MOSCOW, June 14 (RIA Novosti) – Russia will use its 2014 leadership of the G8, a group of the world’s eight richest countries, to push for international regulation of offshore tax havens, President Vladimir Putin said in a Thursday interview with RIA Novosti.
“It is an open secret that it is in offshore zones that considerable amounts of speculative and sometimes blatantly criminal capital are accumulated,” Putin said in written replies to submitted questions.
Such a focus would be consistent with Putin’s earlier public statements and would also continue a campaign against offshore havens begun by Prime Minister David Cameron of the United Kingdom, the current head of the G8; however, offshore banking is a key part of the Russian economy and an increasingly toxic political issue in Russia itself.
In his interview, Putin argued that in order to tackle offshore zones – which he called a threat to “fiscal sovereignty” – regulations need to be drawn up and enforced not only by national governments, but at an international level as well.
“Russia proposes to conclude bilateral agreements with offshore and low-tax jurisdictions … [that] should be aimed at countering illegal schemes of minimizing taxation, involve the exchange of tax information and the implementation of universal recommendations developed within the framework of the OECD,” Putin said, referring to the Organization for Economic Cooperation and Development in Europe.
In his state-of-the-nation address in December, Putin called for the “deoffshorization” of Russia’s economy and in May he signed off on a law that bans state officials from having foreign bank accounts.
But the use of offshore banking remains an integral part of Russia’s economy. Russian entrepreneurs prefer to park their cash abroad because of political and economic risks at home, and even some state entities use foreign-registered companies and bank accounts abroad.
The four countries from which the most money was invested in Russia in 2012, the latest year for which data are available, were Luxembourg, the Netherlands, Ireland and Cyprus, according to the Central Bank. All four have large offshore banking sectors – suggesting most of the money was actually of Russian origin.
Russia’s outgoing Central Bank chief, Sergei Ignatyev, said in February that illegal money transfers from the country had reached $49 billion the previous year, or 2.5 percent of GDP.
Putin also said in the interview that Russia would devote its period as the rotating head of the G8 to supporting the work of the World Trade Organization, which Russia joined last year, and fighting against protectionism as a way of stimulating international trade.