The Moscow Arbitration Court ruled on the additional charges to the ONEXIM group of billionaire Mikhail Prokhorov VAT in the amount of 332 million rubles (also a fine of 46 million rubles and penalties of 123 million rubles) in relation to “consulting services” allegedly rendered to foreign companies in 2013-2015. The tax authorities considered that the place of provision of these services was the territory of the Russian Federation, and therefore taxes were to be paid at home. This is the first decision where the court agreed that offshore companies were governed from Russia. So far, Mikhail Prokhorov has financially suffered. Who's next?
In April 2016, on Tverskoy Boulevard, where the central office of the ONEXIM group of companies is located, the operational group, which included Chekists and tax specialists, arrived. Visitors who quickly dispersed over the floors did not interfere with the work of office staff - they were interested in the financial services of Renaissance Capital, Renaissance Credit, Accord and Quadra. The check was also held at the IFC bank, whose co-owners are ONEKSIM and Mikhail Prokhorov.
The catch of the security forces was rich. During a search conducted by FSB officers, 68 seals of various organizations, including offshore ones, were seized. They also seized a large number of documents related to financial transactions with the participation of foreign firms under the general title “Horns and hoofs”. In a word, they were taken by surprise, because no one was interested in the offshore companies of ONEXIM before.
In November 2016, the ONEXIM group transferred a significant part of the shares of the Quadra energy company from offshore to Russian jurisdiction. Thus, Cyprus Joule Energy Ltd. reduced its share in Quadra from 34.52 to 0%. Ragato Management from the British Virgin Islands, which previously owned 24.75% in capital, also withdrew from Quadra shareholders
At the same time, ONEXIM Group LLC increased its presence in the capital of Quadra from 15.47 to 49.99%. The co-owner of the energy company was the Russian company BusinessInform, which is 100% owned by Mikhail Prokhorov. True, ONEXIM itself continues to own Onexim Group Management Ltd. from the British Virgin Islands. But all these gestures were belated.
Two years after the searches, the Moscow Arbitration Court issued an unprecedented decision to recover from ONEKSIM half a billion rubles of underpaid VAT, fines and penalties. The tax authorities indicated the following circumstances, which, in their opinion, confirm that foreign companies registered in Cyprus, the British Virgin Islands, were actually managed from the Russian Federation: design and preparation of primary documents requiring the permission of the board of directors was carried out at ONEXIM premises; in the office of ONEKSIM, the originals of contracts with offshores were withdrawn; the offshore companies had the same IP addresses as the ONEXIM structures (several pages of the solution are devoted to the study of these facts), etc.
The court rejected the arguments of ONEKSIM that foreign companies were managed in Cyprus. In support, the findings of the law firm Polakis Sarris Co LLC were submitted But he was prepared by a Cypriot lawyer, who is one of the directors of Onexim Holdings Limited, that is, an interested person.
It is often impossible to simply launch an offshore businessmen from the United States and large European countries. The supervisors of these countries control when it is possible to allocate something to a separate jurisdiction, and when it is not. In particular, the criteria are production forces, management risks, reasonable remuneration. Practice for the whole world has long been clear and familiar. And we had it possible. Here, finally, the tax service shop covers.
The end of the freemen
Meanwhile, in the UK, amendments to the law on sanctions and measures to combat money laundering have been adopted. According to the innovations, the Cayman Islands and the British Virgin Islands, as well as other British Overseas Territories, will have to create a public register of beneficiaries by the end of 2020. It will contain information about the owners of offshore companies that were not previously accessible to third parties.
In this regard, in order to “rehabilitate” in the eyes of the international community, many offshore jurisdictions had to implement the requirement of “economic presence” (substance). In particular, the British Virgin Islands (BVI) made changes to their legislation, according to which all companies registered in the BVI would have to provide their
real presence, that is, to manage from the territory of the BVI, to have an office and staff, to bear the operating costs of maintaining personnel directly on the islands.
Similar bills have been passed by the government of Bermuda, the Cayman Islands, the Isle of Man, Guernsey and Jersey. For newly registered companies, the rules are valid from January 1, 2019, and the substance already registered for the creation is granted until July 1, 2019. For non-compliance with this requirement will apply strict sanctions - from fines to deletion from the register of companies.
By the way, the offshore tax scandal is not the first wake-up call for Mikhail Prokhorov. As reported by “Our version”, in 2017, the US Treasury Department found dozens of accounts opened by Mikhail Prokhorov in a Tanzanian bank with the inconspicuous name “FBME”, including in its Moscow branch. Most likely, an institution with Lebanese roots was not used as a credit institution, but as an exclusively settlement enterprise (this can be judged based on the number of Mikhail Prokhorov firms serviced at the bank). The US Treasury Department said that all transactions of Mikhail Prokhorov’s firms will be subjected to the most thorough scrutiny, after which the scrutiny of all of its partners will begin.
Apparently, the offshore freemen of the Russian oligarchs comes to an end. It's time and honor to know. Moreover, domestic offshore companies may soon be located on October Island in Kaliningrad and on the Russian Far East. The bill was developed by the Ministry of Economic Development, now the document is in line with the relevant departments, it is planned to adopt it in the spring session.