OCTOBER SAW A REVIVAL…

October 31st, 2009

The Russian Government hopes to get 70 million rubbles profit from the privatization

Russian Minister of Economy Elvira Nabiullina made this announcement in the beginning of October after the meeting on the 2010 privatization plan. “Nowadays we estimate that the profits from the privatization may reach a level of 70 millions rubles in 2010”, she said. Gabiullina also informed that in 2010-2011 the Government planned to sell 20% of “Sovkomflot” shares and added that those shares were being prepared for the sale but the form of the sale wasn’t still defined.

Midland Consult Conferences are a success

At the end of October Midland Consult hold another conference EUROPEAN COMPANIES AND TRUSTS FOR INTERNATIONAL BUSINESS ACTIVITY & ASSET PROTECTION. Apart from Marriott Grand Hotel where the conference was held, companies Bilanz-Data, Maprima, attorney at law Alain Girardet and Piraeus Bank were the sponsors of this interesting meeting. Many famous lawyers, bankers, consultants and auditors from Europe who work at tax planning, registration and administrating of international companies, holdings, private foundations and trusts assisted the conference. During his opening speech the Director of Midland Consult Maxim Stepanov gave a review on the new tendencies of the tax planning market; spoke on the advantages of registration and administrating of European companies, and also on the peculiarities of work with the companies in other international jurisdictions with the aim of tax optimization and correct international business activity. The speakers were: tax consultant of Bilanz-Data Erich Baier, director of Piraeus Bank International Department Symeon Symeou, director of Midland Consult Financial Department Vassos Maratheftis, partner of a Swiss law firm Schweiger Alain Girardet, partner of the company GMS and CA from Luxembourg Jean-Luc Jourdan and other specialists. Many participants of Midland Consult Conference underlined that such events helped to understand better the possibilities of international business in the sphere of different international companies’ registration and gave the possibility to choose the legal ways of expenditure optimization.

Deputy official of Russian Vneshtorgbank (VTB) spoke to the Russian-Cyprus Business Association

In the middle of October in Hilton Park Hotel, Nicosia, deputy official of VTB M. Kuzovlev met with the Cyprian businessmen. He spoke on the present-day situation in the Russian economic and financial systems, on the Russian-Cyprus relations in this sphere. According to Kuzovlev, the state of Russian economy influences such Cyprian business areas as services, real estate, tourism and investments. The Russian banker underlined that Cyprus was a leader of investments in the Russian economy and by the end of 2008 those investments reached 56,9 billion dollars. At the same time Russian statistics show that in 2008 Russia had invested in Cyprus 15,6 billion USD. According to the Cyprus Central Bank, by the end of the last year Russian deposits in the Cyprian banks made 65% of all foreign investments, and that is more than 11 billions of euro. The Russian banker underlined that in spite of significant financial market fluctuations, there were no significant financial changes in Cyprus. It means that the world financial crisis didn’t have any significant affect on Cyprus. Mr. Kuzovlev said that the turnover of some Cyprian companies to a large extent depended on the Russian clients. It’s difficult to tell any exact number, but thanks to the Russians Cyprus gains approximately 500 millions a year. The Russian banker told the gathered about the Russian Government’s program of anti-crisis measures, about the tasks of the Russian economy’s modernization, called the Cyprus businessmen for taking part in the Olympic projects in Sochi, in telecommunication projects, programs of energy.

In 2010 Russia plans to borrow 17 billions of dollars in international markets

In October Russian Minister of Finance Alexey Kudrin announced that In 2010 Russia planned to borrow about 17 billions of dollars in the international markets. “To secure a large volume of expenditures, social payments, infrastructure, economy modernization, for sure we’ll borrow in the international markets’, he said. “Next year we will borrow about 17 billions of dollars. Now we’re discussing the loan of 2-4 billions from the World Bank because the World Bank’s credits are distinct in a credit period. They are more long-termed and benefit”, explained the Minister. He also added that if the state debt increased 3% of GDP, it won’t be critical for the Russian economy. Mr. Kudrin mentioned that nowadays the state debt makes about 10% of GDP.

