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Western sanctions may encourage capital repatriation, says expert

December 26, 2017, 19:20 UTC+3 MOSCOW

The matter of the duration of the capital amnesty in Russia has not been resolved yet

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MOSCOW, December 26. /TASS/. Western sanctions against Russian enterprises and business people may encourage capital repatriation and make the amnesty of exported capitals more popular after it is extended, the president of the Russian Union of Industrialists and Entrepreneurs, Alexander Shokhin, told TASS on Tuesday.

"Few people took advantage of that amnesty, in fact it failed to pay off. Plans were large-scale, but the result was modest. Now we have two additional arguments. The first encouraging argument is that the amnesty is not meant to fish out something else, including on the part of law enforcement agencies. Secondly, sanctions should motivate capital owners," Alexander Shokhin said.

"It is interesting to see what the February sanction program will be all about. It will be clear who has fallen under [sanctions], what for and whether assets have been frozen or not. And of course, this may also encourage capital repatriation," the expert said.

He also said that "many more people" will be able to take advantage of capital amnesty in case it is extended, due to an offer by President Vladimir Putin to exempt from another tax payment those, who have already paid taxes with other jurisdictions.

The question of the duration of the capital amnesty in Russia has not been resolved yet, but the priority is to set up a comfortable environment in Russia for bringing capital back to the country, which could be under threat overseas because of sanctions, Russian Presidential Spokesman Dmitry Peskov told reporters commenting on President Vladimir Putin’s proposals on capital repatriation on Tuesday.

"There are no details yet, this is an initiative, it is to be formalized and implemented," the Kremlin spokesman said when asked for how long the capital amnesty program could be extended.

He refrained from providing any estimates on the amounts that can be repatriated as part of the amnesty program.

Commenting on capital repatriation to Russia in general, Peskov recalled that the Russian president had repeatedly mentioned cases when Western countries refused to adhere to the principles of sanctity of private property, including movable and immovable assets and financial resources.

"Our entrepreneurs have repeatedly encountered attempts to encroach [on their funds], in an unjustified manner such as illegally freezing (them) among other things. All that is done under the guise of restrictive measures and sanctions. Of course, this insecure climate for foreign investment can raise anxiety for Russian businesses and Russian capital. So the president as the head of state put forward the initiative to create comfortable conditions here [in Russia] for businesses, if they want to take advantage of the opportunity and repatriate their capital to Russia, thus making themselves immune from the potential brutal non-market encroachments on their property," Peskov concluded.

Concerning the overall effort to improve the investment climate in Russia, Peskov noted "there is always room for improvement.".

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