Why did Mikhail Prokhorov transfer the Onexim holding from offshore to Russia

Billionaire Mikhail Prokhorov became the direct owner of Onexim Group. This is evidenced by the data of the "SPARK-Interfax" system (Vedomosti was the first to notice this). Changes occurred on February 1. Up to this point, the businessman owned the company through the Onexim Group Limited, registered in the British Virgin Islands.

Mikhail Prokhorov had been thinking about transferring Onexim from offshore to Russia. Back in June 2013, the Federal Antimonopoly Service (FAS) granted his application to acquire 100% in Onexim (at that time belonged to Onexim Group Management LTD in BVI).

At that time, the businessman headed the Civic Platform party, which caused the need to get rid of foreign assets. At the same time, the assets of the businessman were transferred to the trust management of Onexim partners. Formally, the group owned only shares of the insurance company “Consent”, but managed the shares in UC Rusal, the energy company “Quadra”, the development company OPIN, the investment bank “Renaissance Capital”, the media companies “ZHIVI!” And RBC, the bank “International Finance Club”, the manufacturer OptoGan LEDs, as well as shares in the E-Mobile project, the Intergeo Mining and Metallurgical Company and the Witology project.

Since then, the billionaire has said goodbye to political ambitions, and the structure of his assets has undergone significant changes. Currently, Onexim Group directly owns only 50% of Kvadry and 3.7% of shares of the rating agency ACRA.

Prokhorov got rid of a significant part of the assets in Russia in the course of a big sale of 2016-2017. He also owns directly 58% in the IC “Consent” and 83.6% in the IFC bank.

Why did the billionaire need to transfer Onexim to Russia?

The fight against offshore companies has already become a global trend, and is accompanied by changes in legislation, recalls the head of international taxation practice at FBK Legal Dmitry Paramonov. Not bypassed innovations and BVI. Starting from the new year, the authorities of the island state require that companies that do not conduct active business have a sufficient presence in the country, for example, an office and staff. It makes no sense to provide such a structure, but if this is not done, the owner will face criminal liability.

“And to get a small, but still a criminal fine, people have no desire. This is a stigma for life. Therefore, now many people leave this jurisdiction, ”explains Paramonov.

There may be other reasons. “The Russian Tax Service very carefully monitors all payments abroad, a regime of pass-through income payments with taxation of the final recipient is established,” explains Paramonov. “Intermediate structures are becoming transparent to tax authorities and, therefore, unnecessary.”

But de-offshorization can bring benefits. If Mikhail Prokhorov, for example, took advantage of the privilege in liquidating a foreign company, he could re-register all assets for himself without paying taxes and in five years would be able to sell them - also without paying taxes.

Roman Terekhin, Managing Partner of Business Fairway, agrees, given the introduction of an extensive package of amendments related to de-offshore, it is not possible to conceal the actual business owner. Motives can be associated with politics. The United States is seriously engaged in the search for funds of famous Russians and the ownership of large assets in Russia through a company in the BVI now does not seem so safe and reliable.

The transfer of Onexim to Russia also means that now Prokhorov will personally receive dividends from the company and pay personal income taxes from them at a rate of 13% instead of 15% that the Russian organization should have previously withheld when paying dividends to the organization in the BVI.

Last year, two members of the Russian Forbes list at once transferred part of their assets to Russia. Alexey Mordashov translated Power Machines, Svezu and Utkonos from Cyprus, and Alisher Usmanov Metalloinvest and Megaphone.

Mikhail Prokhorov sells assets. And he has 3 reasons for this.