MOSCOW, December 19 (RIA Novosti) – Several top Russian companies have announced plans to reduce their use of offshore holding structures after President Vladimir Putin repeated calls for “deoffshorization” last week, according to a Russian newspaper report Thursday.
Aluminum producer Rusal, telecoms giant MTS, truck maker Kamaz, state-owned hydroelectric conglomerate RusHydro and iron ore miner Metalloinvest have all made commitments to cut their dependence on offshore companies, Vedomosti newspaper reported.
“You’re welcome to use offshores – but the money needs to be [sent] here,” Putin told an audience of lawmakers, top officials and businessmen during his annual State of the Nation address on December 12.
Russian companies hold money abroad not only to take advantage of easier tax regimes, but to avoid risks associated with doing business in Russia, which experts say include an unpredictable business environment, erratic courts and weak law enforcement.
“In accordance with the instructions of the president of Russia, international group Rusal has developed a plan to bring, in stages, its financial and management operations onto Russian territory,” a Rusal spokesperson said Wednesday, the Prime news agency reported.
Rusal, which produces about 10 percent of the world’s aluminum, trades its shares on the Hong Kong stock exchange, while the company is registered on the island of Jersey in the English Channel.
About $111 billion of Russian money passed through offshore companies in 2012, equivalent to one-fifth of the nation’s exports, Putin said last week.
Finance Minister Anton Siluanov told reporters after Putin’s speech that the “deoffshorization” of the Russian economy could provide the budget with “billions of rubles,” the Prime news agency reported.