MinFin includes Cyprus, Hong Kong, Switzerland in list of 57 jurisdictions used for offshore ownership of assets in Russia

MOSCOW. June 28 (Interfax) - The list of countries and territories used for intermediary (offshore) ownership of assets in Russia consists of 57 jurisdictions, including Cyprus, Hong Kong, Switzerland, Ireland and Montenegro.

The Russian Finance Ministry order approving the list has been posted on the ministry's website and will go into force on January 1, 2023.

The document has been in the works since 2021 in line with Point 15, Article 242 of the Russian Budget Code with the aim of taking comprehensive additional measures to "deoffshorize" ownership of assets and minimize the negative impact of sanctions on production assets in Russia in connection with the vulnerability of exercising the rights of owners in intermediary offshore ownership in the event that the owners of the offshore company are included in the U.S. Treasury Department's Specially Designated Nationals List (SDN List), a memo attached to the draft order said.

The approval of the list is expected to be an additional incentive for Russian owners (ultimate beneficiaries) to increase the transparency of the corporate structure of their business and accumulate revenues in Russia.

Russia passed a law in November 2021 that tightens conditions for receiving state support in the form of subsidies and budget investments for companies with owners registered in offshore jurisdictions. Companies that are 50% or more directly or indirectly owned by offshore companies are now not eligible for state support, and this threshold will be lowered to 25% as of January 1, 2023.

The list of countries and territories used for intermediary ownership of assets in Russia will be used to determine this degree of offshore ownership. The list just approved by the Finance Ministry includes 15 more jurisdictions than the current list of offshore zones - 57 as opposed to the current 42.