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5 Jun, 2008 02:36

Tax havens lose appeal for wealthy

Offshore tax heavens are losing their attraction for wealthy Russians. Financial gurus say Russia’s favourable tax regime and commodities boom induce the rich to invest in domestic assets.

Last week the EU got tough on offshore tax havens like Bermuda and the British Virgin Islands, leaving them off a new White List of countries which tackle money laundering.

U.S. Presidential hopeful Barack Obama has tabled a 68-page bill to stamp out offshore tax heavens for Americans.

But scared off by domestic political interference, Russia’s 140,000 millionaires are prime users of the $15 trillion held in offshore finance companies, or OFCs.

However, the tendency seemingly changes, as considered by country’s major financiers.

MDM bank chairman Oleg Vyugin has told RT the fact so many Russian firms are registered overseas is blocking the development of the country’s entire banking industry. The man who has pioneered Russian private banking back in 1992 claims Russia’s attractive investment conditions are to bring offshore accounts onshore in record numbers.

Claus Korner, Glitnir Private Banking CEO, has given a meaning to investment in Russia. “If you see the Russian market tripling during the past years while you have a 3% performance in your Swiss bank account, it's more fun to stay in Russian investments,” he told RT.

Vasily Titov, the vice president of VTB, has voiced a hope for domestic market’s swift growth. “It’s a very good time for hem to start, because there are a lot of possibilities for mergers and acquisitions,” he said.  

Russian private bankers still currently manage only $US15 billion in assets yet. Alexis Rodzianko of Credit Suisse has estimated the national market should be worth 30 times that.