Ukraine is expecting presidential elections

In October there was an increase not in the economic, but first of all in the political activity in Ukraine. The country is living a new crisis related with Ukrainian parties’ fight for power, this time they are fighting for the presidential post. Yatsenjuk, Timoshenko, Yanukovich, Jushchenko and others, in general about a dozen of persons, are spending considerable sums of money for the electoral campaign and they are generous in giving promises. Thus, the leader of the Party of Regions Victor Yanukovich is ready to exempt the small business from taxes if he wins the elections. He made this announcement answering to the journalists’ and audience’s questions on the 28th of October. “Besides, I plan to make the companies’ registration and licensure free of charge. It will motivate you to get as quickly as possible all the necessary documents that will open the way for the development of your business. That will also eliminate the corruption in the institutions that nowadays issue this kind of documents. The attempts of the current authorities to make it solely through the only one institution weren’t a success because there is corruption in all the levels. Nowadays the officials gather such requests for licensure in advance, take bribes and unfortunately the businessmen don’t protest’, declared Yanukovich. “I understand that you just have no choice, you have to live, to survive, to have an opportunity to work. We have our draft on the tax vacations prepared. It is registered in the Parliament, and as soon as it is examined, we’ll adopt it and for sure, follow it”, added the candidate to the Presidency.

Latvian political analyst: Latvia has lost independence

The situation with the budget has shown the following: Latvia has actually lost its independence!”- said political analyst Ilga Kreituse.

If the Government having adopted the budget project for the following year, can’t direct it to the Seim without its coordination with the international creditors – WMF and the European Commission – it means that “Latvia is gradually stopping to be an independent state that decides itself how to act, and appeared under control of the international structures”, considers the expert. The project of the 2010 budget drafted by the Government Kreituse called as “the project of survival, but not development”, it was made in the “style of Bolsheviks”. “Let’s take everything away from someone who owes something and don’t give it to those who owe nothing and as a result make everyone equally poor. At the same time we have to give an opportunity to get more for those who owe something and try to make everyone rich more or less”.

Russia-Cyprus: high level relations

The Cyprian parliamentary delegation headed by the Head of the Parliament Marios Caroyan, returned to Cyprus in the end of this month after its visit to Moscow in October. According to the Cyprian part, the visit was fruitful and confirmed the solid position of Russia related to the problem of Cyprian regulation. The parliamentarians think that bilateral relations may have further development on the mutually beneficial basis, which is already having positive influence on the economy of both countries.

In the beginning of November another important visit will take place. Russian Minister of Foreign Affairs Sergei Lavrov will come to Nicosia. It’s expected that apart from political issues, Cyprian authorities and Mr. Lavrov will touch the problems of bilateral economic relations.

The offshore companies will be required to present the information on the beneficiaries & juridical persons working in the offshore companies themselves.

The Presidential Council on Codification doesn’t want to register offshore companies working in the territory of Russia in the register of juridical persons. The offshore companies will be required to present the information on beneficiaries themselves. There are no signs of strict regulations of the offshore companies working in the territory of Russia in the final draft of the law concerning juridical persons approved by Mr. Medvedev in October. Compared to the draft published half a year ago, the final draft doesn’t contain an article on the registration of offshore companies working in the territory of Russia in the register of juridical persons with the obligatory information enclosure about a founder and beneficiaries. According to the idea of the draftsmen, offshore companies couldn’t make business or buy property without this kind of registration. Still the offshore companies won’t be left severely alone. In October the Government discussed the project of changes to be introduced into the intergovernmental agreement with Cyprus on the avoiding of double taxation. The project had been already accorded by the Ministers of Finance of both countries in April. According to it, the Cypriots have to disclose information (including the information about the final beneficiaries of the companies) even if it is a bank secret or a personal agent’s or trustee’s secret. The request of this information is just an administrative request and it’s not a legal procedure. In exchange the Russian Ministry of Finance will exclude Cyprus from its list of offshore jurisdictions which will decrease taxation on the dividends paid by Cyprus to Russia. The analysts from both countries think that this project doesn’t take into consideration the fact that Cyprus isn’t an offshore jurisdiction for a long time already and alike Russia is in the white list of the countries that follow the prescripts of international finance institutions. Besides, without a judicial authorities’ decree the information can’t be disclosed just on the request of Russian authorities. It’s widely known that in the Russian computer markets you can buy any database and that is why it’s quite clear why the Cypriots want to keep confidential the information on the owners of international companies. Moreover, this approach contradicts the European Union law and Cyprus is the member of the EU.

MIDLAND CONSULT, 10/31/09