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would be RUAL and GMKN, with the annual MET tax hike hitting M2M EBITDA by 2-4% and 4-7%, respectively.
Russia and Cyprus signed a new deal on September 9 to hike the taxes that Russian companies have to pay on profits they send to holding companies incorporated Cyprus.
Most Russia-based firms will now have to pay a 15% tax on dividend payments they send from Russia to Cyprus — up from previous rates of 5% or 10%.
President Vladimir Putin has made targeting the flow of profits to low-tax jurisdictions a high-profile pillar of the Kremlin’s economic response to the coronavirus, saying it is unfair that firms cut their tax bills by incorporating abroad. He threatened to abandon long-standing double tax treaties should the other countries not agree to Russia’s terms.
Similar agreements have been struck with Malta and Luxembourg and Russia is currently negotiating a deal with The Netherlands.
Cyprus has proved a favourite destination for Russian firms to register holding companies due to its low taxes, status as an EU member, privacy rules and judicial system based on English law.
6.2 Debt
Russia - External debt 2012 2013 2014 2015 2016 2017 Jan-Jun ‘18
Budget: external debt (USD bn)
2,363.52 2,844.56 2,729.43 2,169.01 2,073.22 2,096.24 1,005.41
Budget: external debt (% GDP)
29.02 31.73 29.07 37.89 39.83 32.84 /
source: CEIC, CBR
At the Moscow Financial Forum, finance minister Anton Siluanov revealed that the Russian government did increase its borrowing to finance anti-crisis measures as promised.
According to Siluanov, Russia’s public debt will near 20% of GDP by the end of 2021. This is a notable increase for the traditionally conservative Russian government, which had just 12.2% of GDP in debt at the end of 2019 (up from a record low of 6.5% in 2008). Yet it remains low by international standards.
According to the IMF, average public debt in developing economies is around 52.4% of GDP, and it will increase by 10.7 percentage points by 2021 as
86 RUSSIA Country Report October 2020 www.intellinews.com
