Russia approves laws establishing domestic tax havens

Under a package of new laws, Russia will establish special administrative zones on Russky Island next to Vladivostok and on Oktyabrsky Island, which is part of the Kaliningrad enclave. Both sites have been designated as offshore centres where foreign-registered firms owned by Russians that meet compliance standards will be eligible for "redomiciliation" of their business. Companies that transfer their operations to one of the zones will enjoy notable advantages with respect to taxation e.g. of their profits, dividend income and different types of property, as well as the looser currency regulations applied to non-residents. Excluded from registration on the islands are banks, financing companies and companies providing payment services.

The legislative package is part of measures planned in Russia that seek to alleviate the impact of economic sanctions. Business daily Kommersant reports that a plan drafted by the finance ministry combines the new legislation with measures to reduce the dollar's role in foreign trade payments, support access to financing of Russian firms affected by sanctions, limit "unfair competition" by foreign states (i.e. imports), as well as restrict access to information on firms potentially affected by sanctions. The measures will be prepared over the next two months.