‘Establishing bridges in challenging times’ was a fitting theme for this year’s Russia Law Week.
Jointly hosted by the Law Society and the Bar Council on 15-16 November, the event discussed legal developments in Russia and the impact on the wider profession.
One session focused on Moscow’s efforts to clamp down on offshore tax evasion, neatly coined as ‘de-offshoreisation’, and another on the country’s new arbitration laws.
Legislation passed earlier this year requires Russian residents (whether individuals or companies) owning more than 10% of a foreign company to declare and pay taxes on the company’s income. As part of these measures, a ‘tax amnesty’ encourages full disclosure by individuals of foreign assets and bank accounts not previously declared. In exchange, they are handed an exemption from criminal or civil liability.
Egor Noskov, founder of Duvernoix Legal in St Petersburg, said the law introduced ‘positive initiatives but was badly executed’. He said the entire legislation was just seven pages and regulated ‘hundreds of thousands of situations where money had been placed abroad’.
‘It’s a mistake to assume that people use offshore to evade taxes. The main reason I believe is a confidentiality issue,’ he said, adding that people do not trust the state to handle confidential information.
Also controversial are Russia’s new arbitration laws which came into force in September, specifically in relation to corporate disputes.
Under the legislation, corporate disputes involving shareholders of a Russian entity are now arbitrable, but only under certain provisions.
The legislation distinguishes between three categories of corporate dispute and whether they qualify for arbitration. Disputes involving a public element, including state registration of corporations, do not.
Evgeniya Rubinina, senior associate at the London office of Freshfields Bruckhaus Deringer, said the new legislation had a ‘very broad definition’, describing it as ‘one step forward, two steps back’.