Russian companies return home from Western listings chastened and wiser

In recent months, hundreds of companies that were previously registered in jurisdictions in the West have returned to Russia. This trend has accelerated due to new laws that make it easier for Russian capital to relocate back to their homeland. It is unclear how much money has already been repatriated but its certainly into the trillions of rubles
However, it is worth noting that these companies are owned by Russian capital and were once registered in the West. The most recent development in this series of events pertains to the Headhunter company (HeadHunter Group Plc; HH). On March 27, its shareholders decided to redomicile (re-register) from Cyprus to Russia.

Shortly before, the large agricultural holding Rusagro made a similar announcement of their intentions. “We are currently waiting as we have not yet received the appropriate permission.” “As soon as we receive it, we will immediately initiate all necessary shareholder decisions to begin the redomiciliation process,” stated Alexander Tarasov, Director of Corporate Development at Rusagro Group of Companies LLC, in early March. The company began taking steps towards this at the end of last year. The delay was due to waiting for permission from the regulator of the Republic of Cyprus, which is in no hurry to approve the decision.

Previous tax jurisdictions are delaying bureaucratic procedures for facilitating the departure of these Russian taxpayers. Sometimes, this delay is not even for mercantile reasons but due to Russophobic sentiments. Companies registered in the Netherlands cannot directly re-register in Russia; they must first go through a third, transit jurisdiction.
For many years, the Republic of Cyprus was a favourable location for registering companies with Russian capital. This was not solely for tax minimisation purposes. Within European jurisdiction, it was simpler for companies to list their shares on Western stock markets. However, following the termination of the double taxation agreement between the Russian Federation and the Republic of Cyprus, the advantages of this jurisdiction disappeared. Plus, the risks associated with a jurisdiction of an EU member state have increased, with the main risk being sanctions against Russian businesses.

The decisions made by Western exchanges to force the delisting of Russian companies and impose sanctions restricting Russian businesses’ access to loans are significant. Additionally, Russian companies registered in the West face challenges when completing transactions and paying dividends.

Today, Russian businesses fully understand the meaning of Vladimir Putin’s words on this matter, which he voiced over 20 years ago. The president reiterated a year ago that Russian capital should work for the country’s national development.

Russian owners are welcome in their homeland, and the state is taking measures to ensure that Russian businesses that are de jure staying abroad return home and pay taxes. Their main activities, employees, and assets of the business are located in Russia.
Since 2018, Russia has established two special administrative regions (SARs) with special legal regimes designed to accommodate foreign holding companies. These regions are located on Oktyabrsky Island in Kaliningrad and Russky Island in Vladivostok. The SAR offers tax incentives to encourage business return, such as the exclusion of income from shares or shares of economically significant organizations from the tax base. Additionally, there is a benefit for personal income tax.
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Russian companies return home from Western listings chastened and wiser

In recent months, hundreds of companies that were previously registered in jurisdictions in the West have returned to Russia. This trend has accelerated…