The state Vnesheconombank will be forbidden to credit offshore companies

The Ministry for Economic Development has prepared a draft law, which forbids the state corporation Vnesheconombank (VEB) to conduct dealings, including credit transactions, with companies, which ultimate beneficiaries are legal entities registered in offshores. The same will be in relation to natural persons - non-residents of the RF, being the citizens of similar states and formations.

The idea to erode government support for enterprises, being out of our jurisdiction, but which fixed assets stem from Russia, has long been discussed and found support by the top management of the country.

The logic of such decision is visible enough – to rely upon the state for the support and participate in implementation of government and other contracts, the business should be registered in the country, directly where this activity is carried out. In other way all revenues fall out of taxation of the Federal Tax Service.

For participation in public procurement it is offered offshore companies in the draft law to disclose the information about location, equivalent of the tax number (in accordance with the law of that country, where an enterprise is registered), beneficiaries and management. It is also offered to create a special register of transactions. It is needed to prevent an unrecorded offshore contractor from conclusion of large government contracts (cost - above 1 bln RUB, if it is referred to the order for state requirements, and 100 mln RUB — for regional requirements).

There are no apparent errors by this measure. If a certain amount of offshore companies re-register their firms by standards of the RF, then it will be able to be considered only by the positive side.

See also: Ministry of Finance has begun to fight with offshore tax evasion schemes