Yesterday (March 25, 2020), Vladimir Putin held a televised speech addressed to the citizens of the Russian Federation, occasioned by the emergence of the coronavirus worldwide epidemic. He talked about the unfolding events that have hit Europe and the United States and announced a number of measures that the government was engaged in, combating the biological threat. During the whole coming week all professional activities are to be suspended while citizens will be secured with money from the state and a number of tax exemptions. A speech like any other that might be held by any leader of any state under the circumstances. There was, however, something that distinguished this address from similar speeches.
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Towards the end of his appearance President Putin announced an important fiscal initiative: recipients of dividends earned in Russia will have to pay a 15% tax (rather than the 2% as binding at present) if they intend to transfer the money abroad. Consider that the income tax in Russia amounts to 13%. With this measure President Putin is doing away with yet another yoke that was put on Russia during the Yeltsin era. With this proposal of a legislative bill President Putin will put a stop to capital flight. Surely, the moment for such an announcement was carefully selected: who during the time of the worldwide pandemic, as the current events are referred to, will dare to oppose the move?
President Putin also announced that Russia would renegotiate with other countries agreements on double taxation and in case those other countries did not yield to Moscow’s demands, Russia will unilaterally renege on those agreements.
Consider also that President Putin can kill two birds with one stone. Capital will be kept within the country and the same measure will affect the oligarchs and their Western partners. There will be less money to line the pockets of foreign investors, less credited to foreign bank accounts, less money for subversive political activities in Russia and – what follows naturally – a resultant more intense – let us express it in mild terms – dislike for the Kremlin “regime”, voiced in unison at home and abroad. Also, since almost every action is like a double-edged sword, there might be smaller foreign investment in Russia.
