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Russia wants $111 billion from offshore accounts

Staff writer |
An estimated $111 billion of Russian money, or 20 percent of the country's exports, is "lost" offshore, President Vladimir Putin said.

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To make Russian companies more transparent, Mr. Putin proposes stricter penalties for firms that avoid paying domestic taxes. Addressing officials in a state of the nation address in Moscow, he balked at the capital flight and said losses incurred have directly damaged the state budget, and that forces behind Russia's economic slowdown are internal, not external.

Half of Russian companies' foreign investments each year leave Russia, Mr. Putin explained in front of Assembly members at the Kremlin hall.

Rosneft's March acquisition of TNK-BP for $55 billion made it the world's largest listed crude oil producer, but Russia lost out because it took place outside Russian jurisdiction. Another $25 billion was lost to offshores as well.

"These numbers stand for the drain of capital that should be working in Russia and direct losses for the national budget," said Mr. Putin. To keep tax money in Russia, he proposed companies that wish to register offshore will still be subject to Russian state taxes, and won't receive any government funding. They also will be barred from participation in bidding at state auctions, like that of Rosneft.

"If you want to go offshore, be my guest, but the money stays here," said Mr. Putin.

Russians invested $70 billion during the first quarter of 2013 into their offshore jurisdictions, according to the Central Bank of Russia.

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