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responsibilities to clients in the Moscow Region. We would anticipate developers trying to pass higher costs on to prices. However, the extent to which they will be successful is yet to be seen since household budgets are still under pressure. In our view, it will depend on the supply of real estate for a particular area and might require developers to fine-tune the quality and lay-out of future apartments,” VTBC added.
“In the medium term, we anticipate companies adjusting their business models, resulting in a balanced scenario between the interests of companies, clients and the regulator. Tighter requirements and the implementation of this harsh version (including the use of escrow accounts) favour large-scale developers that have sizable projects, greater understanding and flexibility for future sales, and established relationships with key banks. We therefore think that there could be sector consolidation in the long-term,” the bank added.
2.4 The number of “one-day” shell companies cut five-fold
The number of so-called "one-day" shell companies in Russia declined to 0.3mn, or 7.3% of the total count of registered companies in Russia, from 1.6mn or 35.5% of total at the beginning of 2016 and 1.8mn or 40% in 2011, RBC business portal said on June 26 citing the Federal Tax Service (FTS).
"One-day" companies have been a plague on the tax system, as a notorious way of evade taxes, siphoning off assets, and channelling money abroad. Cutting their number five-fold is a major step forward in Kremlin's fight against corruption . Typically a one-day firm will be set up that has a tax liability but the company is shuttered the day before it is due to pay those taxes taking its liability with it to the grave.
Experts surveyed by RBC believe that the number of companies set-up at the beginning of 2018 was slightly higher than the official estimate at 0.53mn, but the number was more than halved from the 1.2mn established in 2017.
The main reason behind the trend is believed to be the ASC VAT procedure (automated system of VAT control), which allows for real-time commercial activity tracking, that flags discrepancies with filed VAT statements and thus brings the grey schemes to the attention of taxmen.
Without physical check-ups ASC VAT enabled FTS to boost tax collection by 1.8-fold year-on-year in the first quarter of 2018.
Changes to business registration laws that allow the FNS more room to exclude companies from the registrar and carry out more in-depth due diligence also helped to cut the number of shell companies.
The penalty for using shell firms has been toughened to five years of imprisonment, while the banks are now also obliged to check whether their clients are using shell company schemes.
2.5 London court rules in Deripaska’s favour in NorNick dispute
The London High Court resolved the case involving billionaire Russian shareholders of Norilsk Nickel metals major in favour of sanctioned Oleg Deripaska (controls Rusal aluminium major), ruling that Roman Abramovich (controls Crispian Investments) breached the shareholder agreement when selling 2.1% stake in Norilsk Nickel to fellow oligarch Vladimir Potanin's Interros.
RUSSIA Country Report July 2018 www.intellinews.com