Russia Forces Foreign Firms Leaving to ‘Contribute’ to Budget
13:59 JST, March 30, 2023
Russia has announced a policy of requiring firms from “unfriendly countries” selling assets in and withdrawing from Russia to make a certain amount of “voluntary donations” to the Russian budget.
The Russian government announced the requirement Monday for companies from the United States, European countries and Japan, among others, which were designated by Moscow as “unfriendly nations” after its invasion of Ukraine.
Moscow is believed to be trying to prevent companies with advanced technological capabilities from withdrawing from Russia by raising the cost of withdrawal, while simultaneously securing funds for the war.
The Russian government’s foreign investment committee introduced the policy on March 2. It was a revision of the policy announced in December regarding “voluntary donations” by foreign companies withdrawing from Russia.
The new policy requires companies from the unfriendly countries to donate at least 5% of the assessed value of their assets to the Russian budget when withdrawing from the country. In the case of selling their Russian operations at discounts of more than 90%, the amount to be paid to the Russian treasury will be at least 10% of the assessed value.
According to the database of Ukraine’s Kyiv School of Economics, which examines trends of foreign companies operating in Russia, more than 1,200 foreign firms continue to operate in the country. Of the 466 companies that announced their withdrawal from Russia after the invasion, only 207 have completed the necessary procedures for withdrawal, including the sale of their assets, according to the database.
Russia is believed to be struggling to secure new revenue sources amid the uncertainty that has followed its increasing dependence on exports of oil and natural gas, due to sanctions by the United States and Europe against the country.
According to Russian news agency Tass, Russian Deputy Prime Minister Alexander Novak, who is in charge of energy, said Tuesday that exports of energy resources accounted for 42% of the country’s national revenue in 2022, up from 36% in 2021. Novak said that oil exports to India in 2022 increased 22-fold from the previous year, and those to China also rose 8%. However, observers pointed to a significant decline in Russian oil revenues this year.
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