Page 6 - RusRPTSept20

2.0 Politics
2.1 Russia on track for new all time high harvest
Grain production in Russia is expected to reach an all-time high this year, according to the US Department of Agriculture (USDA), with wheat production reaching 78 million tons.
The USDA has raised its July forecast by 1.5 million tons (excluding Crimea), saying that Russian wheat exports are also expected to rise by another 1.5 million tons this year, to 37.5 million.
At the same time, the USDA’s forecast for global wheat production in the 20/21 season has been reduced by almost 3.5 million tons.
Meanwhile, Russian analysts expect the country’s wheat harvest to grow by at least three million tons. According to Igor Pavensky, general director of the Rusagrotrans analytical center, Russia could collect 127.5 million tons of grain, which would be one of the country’s largest harvests, second only to the record 135.5 million tons recorded in 2017. This year’s wheat harvest may total 81 million tons. In 2017, a record 86 million tons of wheat were harvested in Russia.
Grain exports have become a major sources of export revenue, earning c.$25bn in 2019 -- more than Russia earns from its arms exports.
2.2 Russia to amend double taxation treaty with off-shores
Russia and Cyprus have come to an agreement on amending their double taxation treaty, which is part of the Kremlin’s plans to increase taxes on dividends payments made to offshore entities, Cypriot Finance Minister Constantinos Petrides said on August 10 via Twitter.
"Restoring confidence in economic relations between Russia and Cyprus, amendments to the agreement have been agreed upon with Deputy Prime Minister (of Russia Alexei) Overchuk. An important and mutually beneficial agreement," Petrides said following meetings in Moscow.
According to Russia’s Finance Ministry, Cyprus agreed to raise the tax on interest and dividends in the framework of the agreement with Russia to 15%.
"In the framework of the negotiations, Cyprus has agreed with the conditions of Russia to introduce changes to the Russian–Cypriot agreement on avoidance of double taxation in terms of raising the tax at a source on dividends and interest to 15%," the ministry said. The protocol will be ratified until the end of 2020 and come into force from January 1, 2021.
Wealthy Russian have long abused a loophole, whereby they register businesses in low-tax offshore locations, like Cyprus and the British Virgin Islands, and distribute profit via dividends to the “foreign” firms. In doing so, they avoid Russian income taxes. Using these dodges they can bring effective tax rates down to as little as 2%, representing a big drain on the Russian exchequer.
Over several years Russian President Vladimir Putin has been pursuing a policy of “de-offshorisation” where he is trying to persuade Russian companies to re-register in Russia. To this end Russia has set up a series of “on-shore off- shore” zones where Russian companies who register in these domiciles enjoy significant tax breaks. In particular dividend payments taxes will be set at 5%.
6 RUSSIA Country Report September 2020 www.intellinews.com