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Strategy to be elaborated in Russia against offshorization of economy

July 05, 2013, 11:52 UTC+3
According to sources, American experience would be taken into consideration
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Working groups of the Russian Financial Monitoring Service together with the Economic Development Ministry and the Finance Ministry have started writing a national plan to combat offshores, the Izvestia reports.

A government source told the daily that the American experience would be taken into consideration in the national strategy to combat offshores. According to the official, the strategy, like the U.S. bill to prevent abuses of tax shelters, will prescribe more severe requirements for Russian tax payers who use offshore jurisdictions, entitle the financial monitoring service to carry out special measures against foreign jurisdictions and financial institutions that prevent tax collecting, impose taxes on offshore trusts used to purchase real estate, articles of art and jewelry for Russian citizens, declare persons factually receiving assets of offshore trusts as beneficiaries and increase fines for persons who use tax shelters.

A provision is under consideration to prescribe a ban not only on officials, but also top managers of state companies, state corporations and state funds and members of their families from having offshores abroad. NGOs and other organizations must disclose all their beneficiaries. This also applies to strategic companies, military plants and airports. "Such must not be accepted as it is with Domodedovo airport when we do not know the final owners," the official said.

It will be a choice for everybody to give up an offshore, or a family, he noted.

Besides, the national strategy envisages that an agreement will be concluded between Russia and other states to reveal information on company owners.

Earlier, President Vladimir Putin said that Russia would have a national plan against offshores. At a press conference at the conclusion of the G8 summit, the president said Russia had not gone a path yet to combat offshorization of economy, as other developed countries. After the law on the disclosure of the final beneficiary is signed, Russia, like other G8 members, will propose a national plan against offshores. Everything, naturally, will be within the reasonable bounds and will not violate the principles and standards, he added.

Chairman of the State Duma committee for economic policy Igor Rudensky believes a national anti-offshore strategy must create a favourable economic climate in Russia, but not to impose bans on offshores for an official's family members and top managers.

First of all, private property must be protected, and additional taxes must be imposed on those who use offshore schemes. It should be profitable for an individual to invest personally and disclose all the beneficiaries. Investments are made through offshores to conceal beneficiaries. And they try to escape pursuing, including prosecution. If to impose the ban on relatives, the farther it is, the more intricate the schemes will be. Maybe, amnesty of capital is needed, he added.

Chief economist at Deutsche Bank Yaroslav Lissovolik, who was cited by the Izvestia, believes the method of severe measures prescribed in the national strategy will not change the situation of state companies' functioning. Other measures should be added to these. For example, if speaking about managers of state companies, they must set clear criteria how their companies function. There must be clear guidelines for top management that will be followed or not. If there are such conditions, it may help, along with other deoffshorization measures, he noted.

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