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Russian lawmakers ready to pass act denying government contracts to offshore companies

December 12, 2013, 18:29 UTC+3 MOSCOW
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MOSCOW, December 12. /ITAR-TASS/. Russian lawmakers are ready to give legislative underpinning to the idea to bar offshore companies' access to government contracts, member of the committee on economic policy under the State Duma lower house of Russia's parliament Igor Igoshin /United Russia faction/ told reporters on Thursday, in comments on proposals in the president's state-of-the-nation address.

"Of course, one of the key provisions of the president's address was the proposal to deny government contracts to offshore companies. It is a difficult decision, but it has the right to existence," Igoshin said. "Firstly, it is our taxpayers' money. They have the right to count on budget money's being used for the development of Russian companies and that new jobs are created here, not abroad."

"Secondly, while awarding contracts, the government has the right to know who the contractor is and whether they can be trusted. Such transparency is often impossible for offshore companies.

Such a measure was proposed a year ago, when lawmakers were working on the contract system in state procurements. However, this initiative did not find unanimous support on the part of government agencies back then, according to Igoshin.

The situation has now changed dramatically, as the president supports the measure. "We'll try and put up this proposal for discussion in the near future, so that the idea to deny government contracts to offshore companies is at last reflected in legislation," the lawmaker said.

Chairwoman of the house committee on security and combating corruption Irina Yarovaya /United Russia faction/ backed the president's thesis that those who expatriate capital, should not participate in government projects and contacts and enjoy state support.

"I believe it's an absolutely correct and effective measure. You cannot accept the state's help with one hand, and hide your earnings in other countries with the other. What the president offered is fair and will yield a good result," Yarovaya said.

Meanwhile, President of the Russian Union of Industrialists and Entrepreneurs /RSPP/ Alexander Shokhin believes that business should be given time to implement the proposed measures to "de-offshorize" the economy. Also, it is necessary to take into account business specifics of certain companies.

"The RSPP has no consolidated position on the issue as yet," Shokhin told Tass.

"You cannot implement these measures promptly, they should be phased out, so that business could adapt to new rules," he said.

He supported additional tax assessment for companies which do business in Russia but are registered elsewhere. "Companies should not put too much effort into aggressive optimization of tax payments; all developed states are combating it," he said citing as an example Great Britain which has additional tax assessment for foreigners.

Aside from tax evasion and hiding the beneficiaries, companies have "business reasons" for registration outside Russia. "Many foreign partners of Russian companies prefer to work in British jurisdiction, and if it is the main reason for selecting the place of registration in this or that country, a company should have the opportunity to prove it to Russian regulators," the RSPP president said.

He believes that the Russian government should continue to make efforts towards improving the domestic investment climate, so that registration in Russia is convenient and advantageous.

"In this context, protection of property and minority shareholders' rights remain acute issues; our legislation is not yet perfect in this respect," Shokhin said.

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