State Duma passes law on fourth phase of capital amnesty

State Duma passes law on fourth phase of capital amnesty

The relevance of the expansion of the program and how it differs from previous stages of amnesty?

According to representatives of the Ministry of Finance of Russia, businessmen declared more than 35 billion euros worth of assets during the first two waves. In this case, the announced amnesty of capital, according to representatives of state authorities, promises to be the most ambitious. This assumption has objective prerequisites, because, firstly, Russian citizens are prohibited to keep capital exceeding the threshold values in the Western financial institutions, and secondly, the Russian assets are becoming "toxic" for the majority of European jurisdictions. It should also be remembered that in the fourth wave it will be possible to declare, including cash and derivative financial instruments. The first waves of amnesty did not provide such an opportunity. Previous waves of amnesty provided an opportunity to declare property (e.g., securities, real estate, and vehicles), controlled foreign companies, and accounts in foreign banks. The fourth amnesty expands this list. According to the draft law, it should include cash and derivative financial instruments. This approach may cause additional interest of business representatives. 

Comparison of the third and fourth stages: softer or harsher?

The third wave of amnesty also provided for a requirement to actually return the declared funds to Russia. The bill extends this requirement to financial assets and cash. Therefore, the approach proposed in the draft law seems to be consistent. 

Correlation of amnesty and imposed sanctions - are there possible contradictions?

The economic measures taken by the government in response to sanctions imposed by foreign countries are to a greater extent aimed at stabilizing the economy and limiting opportunities to withdraw capital outside Russia. Amnesty, on the contrary, creates conditions for the return of capital to the Russian jurisdiction. Therefore, at the moment there is no reason to believe that the measures introduced may hinder the amnesty. At the same time, we should not forget that the amnesty involves the actual return of assets to Russia. Therefore, persons against whom sanctions have been imposed may encounter difficulties in other countries, for example, if their assets have been frozen. 

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Amnesty for legal entities as well: how expedient is it to expand the instrument?

The amnesty of capital was originally intended as a tool for individuals to return capital to the Russian jurisdiction. Expanding this program to cover legal entities would have been fraught with various difficulties. Also, it should not be forgotten that within the framework of the third wave, declared foreign companies had to be re-registered in a special administrative district (SAR). In practice, this requirement created difficulties for businesses. 

Peculiarities in the declaration of cash: goals and prerequisites

There is reason to believe that the inclusion of cash in the program is due to several purposes. First, to create conditions for the actual flow of foreign currency into Russia. This approach looks reasonable, taking into account, for example, the EU ban on cash (EUROs) imported into Russia. Secondly, part of the capital of individuals may be represented by cash. Therefore, extending the amnesty to this type of assets looks consistent, given the government's desire to return capital to the Russian economy and make the upcoming amnesty the most ambitious. 

However, it is important to remember that the amnesty is not a way to legalize money and property acquired by criminal means. Therefore, businessmen should assess possible risks beforehand and prepare supporting documents, if necessary.