Russian companies may be forced to declare offshore units

File Photo of Man Placing Stack of Large Bills into Inside Pocket of Suitcoat

(Business New Europe – bne.eu – August 28, 2013) The Kremlin’s drive to increase transparency and limit the amount of money held in offshore havens could be extended to companies, which will be forced to declare an overseas status.

Duma deputy Dmitry Savelyev for the ruling United Russia Party, has submitted a bill, which would oblige the companies to inform consumers about their offshore status, RIA Novosti reports.

Currently companies must give their name, location, operating schedule of the company and registration number of the Certificate of License and State Accreditation, but do not have to declare their legal domicile.

For tax and ownership reasons, many “Russian” companies are technically foreign companies as they are legally domiciles in other countries like Cyprus or the Netherlands.

Savelyev’s suggested bill chimes with the Kremlin’s own efforts to increase transparency and bring Russian wealth back onshore. Russia will take over the G20 presidency next year and Russian President Vladimir Putin has already said one of the main themes will be to end the “offshorisation” of the Russian economy. Putin has started the process; on August 19 a ban on Duma deputies and state officials from holding foreign bank accounts and assets came into effect.

Savelyev bill will not force Russian companies domiciled elsewhere to come home, but it is a step in that direction. At the same time the bill fits with the increasingly nationalistic tone that is entering Russian politics.