Page 52 - RusRPTApr19

6.1.1 Budget dynamics - specific issues...
The Federal Tax Service (FTS) has received a new tranche of data from the OECD’s Automatic Exchange of Information programme, under which countries exchange data about accounts held by each others’ citizens in order to combat tax evasion. This is an international program, but it reinforces three Russian government priorities. The first is to expand the tax base, as the budget comes to rely more heavily on taxes than on oil revenues. The second is the onshore-offshore program. As more tax havens join the Automatic Exchange of Information, Russian onshore-offshores begin to look more attractive. Finally, this program helps the capital amnesty program, which encourages Russians to repatriate money from abroad in exchange for amnesty for certain economic crimes.Seventy-five countries and thirteen territories, including the British Virgin Islands and the Cayman Islands, currently participate in the Automatic Exchange of Information.
Russia's Finance Ministry warned that it would have a RUB204bn ($3.3bn) hole in budget revenues in it if state-owned enterprises (SOE) don’t pay out the 50% of profits they have been ordered to by the government, Interfax and Vedomosti daily said on April 23 citing unnamed sources in the government. The 2018 federal budget plans to raise RUB380bn in dividends based on 50% of IFRS net profit, most of the state majors dodge. Gazprom natural gas giant alone will save paying the state RUB78bn by paying 25% of consolidated net profit.
Rosneftegaz holding controlled by influential ally of President Vladimir Putin Igor Sechin is another long-time rival of the Ministry of Finance in the fight for dividends, and still holds half of the RUB40.6bn interim dividends for January- June 2017 from Russia's largest oil company Rosneft. Rosneftegaz does nothing other than hold shares and has less than a dozen employees. Sechin is head of both the oil company and the holding. Also Russian oil pipeline monopoly Transneft dodged the full dividend payout for 2017. t is unlikely that given the favourable oil prices environment the government will manage to create urgency and will to have the oil and gas giants budge. The "subsidy" for the four largest SOEs alone (Rosneft and Gazprom oil and gas giants, Sberbank and VTB bank) is estimated at RUB350bn, or 0.4% of GDP for 2016,
52 RUSSIA Country Report April 2019 www.intellinews.com