Page 54 - RusRPTSept20

As reported by bne IntelliNews, the latest round of capital repatriation efforts in 2019, or Amnesty 3.0, is especially designed to boost special zones in Russia's Kaliningrad Region and Primorsky Region, or so called Special Administrative Regions (SAR), recently established domestic offshore zones.
Continuing its recent de-offshorization crusade, the Russian government has published amendments to the Tax Code that will establish a 5% tax rate for Russia’s “onshore offshores” in Vladivostok and Kaliningrad. Created in 2018 to help sanctioned Russian companies domiciled abroad, the domestic offshores have not been all that popular. By early 2019, just 10 companies, mostly belonging to the sanctions-ridden Oleg Deripaska, had moved to the special administrative regions (SAR). Last year, Yandex used a domestic offshore to register its public interest foundation, the firm's compromise with the Kremlin after the government decided to target tech firms with high foreign ownership. While Russia’s SARs have offered some of the benefits of traditional offshores—they allow companies to hide information about their beneficiaries and not pay profit tax on the sale of assets and dividends—they have not been able to compete on tax terms. This is about to change. As the Ministry of Finance revises treaties with a handful of countries to increase taxes on dividend payments leaving Russia from 5% to 15%, Russia’s onshore offshores will soon offer the rate that companies can no longer receive elsewhere. This may be just what the government needs to stimulate a flurry of firms rushing home from Cyprus to Russia. The amendments are expected to be adopted by mid 2021 and to enter into force in 2022.
54 RUSSIA Country Report September 2020 www.intellinews.com