Oleg Deripaska’s En+ conglomerate agrees to move subsidiary to Russia's new ‘domestic offshores’

The board of directors at Oleg Deripaska’s En+ energy and metallurgical conglomerate has approved the transfer of its En+ Holding Limited subsidiary from the jurisdiction of Cyprus to Russia’s new domestic tax havens. The decision follows the implementation of a new law establishing “special administrative districts” on the islands of Oktyabrsky in Kaliningrad and Russky in Primorye.

According to the newspaper Vedomosti, En+ is reportedly considering moving other assets to these special districts. Deripaska’s aluminum producer, UC Rusal, is apparently thinking about a similar move.

Residents of Russia’s new “domestic offshores” retain their status as international companies, enjoy various tax benefits, and are exempt from currency controls. Corporate information about these businesses, moreover, is available only to Russian regulatory agencies and courts.

In early April, the U.S. Treasury Department placed Oleg Deripaska under sanctions in response to “a range of malign activity around the globe” conducted by the Russian government, which operates “for the disproportionate benefit of oligarchs and government elites.” Washington also sanctioned Deripaska’s assets, including En+ and UC Rusal, whose international market values promptly collapsed. In late May, En+ reportedly asked the Russian government for special privileges, including permission to raise utilities and housing fees in the Irkutsk region.