Russia to extend offshore wealth amnesty

Russia to extend offshore wealth amnesty

Russian President Vladimir Putin ordered to extend the amnesty for de-offshorization of capitals and their return to Russia at the meeting with business leaders, head of Russian business association 'Opora Rossii' Alexander Kalinin said.

"The President said he considers necessary to extend the amnesty on de-offshorization of capitals because amendments were made in legislation and they would become effective shortly. Therefore, the amnesty should be extended," TASS cited Kalinin as saying..

He added that the President noted the need of improvement of the investment climate, reduction of administrative barriers and increase of labor productivity.

Russia’s government approved a tax law to clamp down on Russian companies and individuals using offshore tax shelters in Autumn 2014. In 2015, a law was signed, allowing Russians to voluntarily declare foreign assets and bank deposits to avoid criminal, administrative and tax liability.

The head of the department of stock markets and financial engineering of the Faculty of Finance and the Banking Business of RANEPA, Konstantin Korischenko, speaking with Vestnik Kavkaza, named the continued negative attitude towards virtually any Russian business abroad as the main reason for extending the amnesty. "Therefore, Russian businessmen have a desire to at least partially return to Russia. Of course, there are certain risks related to it, so the extension of the amnesty and its more clear rules could contribute to the return of capital," the expert explained.

According to him, it cannot be denied that the first term of the amnesty was not very successful. "But the fact is that we still need to get used to this process. In addition, it is very important to understand that the amnesty fell on the period after the crisis of 2014. The new presidential term, as everyone believes, will give impetus to development, and it is necessary to understand what opportunities it will cause," the head of the department of stock markets and financial engineering noted.

The expert added that the amnesty, in its essence, cannot be perpetual, since it represents a kind of one-time action that allows to restart a particular process.

An associate professor at the the Department of Management, Institute of Business and Business Administration of RANEPA, Emil Martirosyan, in the first place, stressed the economic feasibility of extending the amnesty. According to him, it is often more profitable for the government to waive the debt, than collect it.

Second, the economist noted, the amnesty can affect those taxpayers who are in the borderline, thinking whether to pay or not. "This effect exists around the world, it helps to collect about 15-20% of taxes," the expert said.

"The third reason is that today amnesty is often equated with tax holidays, when many entrepreneurs get an opportunity to invest in investment capital, in fixed assets, thus increasing production volumes and not resorting to additional loans," Martirosyan told.

"Taken together, this all leads to the fact that, in general, the situation is more or less normalized, the state does not spend a lot of money to collect microloans and, accordingly, improves the situation with the collection of taxes," the economist said.

The expert highly appreciated the amnesty process, explaining that it does really work. "At least, we have already seen two progressive effects: the amount of foreign exchange capital exported from Russia is declining, the amount of not exported is increasing," he noted.

He added that the amnesty must be limited in time. "Countries that introduced amnesties indefinitely, eventually turned themselves into offshore," Emil Martirosyan stressed.

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