27 Mar 2023 19:38

Russian authorities introduce mandatory fee on sale of assets by foreigners, it could be over 10% of market value

MOSCOW. March 27 (Interfax) - One of the conditions for the withdrawal of "unfriendly" non-residents from Russian assets, along with a significant discount, must now be a voluntary fee paid into the budget, according to a published extract from the minutes of the meeting of the subcommittee of the Government Commission for Monitoring Foreign Investment in Russia. The sub-commission also established that if the discount exceeds 90%, the amount of the contribution shall be no less than 10% of the market value of the asset.

This subcommittee has the right to authorize transactions with "unfriendly" residents, implementation of which was subject to restrictions by Russian authorities in spring 2022 in response to sanctions on Russia, as well as to coordinate the terms of the relevant contracts. In December 2022, the subcommittee announced a number of conditions which would be advisable for application when issuing permits for the alienation of Russian assets by persons affiliated with "unfriendly" states. In particular, this is a discount to the independent assessment of the market value of the asset in the amount of no less than 50%, with the possibility of splitting this payment into installments over one or two years. In addition, along with these conditions or in lieu of them (the document reads "and/or") a voluntary contribution to the budget of no less than 10% of the transaction amount could be paid.

The subcommittee has now adjusted the conditions, waiving the "and/or" language. In order to exit Russian assets, "unfriendly" foreigners will have to pay a contribution into the Russian budget.

According to the general rule, the amount will be "no less than 10% of half of the market value of the corresponding assets specified in the appraisal report", i.e. up to 5%. The contribution will be doubled - no less than 10% of the market value of the assets - if they are being sold at a discount of more than 90%.