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Lidings’ Counsel Stepan Guzey commented on the new bill proposed by the Federal Service of Financial Monitoring

Stepan Guzey, a Counsel of Corporate and Tax practice at Lidings, became an expert in a news broadcast on ExpertTV dedicated to the new bill proposed by the Federal Service of Financial Monitoring (FSFM) and aimed at stimulating local investment in Russia and fighting the “offshore economy”.

The story covering the new bill submitted for governmental review aired on 12 March.  The FSFM’s initiative was triggered by Vladimir Putin’s recent order “to work on increasing transparency of financial activities of business entities”. A similar proposal was made by the Ministry of Finance back in 2007 but did not receive governmental support at the time.

The list of measures proposed includes a major expansion of powers of tax authorities who will be allowed to change the deal classification and assess additional taxes without having to obtain a relevant court decision. In addition, it stipulates a substantial increase in the list of grounds for refusal of registration or renewal of registration of an entity. The bill also provides a number of restrictive measures and introduces the new requirements on disclosure of beneficial owners for the counterparties of state-owned companies.

The purpose of the proposed list of measures is clear: it is aimed at increasing corporate responsibility for attempted withdrawal of funds from Russia and decreasing profitability of business management through offshore jurisdictions. It is also drafted to force Russian business to disclose information on its real beneficiaries.

Experts, however, question the effectiveness of future law. In his interview to ExpertTV Mr. Guzey, in particular, expressed his concern in relation to the FSFM’s new initiative saying that should the bill receive governmental approval it would mean a new wave of corruption and an additional burden on the Russian business community. “Opacity in the bill would provoke an “opaque” response from business owners”, Guzey predicted.

For more information on the story please revert to ExpertTV’s website.