The movement of Russian capital from offshore to direct ownership – it is conditionally voluntary, but after the problems in Cyprus and the misadventures of Abramovich in Britain, it seemed that the fight against the unbearably acquired hidden assets of Russian oligarchs began the whole world. And now come no less encouraging news from PwC analysts, who recorded the beginning of the era of sunset offshore island. Since 2019, many Islands, known for their convenient economic and tax climate, have acquired laws that make them less convenient for companies that are accustomed to “work” without offices and employees.“This is a tectonic shift in offshore business, in fact, one of its pillars is being destroyed – the ability to transfer income to companies without an office and employees, “Vedomosti quotes Yuri Kulikov, head of the UFG Wealth Management tax practice.
The new laws oblige to have an adequate material base under the account-an office, qualified employees, reports on the expenses of this office and so on. Reforms for new companies have launched Bermuda, The British virgin Islands (BVI), the Cayman Islands, Guernsey, Jersey, Maine, Mauritius, the Bahamas and Seychelles – they operate from 1 January this year, the old gave time to bring things in line with the declared activities – a transitional period.
Penalties for failure to comply with the conditions specified in the new rules are severe – up to criminal liability to owners and exclusion from the register, and for the first failure to provide information, for example, in The British virgin Islands can be fined at least $ 5 thousand.
How will the Russian offshore aristocracy behave now?
Head of the center for political economic research of the Institute of new society, economist Vasily Koltashov says- ” there is a corral hunt»:
“It cannot be excluded that now there will be a withdrawal of capital, including funds hidden in offshore, because these capitals are not really protected if the us government wants to take away funds in any offshore.”
The economist recalls that the policy of offshore companies was based on the idea that the national state dies and, in principle, will no longer influence anything. Now we are witnessing the reverse process, the national state, for example, in the interests of major American national players can easily Rob our oligarchs – for its own benefit.
“It turns out that if you do not have a strong national state that will protect you, then you have no guarantees, no rear. And the mockery of Abramovich, when he was not allowed to go to Britain, and the fact that Derepaska was thrown out of his own company, literally pushed the Americans under the guise of transactions is all one campaign,” he says.
Why should countries with low tax rates destroy a mutually beneficial Alliance with Russian and other offshore companies? After all, these “fairy Islands” attracted about half of the profits of international companies.
Lost paradise
“Fairy Islands” are not the leaders of the processes, they do not trigger trends and they do not stop them, once in the 1970s and 1980s, these processes launched such centers of power as the UK, the United States, they allowed the possibility of these offshore companies, seduced the elite of developing countries and guaranteed that everything will be safe. But now there are no guarantees-there is pressure.
Indeed, in the summer of 2018, the first bell rang in Cyprus, when the Republic in early may was visited by representatives of the us Treasury – Cyprus banks began to close the accounts of offshore companies under pressure from the Central Bank, analysts then called the price of loss – under the blow was 70 billion euros of Russian origin.
Cyprus has been the main Russian offshore for more than 15 years, we can say, “financial Paradise” for Russian businessmen – citizenship when buying real estate, low taxes, stable currency, no reporting on the origin of funds. Now under the attention and got all the Russian depositors. Last summer, as if preparing for such a situation, Vladimir Putin prepared a small “pen” for economic refugees – he signed a package of laws establishing two zones in Russia with preferential conditions for foreign companies – on Russky island in Primorsky Krai and Oktyabrsky island in Kaliningrad region.
Apparently, the hard times have really come
The other day it became known, members of the Board of Directors of PJSC “Chelyabinsk pipe rolling plant” Andrey Komarov and Alexander Fedorov became direct owners of shares of the plant. Previously, they belonged to offshore companies. As part of the restructuring Komarov became the owner of 49.4% of the shares owned by Arbordeen International Limited, Fedorov — 6.9% of the shares owned by Poweredge Holdings Ltd. Considering the indirect ownership of shares of JSC “Chelyabinsk tube rolling plant” JSC “Pervouralsk new pipe plant”, Andrey Komarov and Alexander Fedorov together control over 80% of JSC “CHTPZ”. The group is one of the ten largest producers of pipe products in Russia.
The news, as they say, out of the ordinary. Further-more?
