Russian authorities are contemplating a significant increase in the one-off contribution required from foreign companies exiting the country, potentially raising it from the current 15% to as much as 40%. This move, reported by RBC daily, aligns with ongoing efforts to tighten restrictions on foreign businesses following Western sanctions imposed due to Moscow’s invasion of Ukraine.
Ongoing Restrictions on Foreign Businesses
Since the onset of sanctions, Russia has enforced stringent exit requirements, demanding substantial discounts on any sale agreements before granting approval. This policy has resulted in the imposition of what has been termed an “exit tax” by Washington, further complicating the process for foreign entities wishing to leave the market.
Financial Impact of Current Exit Tax
As of August, contributions from foreign exit deals have reached nearly 140 billion roubles ($1.51 billion), exceeding the total for the previous year, which was 116.5 billion roubles. The initial “exit tax” was set at 10% and has gradually increased to 15%, with discussions now indicating a potential rise to 40%, according to sources familiar with the negotiations.
Concerns Over Asset Valuations
Reports suggest that foreign companies attempting to exit Russia are facing rising costs as the government demands larger discounts, often well above the original 50% minimum threshold. This shift is seen as a response to cases where asset valuations were significantly low, limiting the potential revenue for the state.
Government Response and Future Considerations
In response to inquiries regarding the proposed increase, the finance ministry stated that they continuously evaluate the effectiveness of their sub-committee’s work on reviewing foreign asset sales. Although no new decisions have been finalized, the discussion indicates a willingness to adjust policies in light of current economic conditions.
Conclusion
The potential increase in the exit tax reflects Russia’s ongoing efforts to manage foreign company withdrawals amid a challenging economic landscape. As discussions continue, foreign businesses should remain vigilant and prepared for possible changes in the regulatory framework surrounding their exit processes.
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