Zhemukhova M.A. Root cause analasys of Russian economy's offshorization and underlying principles of deoffshorization

Abstract: The subject of the research is to determine causes of Russian economy's offshorization and what kind of preventive measures can be taken for its deoffshorization. A high level of offshorization is explained by the fact that the largest percent of Russian corporations is controlled by the companies registered in offshore zones.The article presents the main advantages of using offshore schemes whereas author points out the following aspects: minimisation of taxation, available long-term bank loans at the reduced interest rate provided by IMM (International Monetary Market), anonymity of end-beneficiaries and securitization of the property. It was applied a comparative analysis of various approaches to solving the issue of offshorization.Analysis would also take into consideration several key actions such as: tax, monetary and economic measures. The major measure to combat the trend of economy offshorization is to conduct a competent proactive monetary policy aiming to increase the money supply in the country, enhance the level of monetization and liquidity resulting in lower interest rates on credit resources as well as significant decreasing of the need for the long-term funds abroad. It is stated in the article that the negative effects of the offshore activities has dual economic consequences. As a result residents of the country eventually pay more taxes to compensate the occurred damage because of the money disappearing in the offshore territory. Author demonstrates the urgent need to revise or even reject the agreements in order to avoid double taxation, to enhance foreign exchange control, determine a list of end beneficial owners of active offshore companies in Russian Federation. Author emphasises the need of establishing of domestic long-term lending at low interest rates through development of the Russian stock market as an opportunity for borrowing funds for corporate business.

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