“Our offshore aristocracy should think about where it will run, as soon as it is no longer enough to have local staff in the offshore, have a permanent office and the like, and run it especially nowhere. She can only run home, because the new rules of the game imply that someone will try to Rob her. There is a corral hunting, and it only begins, change of rules in offshore is a sign of corral hunting, it is conducted by the Western financial capital, first of all Anglo – Saxon, to a lesser extent in Europe”, – Vasily Koltashov notes.
“The rumors of my death are somewhat exaggerated»
The fact that the Americans are making a new blow to the offshore aristocracy in the places of deployment of its capital, can not indicate that the offshore will go into the past forever, so says the political scientist, Director of the Center for political studies of the Financial University Pavel Salin. First, the expert draws attention to the fact that in the process of “pressure” a selective approach is noticeable among those who press the leadership of the countries in which offshore companies are located – that is, offshore companies not of Anglo-Saxon jurisdiction fall under pressure.
“It seems that under the slogans of the struggle against offshore companies, attempts are being made to stimulate the flow of money of the world elite to offshore jurisdictions, which are directly or indirectly controlled by Anglo-Saxon capital. There are exceptions-The British virgin Islands, but, nevertheless, there is no talk of a total struggle against all offshore companies. There are those who are “more equal than others” and remains in the shadow of attention of fighters with “dirty money”, – Salin speaks.
The tradition of keeping money in the shadow jurisdictions of the world elite has a long history and is unlikely to end on the episode with the closure of accounts of Russian Nouveau riches, can only change the form of storage of capital.
“This form, that is, the form of island Offshores, there is a fairly short time – it is 20, a maximum of 30 years of prosperity of island Offshores. But before that, there were ways to optimize taxation and to hide the real owners, and then there will be ways. The first thing that comes to mind now is cryptocurrencies, ” says Pavel Salin.
According to him, not in vain in the last few years there was such a flourishing of cryptocurrencies. It is necessary, of course, to approach differentially to each cryptocurrency, but they effectively allow you to maintain the anonymity of the owners of large assets. And the rise of bitcoin in 2017, among other things, was due to the flow of part of the money from offshore jurisdictions and some national States, where the requirements for rich people to cryptocurrencies were tightened. Another thing is that bitcoin has become an intermediate link in this flow.
The expert notes that the foreign authorities, the same USA, do much more for the deoffshorization of the Russian economy than the Russian ones. Money does return to the country, though not completely, but in part, they do not go to more favorable Russian conditions, and they are not so much attracted to the Russian leadership, offering more favorable conditions, as repel the authorities of Western countries. At the same time, the economist Vasily Koltashov believes that Russia should put pressure on its part, that is, not only to offer something profitable in the form of internal offshore companies, in the form of Eurobonds, but also to punish. Avoid ownership of Russian assets by offshore companies.
Give me back my October?
Doctor of historical Sciences, politician Vyacheslav Tetekin explains the activation of the American machine to raise money deep crisis, which flows into the entire world economy: “Of course, the destruction of the Soviet Union has allowed this economic system to survive another quarter of a century, without falling into a devastating crisis for her. But now it is quite clear there is a fall in world product.”
“Now our government began to “bake” already – they are taking measures to return the money to bring them out of the shadows. They fear the deepening of the global economic crisis, which may lead to events similar to October 1917 in Russia. That’s what worries them, and not caring about social justice, ” – said the expert.
Russian businessmen, who previously feared that their capital will be taken away by the state, are now afraid of very different things when they think about whether to return the money to the base? First, money is often simply nowhere to invest: with the participation of the same oligarchs, Tetekin notes, the productive economy was destroyed. There is nowhere to invest, you can only” put ” in not very reliable new Russian offshore. The second reason is the fear that the money will have to be returned, but not to the state.
“They are justly afraid that the people will demand to return stolen. Therefore prefer still, despite all threats, to keep them abroad, – Vyacheslav Tetekin speaks. – However, abroad, as the experience of a number of figures who tried to keep their holdings abroad – the money is very confidently selected. What happened to Deripaska showed that they were being taken to the impudent. Therefore, these guys, of course, need to return the money back to Russia – to repent, to return the money, to invest them – maybe the people will forgive them. Although it is doubtful”.
