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Businesses returning to Russia from abroad

December 19, 2013, 12:29 UTC+3

They have responded to a call President Vladimir Putin made in his state-of-the-nation address to the Federal Assembly

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MOSCOW, December 19. /ITAR-TASS World Service/. Major companies have already said that they were refusing from offshore operation and transferring business to Russia, the Vedomosti newspaper writes. There are Metalloinvest, MTS, RusHydro, Kamaz and UC Rusal among them. They have responded to a call President Vladimir Putin made in his state-of-the-nation address to the Federal Assembly (both house of Russian parliament): “If you want to go offshore, be my guest, but the money stays here.”

The Finance Ministry has not expected such reaction, its official says, nobody has made companies to transfer all the structures to Russia: “The main thing for us to make them correctly calculate the taxable base, which can be well done in offshore jurisdictions and in tax havens.”

Putin proposed two measures: to impose taxes on profits of the offshore companies whose beneficiaries are Russians: to deprive foreign companies of state support, including Vnesheconombank (VEB) loans and state guarantees and deny them access to state contracts.

Certain anti-offshore measures have already been taken. Starting from 2014, the major companies are facing checks of their transfer prices: by December 1, the Federal Tax Service (FTS) received from 5,000 companies the notifications of their controlled deals. It is early yet to summarize the results of the analysis, says FTS deputy head Alexei Overchuk, adding that the notification would also be checked by directing inquiries abroad. Tax officers will also be able to receive information from businesses themselves: starting from 2014, foreign companies who fail to disclose their beneficiaries face the imposition of a 30% tax on the passive income paid abroad (the money can be returned after the beneficiary disclosure). Taxpayers have become more careful, reorganizing business, says Overchuk: cost effectiveness is improving in some sectors that had earlier understated profits in Russia.

UC Rusal has worked out a plan for the gradual transfer of financial and economic operations to Russia, a company official says. The holding’s head company — UC Rusal — is registered on Jersey Island. The Norilsk Nickel stake, belonging to UC Rusal (27.8%) is held by the registered in the Netherlands Aktivium Holding, which belongs to the Cyprus-based Gershvin Investment Corp. Limited, which belongs to the Jersey-based UC Rusal.

RusHydro in 2014 plans to liquidate the Cyprus companies in which it has a stake — Balp Ltd and Boges Ltd, deputy board chairman Dzhorzh Rizhinashvili said.

The transfer of companies to Russia can only be welcomed, the official is certain: “If a company is registered in an offshore zone, it is difficult to check all information about it, and now it will be easier for tax officers to do so from the technology viewpoint.”

When the transfer prices are checked, claims may be raised against some 300 Russian companies, FTS head Mikhail Mishustin had said previously.


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