Essay: Payments in breach of international sanctions

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  • Subject area(s): Accounting essays
  • Reading time: 3 minutes
  • Price: Free download
  • Published on: October 25, 2015
  • File format: Text
  • Number of pages: 2
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Different countries may or may not treat payments in breach of international sanctions as money laundering. Some jurisdictions differentiate these for definition purposes, and others do not. Some jurisdictions define money laundering as obfuscating sources of money, either intentionally or by merely using financial systems or services that do not identify or track sources or dThe Russian economy is currently
seeking to develop in quite an adverse
foreign political and economic
environment. Despite this, Russia
has continued to undertake various
measures aimed at improving its
investment attractiveness. In particular,
as announced at the 2014 Saint
Petersburg International Economic
Forum, Russia is seeking to maintain
economic relations with the West, but
actively develop and grow its economic
relations with the East.
According to the 2015 ‘Doing Business’
ratings, which measure how easy it
is to conduct business operations in
different countries, Russia was ranked
at number 621(having improved 30
positions compared with the previous
year2). In particular, Russia was quite
highly ranked (34th and 12th position,
respectively) when measuring how
easy it is to start a business or register
property.
Revision and simplification of
administrative procedures have
significantly increased the attractiveness
of investing in Russia.
It should be noted that continual
improvement of the attractiveness of
investment in Russia remains one of
the government’s key strategies. In
particular, on 27 January 2015, the
Russian Government issued a decree
on high-priority measures to assure
stable economic development and
social stability in 20153. Among the
key points in the Government’s actions
were moves to increase the possibility
of attracting renewable investment
resources of significant value to the
most important sectors of the economy.
As part of increasing the investment
attractiveness of the Russian economy,
Russia has developed a tax incentive
system (both at the federal and regional
level) aimed at making the investment
process more effective.
The range of measures taken is quite
extensive and includes developing
special economic zones, creating
‘advanced development’ territories, and
improving local tax incentive systems
(diversifying the investment amounts
needed to receive incentives, varying
incentive types, etc).
In addition, various measures are
currently being taken to improve
infrastructure in Russia.
Building on trends that started in
previous years, there are an extensive
combination of measures being
implemented to improve Russia’s
investment attractiveness, which as of
today have led to positive results. The
current difficult foreign economic and
political environment has not halted this
process but rather accelerated it,
encouraging flexibility and proactive
change, all aimed at achieving the set
goals.
Encouraging innovation
and modernisation in the
economy
Over the past few years, Russia has
taken significant strides towards
founding economic development on
innovation. Both the President and
government have voiced their support
and are allocating substantial budget
funds towards these goals.
Russia is striving to progressively
develop in order to compete globally
and overcome the failings experienced
in the 1990s. At the same time, Russia
is seeking to take advantage of
international best practice.
The Russian President has already
signalled that Russia’s goal is to
gradually transition away from
an economy based on oil and raw
material extraction to an economy
focused on technology. To reach this
goal, Russia is seeking to increase the
hi-tech sector’s share of GDP, grow
the proportion of innovative products in
total production output, increase R&D
spending, and make Russia’s innovative
products highly globally competitive.
Many are sceptical about Russia’s
chances of success; nevertheless, the
goal has been set.
The Russian business community is
currently actively discussing Russia’s
innovation strategy, which runs until
2020 and forms the basis on which
state policy can be consistently made. A
conservative reading of the innovation
strategy finds it covering economic
development, supporting and motivating
the domestic talent pool, protecting
intellectual property, and establishing
and supporting the necessary
infrastructure. The strategy also covers
improving the legislative framework,
reducing administrative (tax/customs)
barriers, providing tax incentives, and
creating the prerequisites to support
demand for innovative products.
Russia has already adopted and
implemented a number of measures
to support the development of an
innovative economy. A number of
state-controlled institutions now exist
to invest in ‘innovative’ companies. For
example, the Russian Corporation of
Nanotechnologies (Rusnano) supports
projects in the field of nanotechnology,
while the Russian Venture Corporation
allocates funds to support venture
capital based projects.
Russia additionally provides an
extensive list of tax concessions to
companies with a high degree of
intellectual capital. For example,
IT companies have had their social
security contributions reduced from
30 percent to 14 percent until 2017,
while their intangible assets are now
amortised over 2 years instead of 10.
A zero-percent profit tax rate has been
introduced on income from the disposal
of shares in Russian hi-tech companies
(providing certain conditions are met),
and legislation is being developed
to improve the accounting of R&D
expenses for profits tax purposes.
estinations.

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