."

"The struggle against offshores is a trend, but you should get carried away, we have to find the golden mean," Prokhorov said, adding that broad use of offshores could also be viewed as a sign of ineffectiveness of national legislation.