Experts: anti-offshore campaign may lead to pressures on the business

The anti-offshore campaign is well-timed, but it may cause some excessive pressure on the business by controlling bodies. Such was the opinion voiced to the Prime agency by the experts commenting on the words of Vladimir Putin, Chairman of the Government of the Russian Federation regarding the necessity to “impose order” on the situation, when large businesses evade taxation by creating off-shores and “one-day” companies.

In his article, published Monday in “Vedomosti” newspaper, V.Putin says that good-faith business only has to gain, if order is imposed in this sphere, as it would not have to compete against those who flourish on machinations and frauds against the state

It is not the first time the theme of war on off-shores is raised in the Government: this spring the Chamber of Accounts, on the Prime Minister’s instruction, will check all state corporations for corruption schemes and their employees’ offshore connections. In particular, the Resolution of the Government mentions companies like Gazprom, Transneft, RZhD, Sovkomflot, VTB, Vneshekonombank, Rosatom and Sberbank.

Danger of interpreting widely

Alexey Popov, Advocate, Partner at the Firm, believes that one should draw a distinction between legal ways to minimize taxes and using offshores for tax evasion.

A.Popov said: “In his article, Mr. Putin mentions the offshores within the context of the necessity to fight tax evasion, and in this sense the Prime Minister’s message appears completely true and logical. Of course, one should distinguish between using offshores for tax evasion, that is – for cheating on the budget, and using them for legal minimization of taxes. In the latter case, not only do offshores not violate legal interests of the budget, but also become one of the most famous and efficient methods of tax planning”. He also said: “There is a danger that the tax and investigation bodies might stretch the meaning of Mr. Putin’s message to excess, which could lead to a total campaign against offshores. Such campaign will undoubtedly become a serious factor of the state’s influence over large and medium businesses”.

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