Cashing out of Russia will come with new tax on foreign business, 20 April 2023

Russia has another surprise for the foreign companies preparing to pull out of the country with a plan for a new levy on top of demanding they sell at a 50% discount and get government permission to leave.

A windfall tax being rolled out in Russia will also apply to those lining up an exit deal, according to people familiar with the plans. It could alternatively factor into the price negotiated as part of the divestment, they said.

There will be no exemption because the budget needs the money, the people said, speaking on condition of anonymity to discuss matters that aren’t public. Russia’s Finance Ministry didn’t immediately respond to a request for comment on Wednesday.

Faced with an exodus of foreigners after the invasion of Ukraine last year, the Russian government moved to exact a higher cost by means of what it called a “voluntary contribution” to the budget and requiring a discount of companies from countries it deems unfriendly. A queue of candidates to leave Russia includes the likes of Volkswagen AG and lenders UniCredit SpA and Raiffeisen Bank International AG...

The main burden of the new tax will fall on businesses in chemicals, metals and mining — except for coal — as well as banks, according to Dmitry Polevoy, economist at Locko-Invest in Moscow.

Should all companies liable for the tax opt to pay early at a discount, Russia will collect 300 billion rubles already this year, allowing it to spend the amount without increasing the fiscal deficit, he said...