In the future, the Russian government will demand payments from companies that want to go out of business in Russia.
(Photo: IMAGO/ITAR-TASS)
Riga Western companies that want to leave Russia and sell their assets in the country must now make a direct payment to the Russian state. A committee of the Russian Government Commission for the Control of Foreign Investments had already decided at the beginning of March. However, the corresponding document was only published on the Commission’s website on Monday.
This shows that the companies concerned are obliged to “voluntarily transfer funds” to the state budget. The levy amounts to at least ten percent of half the market value of the assets concerned. If the sale takes place at a discount of more than 90 percent, the companies are even obliged to pay at least ten percent of the market value.
Ultimately, companies could choose to either pay a “voluntary contribution” of 10 percent of the sale value, or agree that receiving the money from the sale would be delayed for several years. This choice is no longer available.
Since the start of the full-scale Russian attack on Ukraine, many Western companies have left Russia, while others plan to remain in Russia for the time being. A large part underlines the intention to want to withdraw further soon.
But the Russian government is making it increasingly difficult for foreign companies to sell their businesses in Russia.
Russia reports an enormous budget deficit
The income from the recently mandatory levy will come in handy for the Russian authorities, because the Russian state is threatened with an enormous budget deficit this year. After January and February, the state budget already showed a deficit of 2.581 trillion rubles, the equivalent of about 32.3 billion euros, as the Russian Ministry of Finance announced in early March.
The sum is almost 90 percent of the budgeted deficit for the whole year of 2.925 trillion rubles. The state budget is under pressure, particularly due to the slump in oil and gas revenues.
>> Read here: This is the true state of the Russian economy
Putin urgently needs money for Russia’s war economy. Recent data from the Treasury Department shows that the biggest increase in government spending is in defense and payments to the regions. However, information on a third of public spending remains classified. This increase in classified spending points to rising war-related spending, Russian economist Alexandra Suslina told Bloomberg.
“It is logical to assume that the cost of new areas is also included there,” Suslina said, referring to the parts of eastern and southern Ukraine that President Vladimir Putin declared annexed last September.
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