As the ruble depreciates against the dollar and euro, the Russian government’s first assistance to its suffering oligarchs is taking shape: the creation of domestic offshores in Kaliningrad and on Russky Island, south of Vladivostok. These new zones would offer special tax and regulatory benefits.
If implemented, the project would allow certain Russians to transfer their businesses to Russia from other countries (including offshores) without changing their legal form or financial infrastructure. They could also move their corporate capital without paying additional taxes. “Residents” of these zones would receive status as international commercial enterprises, which could be registered in a single day, without disclosing key information about its management or shareholders.
Residents of these offshore zones wouldn’t have to pay taxes on any income earned abroad — a sweet deal for one of the companies hardest hit by the new U.S. sanctions: Oleg Deripaska’s Rusal, which last year earned almost 80 percent of its revenue ($7.9 billion) outside Russia.