Draft law to ban government contracts with offshores approved

Draft law to ban government contracts with offshores approved

Russia’s government plans to ban government and municipal contracts for offshore-registered companies, Prime Minister Dmitry Medvedev said at the cabinet meeting on December 25.

Ministry of Economic Development has prepared a draft federal law "On Amendments to the Federal Law" On the contract system in regard to the purchase of goods, works and services for public and municipal use" approved by the Government Commission on legislative drafting activities.

The draft law provides for a ban on the conclusion of government and municipal contracts with offshore companies and a ban on provision as well as obtaining by the offshore companies the government’s support.

Moreover, the bill proposes a number of changes to be made in taxation of offshore companies’ income in case such companies do not distribute profits in favor of the Russian persons controlling them.

It is expected that the Commission for procurement will look into participants’ compliance with the requirements; when incompliance is discovered the bids will be annulled.

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