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Official: counter-offshore crusade may ruin Russian major shipping company

December 21, 2013, 7:33 UTC+3 21
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MOSCOW, December 21 (Itar-Tass) - Crusade against offshores Russian President Vladimir Putin has lately declared in his address to the Russian Parliament may ruin Russia’s major merchant marine company Sovkomflot, Deputy Minister of Economic Development Andrey Klepach told a meeting of the Marine Board, calling for a careful approach to the Russian shipping companies.

In the current economic conditions “it is still more lucrative to operate under a foreign flag,” he said citing 2001 and 2012 statistics for Russian export freight transportation. In 2001 the volumes of export cargo transported by ships flying the Russian flag and Russia-controlled ships flying foreign flags were about he same, about 6 million tonnes each, whereas in 2012 they made 5 million and 15 million tonnes respectively.

Klepach added that implementing the regulations stipulated in the Russian sea strategy till 2030 would be enough to increase the appeal of flying the Russian flag.

Another point for scrutiny, according to the official, is that foreign-flagged ships controlled by Sovkomflot and other companies are offshores. The all-out fight against off-shores, however reasonable, in this particular case may ruin Sovkomflot’s economy, so measures should be considered in cooperation with the transport ministry and other companies to encourage ships to fly the Russian flag, one of the means being the Russian Maritime Register of Shipping, Klepach said.

In the annual state-of-the-nation address President Putin cited statistics indicating that a total of $111 billion, a fifth of Russia’s aggregate exports, came through offshores and semi-offshores last year. Half of Russian $50 billion investments in other countries had also been made in favour of offshores, he added. These figures, Putin believes, conceal the export of capital that should work in Russia, which means direct losses for the country’s budget, so he suggested earnings of foreign-registered Russian companies be taxed under Russian tax regulations.

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