Double tax avoidance treaties are useful instruments for foreign investors or trade businesses to understand and utilize as they mitigate against the potential for being taxed in two countries, and often provide clauses that permit the reduction in income tax, VAT, and other pertinent taxes between citizens of Russia and another treaty state. This means the application of them can help open up new markets in Russia and vice versa by reducing the overall tax burden. This can have significant impact on trade profitability.
FDI & Foreign Trade
In signs of the growing trends of Russian companies moving into Asian markets, Russian truck maker Kamaz has opened a subsidiary in Indonesia to increase sales of its products, the company has reported.
The 100 percent wholly owned subsidiary, PT Kamaz Trucks Indonesia, has become a hub for Kamaz in Indonesia and obtained an import license for its products. The company is also setting up service centers in Java, Sumatra, and Kalimantan. Kamaz has chosen local distributor PT Pusaka Bumi Transportasi, which is a part of Indonesia’s Blue Bird Group, to help get its products to the market.
Russia has sold off US$77 billion of its US Treasury Bonds, in one of the biggest sales of the financial instrument. The sales, which occurred last month, have triggered surprise, as United States issued bonds are generally considered a safe investment. Russia currently now holds just US$14.9 billion in US debt.
The Russian Central Bank has stated that it will in future be investing in IMF securities and gold. IMF bonds are issued by the International Monetary Fund (IMF); Russia has stated it will be investing in these and IMF bank deposits. IMF bonds are denominated in special drawing rights, an artificial currency used by the IMF.
Dezan Shira & Associates, specializing in assisting foreign investors in Asia, have joined the Russo-British Chamber of Commerce (RBCC) and established partnerships with Russian law and tax firms in Moscow, St. Petersburg, and Vladivostok. The firm, which has 28 offices throughout China, India, and the ASEAN region, is in its 26th year of operations and provides business intelligence, legal, tax, and administrative services to British and other predominantly European and American companies throughout the region.
The RBCC was formed in 1916, and works to promote trade and cooperation between the UK and Russia, helping companies in both countries to find trading partners and representing the interests of its member companies of all sizes.
Russia’s Vedomosti newspaper has reported that the Russian government is planning the creation of two offshore financial centers (OFCs) with special legal systems in the Kaliningrad Region and the Vladivostok in Russia’s Far Eastern Primorsky Krai territory to support business and trade.
Kaliningrad is based in the Western Baltics and is a Russian enclave surrounded by the European Union. The OFC may be situated on its Oktyabrsky Island, to allow customs and financial operations to be physically separated from normal commercial applications at standard national tax rates. A similar plan is envisaged for Russky Island near Vladivostok in Primorsky Krai.
Russia has begun making trades in cryptocurrencies, with trades beginning on a trial basis in Switzerland and an trade deal with Venezuela for Russian auto component parts being settled in Venezuela’s own national cryptocurrency, the Petro.
Russia’s Gazprombank, the third largest bank in the country, is planning to execute its first test deals with cryptocurrencies later this year via its subsidiary in Switzerland. According to deputy chief executive Alexander Sobol, the bank doesn’t currently have plans for massive introduction of the feature, but is looking into it due to existing demand from some of its major clients. “It’s going to be test deals. Not major ones, just for ourselves. Some of our major clients are interested in such services, so we are currently looking into the possibilities of how to organize it,” Sobol said.
Russian Prime Minister Dmitry Medvedev signed an order this weekend to allocate funds for financing the priority activities of the program – “The Digital Economy of the Russian Federation”. The document was published on Saturday on the government website and can be found in English here. According to the document, US$53.14 million from the reserve fund of the Russian government has been allocated to finance priority activities of the program.
The funds will be used for the state digital programs – “Information Society (2011-2020)”, “Economic Development and Innovative Economy”, “Development of the Transport System”, and “Development of the Electronic and Radioelectronic Industry in 2013-2025”.
Novatek Gas and Power Asia Pte. Ltd., Novatek’s wholly owned subsidiary, shipped to the Indian market its first cargo with LNG produced by the Yamal LNG plant, Novatek said in a press release published on Tuesday.
Yamal LNG’s shareholders are: Novatek (50.1 percent), Total (20 percent), CNPC (20 percent), and the Silk Road Fund (9.9 percent).
“One of our core priorities enumerated in the Company’s Corporate Strategy up to 2030, is the expansion of the supply geography and the growth of our presence in the key Asian markets”, Lev Feodosyev, First Deputy Chairman of Novatek said. “The first cargo delivered to the growing Indian market is an important development in this direction”.
“The number of Chinese tourists in Russia reached 1.5 million in 2017. This is the largest number among all countries for Russia. China, for its part, ranked second among the countries visited by Russian tourists,” the Chinese envoy said. Li was speaking at a board meeting of the Russian Ministry for the Development of the Russian Far East in Vladivostok.
In addition to the export demand, Russia’s precious metals refineries reportedly produced 306.9 tons of gold in 2017, some 6.4 percent more than 288.6 tons produced in 2016. 18.4 percent of the gold produced in the country was exported, while the balance of 224 tons of the metal were purchased by the Central Bank of Russia to add to the country’s gold and foreign currency reserves.