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US authorities delay KFC's departure from Russia over 'exit tax' — Reuters

Once the buyers were approved, taking this new requirement into account, another one appeared - the budget contribution termed an "exit tax" by Washington, according to Sergey Levin

WASHINGTON, September 26. /TASS/. The Office of Foreign Assets Control (OFAC) of the US Department of the Treasury has delayed KFC's exit from the Russian market due to required payments to the Russian federal budget, Reuters reported citing the owner of the master franchise in the country.

"The process of finding a buyer and agreeing the basic conditions took some time," Sergey Levin who heads the legal department at Unirest, which manages the former assets in Russia of Yum! Brands, KFC's US parent company, told the agency. "When the basic conditions were agreed, a rule appeared that the sale of shares should be agreed with the relevant (government) department," he added.

Once the buyers were approved, taking this new requirement into account, another one appeared - the budget contribution termed an "exit tax" by Washington, according to Levin. Russia added that demand in December 2022. "The closure was delayed again, the correct procedure on paying the exit tax was agreed," Levin said, adding that "it seemed that all was agreed, everything was moving towards completion and then a foreign regulator appeared on the scene - OFAC." "As a result, it took quite a long time to settle <…> we closed everything successfully in mid-April," he told the agency.

Levin added that Unirest hopes to complete the brand transition from KFC to Rostic's in 2024, with plans for 60% of the 1,200 restaurants in Russia to be Rostic's by end-2023.

On April 17, Yum! Brands completed its exit from the Russian market by selling its KFC business in Russia to Smart Service Ltd. The sale to Smart Service includes all Russian KFC restaurants, operating system, master franchise rights and the trademark for the Rostik's brand. Currently, the total number of network locations exceeds 1,100.

On April 25, former KFC restaurants started opening under Rostic’s brand.

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