Russia tightens exit regulations for foreign businesses, imposing heavier financial penalties
In a move potentially complicating the departure of foreign businesses, the Russian Finance Ministry has enforced stricter conditions under Kremlin directives. As reported by the Russian newspaper Kommersant, the minimum discount rate on the sale of foreign assets in Russia is set to increase from 50% to 60%. Additionally, the mandatory gratuitous contribution to the Russian budget will now rise from the current 15% to 35% of the asset's market value. The Finance Ministry has distributed these new regulations to federal executive authorities, according to the publication.
Foreign companies could now be sold for less than half their worth, meaning they can be bought in Russia for no more than 40% of their market value due to the heightened discount.
Furthermore, foreign entities will be required to contribute a so-called "exit tax" of 35% of the company’s market value to the federal budget. Of this tax, 25% is due within a month of the transaction, 5% within one year, and another 5% within two years, noted "Kommersant." As highlighted by the news agency RBC, " these payments to the Russian budget are mandatory only for "residents of unfriendly countries."
As per documents obtained by the publication, these new requirements align with directives from President Vladimir Putin issued on October 2, Kommersant reports.
Foreign companies may reconsider leaving Russia. RBC's data shows that in the first eight months of 2024, nearly 140 billion rubles were paid into the federal budget by foreign companies selling their businesses within Russia, surpassing the entire year's plan by a factor of 66.
Analysts suggest that the increased contribution might cause foreign businesses, which have not yet left Russia, to rethink their strategy due to financial considerations. Many foreign companies opted to exit Russia following the full-scale invasion of Ukraine in 2022.