Residents of "Russian offshores" will be offered a 5% rate on dividends abroad

Starting from May 2021, all "international holdings" resident of the Special Administrative Regions (SAR) in Kaliningrad and Vladivostok will be able to transfer profits from abroad on a preferential rate.

This change is taking place against the backdrop of a tightening tax regime in relation to offshore jurisdictions traditionally used by Russians. Since January 1, 2021, the tax rate on dividends withdrawn to Cyprus and Luxembourg has been increased to 15%.

It is expected that the SARs, that have also been labeled as "Russian offshores”, will become more popular and their residents increase from 30 to 40-50 companies.

To move to a SAR, a foreign company must:
· Have an unchanged composition of shareholders for more than 15% of shares since 2017;
· Do business in several countries, including Russia, through branches, representative offices, a group of individuals or controlled entities since 2018;
· Make 50 million rubles of investments in Russia within six months of moving to a SAR;
· Change the jurisdiction while maintaining the original name, bank accounts, staff, and contractual relationships.

More information on residency benefits in a SAR here:
https://www.economy.gov.ru/material/directions/investicionnaya_deyatelnost/specialnye_administrativnye_rayony/preimushchestva_dlya_rezidentov_sar_i_mezhdunarodnyh_kompaniy/