Businesses don’t need an offshore in Crimea – media
Moscow - Simferopol, October 23 (PolitNavigator, Mikhail Stamm) - Foreign and large Russian businesses do not need an offshore in Crimea for three reasons: the threat of Western sanctions on real investments in Crimea, transparency for the Russian tax inspectorate and the inability of Russian legislation to combat raiding and arbitration. Vedomosti writes about this.
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The Russian government will not introduce reduced tax rates on dividends received from companies in Crimea and Sevastopol, according to the government website.
Thus, amendments to the Russian Tax Code, which reduced the rate on dividends of companies in Crimea to 6% against the Russian 9%, were rejected. Earlier, the Minister for Crimean Affairs Oleg Savelyev reported that the benefit was provided for those who register a company in Crimea and would receive 75% of the profit from activities on the peninsula.
A federal official close to the Ministry of Crimea explained "Vedomosti", that Savelyev’s amendments would turn the peninsula into a regular offshore, and the government wants to stimulate real business, so instead of an offshore in Crimea there will simply be a favorable tax regime for investments.
With the exception of the deleted benefit on dividends, all other benefits offered within the SEZ will remain, according to the publication’s interlocutor at the Ministry of Economic Development. Vedomosti recalls that it was planned to provide residents of the free economic zone in Crimea with an investment incentive, accelerated depreciation, and exemption from income tax for five years, from land tax for three and from agricultural tax for two. The federal income tax rate (2%) was reset to zero for all Crimean companies; the regional rate could be reduced to 13,5% by the authorities of Crimea and Sevastopol.
But all this does not mean that business will go to Crimea, other interlocutors of the newspaper note. With the adoption of a package of deoffshorization laws that will oblige owners to disclose, Crimea could become a potential competitor to other offshore companies, says Andrey Goltsblat, managing partner of Goltsblat BLP. Nevertheless, we can hardly expect a massive influx of investors to the peninsula: Russian law is not always able to protect business, including from raiding, and the ability to conclude agreements under foreign law is offset by the unpreparedness of Russian courts to arbitrate them.
Foreign investors are not interested in an offshore in Crimea primarily for political reasons, adds the tax manager of a large foreign company: the West did not recognize the annexation of the peninsula. An employee of a large Russian company is also afraid of possible sanctions for real investments in Crimea.
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