Kommersant
Russia and Switzerland agree to swap banking information
Russia and Switzerland have agreed to update the double taxation avoidance agreement concluded between them. Now, Russia’s Federal Tax Service will be able to request that its Swiss counterparts share information on Russian citizens suspected of tax dodging, while Switzerland will be granted some tax breaks.
The protocol was signed by Alexei Kudrin, now Russia’s former finance minister, and Eveline Widmer-Schlumpf, head of Switzerland’s Federal Department of Finance, in Washington on Sunday.
The text was posted on the Russian government website on Monday. It introduces new rules governing the exchange of information between the two countries’ tax authorities. The 1995 agreement currently in force contained no such article.
The swap amendments merely reiterate elements recently inserted in new agreements on the avoidance of double taxation concluded with Cyprus and Luxembourg.
The article lays down the procedure through which tax authorities that suspect their citizens of dodging payments can make inquiries. It indicates that inquiries should be to the point and seek information on the identity of the person under scrutiny, the purpose of the inquiry, as well as the name and address of the person that may possess such data. General questions like “Who might be the beneficiary of the deal?” or “Does this bank carry Russian accounts?” are expressly banned.
Switzerland’s consent to share information with Russia about tax dodgers is not unique. Back in 2009, Switzerland announced that it would ease the law on banking secrecy and bring it in line with the OECD’s requirements. Then it introduced similar rules into its agreements with the United States, Britain, France and, last week, with Germany.
Experts believe the new wording of the Russian-Swiss agreement may create problems for Russian companies using Switzerland for doing their business.
“Unlike previous, less demanding OECD’s data exchange requirements, this re-phrased agreement firmly states that neither the banking, nor the professional, nor the auditor’s professional secrecy poses any obstacle to the release of information,” Rustam Vakhitov, head of UFS Investment financial consultancy, told Kommersant. He is certain that reasonable requests filed by Russian tax officials will not go unanswered, something Russian residents who regularly receive an income from their Swiss investments and forgetting to inform the Federal Tax Service might worry about.
In exchange for this information exchange, Russia has granted Switzerland significant tax privileges. One is a zero rate on interest payments made by Russian companies to Swiss residents (the current rate is 10% and 5%). Swiss state- and private-owned pension funds will also not pay tax in Russia on their Russian dividends – this is designed to stimulate asset purchases in Russia. “Such a privilege is denied to rival countries (Cyprus, the Netherlands and Luxembourg), which handle the bulk of inward investment into Russia,” Vakhitov added.
Izvestia
Russian army stops buying Kalashnikovs
The military say they will not renew their contract with the Izhmash plant until they create a new gun.
The Russian Defense Ministry has refused to buy the legendary AK-74 assault rifle by famed designer Mikhail Kalashnikov. Not purchasing the guns in 2011 already represented a significant break with tradition – compounded by the fact that none will be purchased in 2012 or 2013.
The ministry said their “warehouses are stocked” with the gun which has not been modernized for years. A ministry official said they expect the Izhmash plant to produce a new gun that will be as reliable as the AK-74 but boasting improved accuracy and a longer range.
Izhmash said they will try to develop their new design by the end of the year.
“We have been working on a new gun and hope the military will like it,” one plant representative told Izvestia. “Until then, we will increase exports and the production of sports guns.”
The plant’s administration has not informed Kalashnikov himself of the defense ministry’s decision not to buy his famous gun.
“Mikhail Timofeyevich will turn 92 soon. We don’t want to tell him, to have it on our conscience, for he may not survive the news,” one of Kalashnikov’s relatives told Izvestia.
Russia has enough AK-74 guns in stock for 15 to 20 years, military analyst Igor Korotchenko said.
“Several million guns were stockpiled back in the Soviet period. Properly maintained, one of these guns can serve for 10, 15 and even 20 years. Izhmash must be quick to search for new markets while also creating a new gun,” Korotchenko said.
Military analyst Viktor Korablin explained that the guns Izhmash currently produces differ radically from those in the Defense Ministry’s warehouses.
“The new AK-74M has a special plate for mounting optical and optronic sights, which increases accuracy 50%-100% and the effective firing range to 500 or 600 meters,” Korablin said. “Without it, this range falls to just 300 - 400 meters. It cannot be mounted on the old AK-74 guns.”
He added, though, that the old AK-74 can be upgraded to the AK-74M level at Izhmash, or the plant could produce equipment for the military to make this possible.
Izvestia sources said Izhmash has no such plans, and according to the Defense Ministry, they are not going to modernize the AK-74 either.
Kommersant
Italy’s Eni seeks Val Shatskogo stake
Eni is negotiating joint development of a Black Sea oilfield, Val Shatskogo (Shatsky Ridge), with Rosneft. Russia’s top crude producer is angling for access to Eni's projects in Libya.
Eni may acquire 33% in the project and will fund initial exploration works estimated at around $1 billion, sources close to the talks told Kommersant. Rosneft is already using a similar arrangement for Tuapse Trough, another Black Sea project it is developing with its new strategic partner, ExxonMobil. Rosneft anticipates that access to Eni's projects in Libya and ExxonMobil’s North American assets will follow on after it has funded their exploration costs.
The list of potential Libyan projects has not yet been compiled, a source said. A Rosneft spokesman declined to comment.
Rosneft took over the Shatsky deposit, with its estimated 860 million tons (6.3 billion bbl), from Yukos in 2007. Last summer, Chevron signed a deal to join Rosneft in the project but pulled out after a seismic survey, dismissing it as unviable.
Rosneft has kept silent about being in talks with more potential partners until this month. A source close to Rosneft said ExxonMobil, which is already involved in a Black Sea project, would be a logical partner. A source close to ExxonMobil said the company had no plans concerning Shatsky and that Tuapse Trough was “enough” at this stage.
Eni has experience of operating in Russia and partnering with Russian state companies. In 2007, Eni and Enel (also Italy's) bought gas assets and a stake in Gazprom Neft from Yukos, later reselling them to Gazprom. Eni is also Gazprom’s customer and partner in the South Stream Black Sea pipeline project.
Although Eni-Gazprom relations have been rocky, punctuated by conflicts over South Stream and gas supplies, they have stabilized as Eni agreed to sell part of its South Stream stake to new partners, French EDF and German Wintershall. Gazprom had given Eni Europe’s lowest gas withdrawal requirement under its current contracts, 65%.
In February, Eni agreed to sell Gazprom Neft half of its stake in Libya’s Elephant project (33%) for $163 million. Despite the revolution, Gazprom Neft has an option to complete the acquisition within two years.
Several sources said Rosneft is unlikely to try to beat Gazprom to Eni’s Elephant stake, as Eni has other attractive assets in Libya. The company has been Libya’s largest foreign investor since the 1950s. In fact Eni’s large and promising Libyan projects make Shatsky look small by comparison.
This project may be Eni’s “entrance ticket” to Russia’s oil industry, said Bank of Moscow analyst Denis Borisov. But in any case, it is a venture project with an uncertain future. Therefore, Rosneft can hardly expect to lay hands on a large and important Libyan project, he added.
Africa may be an important new market for the Russian producer which is preparing for international expansion, said Valery Nesterov from Troika Dialog.
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