Declare offshore wealth? Russia tycoons would rather ship themselves off shore

Tue Jun 6, 2017 6:08am EDT
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By Polina Devitt

MOSCOW (Reuters) - Some of Russia's super-rich have given up residency to escape a 2014 law requiring them to disclose offshore assets, wealthy businessmen told Reuters, a practice that could keep billions of dollars hidden from Moscow's tax authorities.

Interviews with more than a dozen people familiar with the practice -- including prominent tycoons, wealth managers, lawyers and current and former officials -- suggest a swathe of Russia's national wealth is now in the hands of a new class of semi-exiled oligarchs, who keep bases in their homeland but escape its tax net by spending fewer than 183 days a year there.

"You can scold them, call them unpatriotic, but the fact remains: the budget has lost out," Vladimir Potanin, one of Russia's ten richest men, told Reuters about the practice.

Potanin, co-owner of Arctic mining giant Norilsk Nickel, said he has remained a tax resident of Russia but watched as many of his peers moved out in response to the 2014 law.

Two other people on Forbes Magazine's list of the 100 richest Russians told Reuters they had given up Russian residency to escape the law, speaking on condition that they not be identified to avoid hurting their Russian business dealings.

Two more declined to say whether they had done so, but, like Potanin, said they also knew many fellow oligarchs who had.

No official data has been made public on how many people have given up Russian residency to escape the law, or the overall size of the assets they have shielded from Russian tax jurisdiction through the practice.

But Russian law firm Egorov, Puginsky, Afanasiev and Partners said it had conducted a survey of around 300 wealthy Russians and found as many as 40 percent of those with offshore companies had given up residency in Russia. Another 9 percent transferred the assets to relatives who are not tax residents.   Continued...

FILE PHOTO: A view shows the Kremlin wall, with the Moscow International Business Center also known as "Moskva-City" seen in the background, in Moscow, Russia, February 27, 2016. REUTERS/Grigory Dukor/File Photo