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So far Putin’s efforts to bring Russian business home have not been met with great success as businesses are also interested in the property right protection from appropriation other jurisdictions off in addition to the low tax rates, but the cash-strapped Kremlin is clearly ramping up its efforts in this crisis.
Sazanov said that the Finance Ministry expects additional tax collection to the Russian budget from the agreement at RUB130bn–RUB150bn annually.
With Cyprus done the Kremlin intends to move on to do similar deals with Luxembourg and Malta next month and the Netherlands, where a lot of Russian businesses like super market chain X5 Retail Group and online business Yandex are registered. Experts say that Austria, Switzerland, and Singapore are all also probably on the list.
And Russia is playing hard ball. It has threatened to unilaterally withdraw from double taxation treaties with other countries if they are not willing to negotiate.
This happened with Cyprus which as long been a favourite tax haven for Russian businesses: Cyprus initially refused to negotiate after which Russia threatened to cancel the deal. The withdrawal of Russian capital from the island would cause a major financing crisis of its economy and it came back to the table.
2.3 Russian and Ukrainian startups seduce Silicon Valley investors, Telegram gives up blockchain project amid lawsuits
Several startups with Russian roots made the news in Silicon Valley this
spring. In April, Miro raised a $50mn Series B round involving Iconiq Capital,
Accel and several individual investors. The details of the deal were not
disclosed, but valuation was probably considerable, a source calling the
company a ”soonicorn.” Founded in Perm, Russia in 2011, Miro is now a
profitable business, claiming to serve “80% of the Fortune 100” with some 300
employees in San Francisco, Los Angeles, Austin, Amsterdam and Perm.
Demand for its visual collaboration solutions has been skyrocketing amid the
coronavirus pandemic, as business and educational customers have been
moving from physical to remote work.
In late May, Ecwid, another startup headquartered in California but born in
Russia, secured $42mn from Morgan Stanley and PeakSpan Capital.
Launched in Ulyanovsk (720 km east from Moscow) 10 years ago, Ecwid
quickly asserted itself as a global social commerce major. Since offline
merchants can use these solutions to start selling online, Ecwid saw its
transaction volume jump by 50% between March and April as COVID-19
stroke the world.
In late June, Russian-founded Intento secured a more modest $3mn in Silicon
Valley to scale up AI content processing solution. This seed round was led by
Flint Capital – a VC firm with Russian roots – with participation from Berkeley
SkyDeck, SmartHub and other angel investors.
Meanwhile Yandex, the Russian search giant, raised $460mn on the NASDAQ
– where it has been listed since 2011 – and closed a private placement of
around $600mn to finance domestic e-commerce projects. While maintaining
its IPO plans for Yandex.Taxi, its ride-hailing joint venture with Uber, Yandex
conceded that these plans would be postponed. The company is now
struggling to remain profitable amidst the pandemic.
In May, investment circles were shaken by Telegram’s decision to give up its
widely-hyped blockchain and cryptocurrency projects. As much as $1.7bn had
been raised through a controversial ICO in early 2018 – involving mainly
Russian and US investors. In 2019 the Securities Exchange Commission filed
7 RUSSIA Country Report September 2020 www.intellinews.com