Russian govt maintains right to support cos with offshore participation exceeding 25% in 2024

MOSCOW. Jan 9 (Interfax) - The Russian government's right to bypass the ban on state support for companies in which more than 25% of capital is owned by persons from offshore jurisdictions has been extended for 2024, with the relevant amendments to the Budget Code coming into force on January 1.

According to current rules, companies with offshore participation exceeding 25% cannot apply for subsidies and budget investments, but the government was granted the right in 2023 not to apply this prohibition. It does not apply if budget funds are used for measures to prevent the negative impact of external factors, including geopolitical factors, on the economic situation in the country and other purposes established by the government.

The prolongation of this right was prompted by the fact that the process of excluding offshore companies from the chains of ownership of Russian enterprises and organizations has not yet been completed. Some companies experience difficulties in obtaining consent for such changes in foreign jurisdictions, and the application of "aggressive measures to change the ownership structure" without their consent may have a negative effect on further exports of domestic goods, imports of foreign components and technologies, lead to the loss of financial and production assets, and reduce revenues to the budget, according to accompanying materials submitted with the document for consideration by the State Duma.