Page 21 - RusRPTMar19

In the last few years Russia has been losing a modest $20bn a year, but in 2018, capital flight began to accelerate again due to investors' fears of external shocks. The current outflow is unlikely to reach the highs of 2014, but new sanctions and other external shocks can accelerate it.
The demographic decline is another key internal risk: a reduction in the number of the working-age population while simultaneously the baby boomers from the 1960s starts to retire, restrains economic growth. In 2018, for the first time in a decade, the influx of migrants did not compensate for the natural decline in population, down by 93,500 people. Labour shortages can be mitigated attracting migrants from Central Asia and Ukraine, attracted because of socio-economic instability and military conflicts at home.
The closer the year 2024 comes, the greater the uncertainty over the transfer of power and the more that will concern business. Moody’s first mention of an unorganised change in regime is the signal of the related problems, suggests The Bell: the countdown begins. In the meantime, news of new sanctions will remain the main market-moving news.
2.11 Russia prepares its third tax amnesty
On February 6, 2019, President Vladimir Putin proposed to extend capital amnesty for at least a year. This will be Amnesty 3.0.
As before, its goal is to create conditions for legalizing business and reducing the shadow economy, as well as repatriating capital and increasing investment in the Russian economy.
The first capital amnesty, Amnesty 1.0, was officially held in Russia from July 1, 2015 to June 30, 2016, but in fact was extended until December 31, 2015 and then extended again for another six months.
The initial amnesty required the repatriation of property located in countries that do not share information with Russia, but the requirement for repatriation was subsequently abolished. About 7,200 special declarations were filed during the first stage, which was less than expectations.
There are an estimated 100,000– 150,000 dollar millionaires, which is the “target audience” of the amnesty, Vedomosti reported.
The first capital amnesty was extended for the period from March 1, 2018 to February 28, 2019 by Putin’s orders. The conditions of the second version were a repeat of the first with some changes in favour of the declarant.
Amnesty 2.0 allowed individuals to voluntarily declare real estate, vehicles, securities, accounts in foreign banks and controlled foreign companies (CFC), which freed them from tax, administrative and criminal liability for tax evasion and customs duties, as well as for non-compliance with the requirements of legislation on currency regulation and currency control in respect of the property (sources of its acquisition), bank accounts and the CFC indicated in the declaration.
The declarant could be any individual, restrictions on citizenship and tax residency were absent. This amnesty applies to acts committed before January 1, 2018, with the exception of violations of currency legislation.
In addition, taxpayers are exempt from collecting taxes related to the acquisition, use or disposal of property or the CFC, as well as crediting funds to foreign accounts specified in a special declaration (with the exception of taxes payable in relation to profits and assets of the CFC), if the obligation is tax payment has arisen before January 1, 2018 There are no official data on
21 RUSSIA Country Report March 2019 www.intellinews.com