Cyprus feel­ing the pinch of Rus­sian de­posits drain

Financial Mirror (Cyprus) - - CYPRUS -

Cyprus ap­pears to be the only coun­try where Rus­sian de­posits are los­ing out in Moscow’s ef­forts to repa­tri­ate Rus­sian cap­i­tal which has been de­posited or in­vested abroad. Rus­sian Pres­i­dent Vladimir Putin has per­son­ally taken on the cam­paign to repa­tri­ate Rus­sian cap­i­tal through in­cen­tives, as part of his plans to re­vi­talise Rus­sia’s econ­omy.

How­ever, Putin’s ef­forts do not seem to have borne fruit as ac­cord­ing to a study made by Frank Re­search Group (Frank RG), two-thirds of Rus­sia’s mil­lion­aires and bil­lion­aires’ cap­i­tal is still out­side the coun­try.

Ac­cord­ing to the study, Cyprus is the only coun­try to have lost out com­pared to other com­pet­ing coun­tries (Lux­em­bourg, the Nether­lands, the Ba­hamas, Ber­muda, Vir­gin Is­lands). Ac­cord­ing to the lat­est data from the Cen­tral Bank of Rus­sia, quoted in the study, Cyprus has seen EUR 10 bln of Rus­sian money, de­posited repa­tri­ated over the last 15 months.

This is cap­i­tal be­long­ing to com­pa­nies reg­is­tered in Cyprus, most of which po­ten­tially has Rus­sian in­ter­ests, and were trans­ferred to Rus­sian en­ti­ties.

Ac­cord­ing to the Frank RG study, wealthy Rus­sians (Rus­sians with a for­tune of more than USD 1 mln) have ac­cu­mu­lated USD 455 bln, with only as much as USD 140 bln be­ing de­posited in Rus­sian banks, while some USD 315 bln are still out­side Rus­sia.




How­ever, about a year ago an­a­lysts and ex­perts such as pro­fes­sors at the Paris School of Eco­nomics, Filip No­vok­met and Thomas Piketty, and pro­fes­sor at Berkeley Univer­sity of Cal­i­for­nia, Gabriel Zuc­man ar­gued the wealth of rich Rus­sians was a tril­lion dol­lars, which means that just 1/9 of their funds are in Rus­sia.

The Krem­lin of­fered fi­nan­cial amnesty to Rus­sians who had cap­i­tal abroad, giv­ing them the pos­si­bil­ity of repa­tri­a­tion. But again, lit­tle in­ter­est was ex­hib­ited, as only 7200 cases were recorded, re­ported Bloomberg.

In their lat­est ef­fort to repa­tri­ate cap­i­tal, the Rus­sian gov­ern­ment broad­ened the amnesty of­fer adding more in­cen­tives. In par­tic­u­lar, by March 2019, Rus­sians who close their ac­counts in off­shore com­pa­nies will be able to trans­fer their as­sets back to Rus­sia with­out be­ing taxed, while any tax eva­sion of the past will not be in­ves­ti­gated.

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