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RZD fears Putin’s anti off shore policy

Russian Railways warned investors about a new country risk “deoffshorisation”. The new risk was mentioned in the prospectus of Eurobonds placement, Interfax reported with reference to the document 

Russia’s anti-off shore policy may impact on the Group’s financial condition and operations results, it is mentioned in the prospectus .

Faced with a need to shore up tax revenue as GDP growth stalls, Putin in his State of the Nation Address on Dec. 12.  2013, proposed three measures to tug major firms back into the taxman’s orbit. First, taxes will be levied on Russian-owned companies registered in offshore tax zones according to the Russian Tax Code. Second, companies registered abroad will be barred from receiving support or guarantees from the budget or such state banks as VEB. Third, foreign firms will be forbidden from winning state contracts. The speed of the reaction took the Finance Ministry by surprise, a ministry official told Vedomosti. Authorities were also not counting on companies to begin a wholesale relocation to Russia. The important thing, the official said, is that companies “calculate their taxation base correctly, which can be done in offshore locations and jurisdictions with low taxation.”

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