Russian Bill Would Exempt Select (Sanctioned) Russian Individuals from Disclosing Foreign Assets

As Russia seeks to crack down on tax evaders by requiring disclosure of foreign assets by its citizens and companies, a new bill is progressing through the State Duma (passed in its second reading on March 17) that would, according to the Russian business daily Vedomosti, permit individuals targeted by international sanctions to declare themselves nonresidents (even if they reside most of their time inside the country).  The rationale appears to be that such individuals need tax relief.  The result, however, is that select individuals are exempt from new requirements to disclose foreign assets, including those regarding controlled foreign companies and their earnings.

As the security and financial community pursue greater transparency regarding the identity of the stakeholders behind Russian companies (and the subsidiary entities under their control), this legislation would appear to facilitate the concealing of this information.  The degree to which this exception would actually be linked to those targeted by sanctions (and, for example, what the working definition of “targeted” will be going forward) will be important subjects to observe.