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Law prohibiting state support to foreign legal entities, including offshore companies

February 15, 2016

The President signed Federal Law On Amending the Budget Code of the Russian Federation.

The Federal Law prohibits the provision of state (or municipal) support to foreign legal entities, including offshore companies, in the form of subsidies, public investments from the Russian Federation’s budget system and state (or municipal) guarantees, as well as said companies’ receipt of such support.

At the same time, the right to provide Russian state guarantees aimed at supporting the export of industrial production (goods, works and services) is maintained as an exception.

In particular, the Federal Law amends the Budget Code to require a mandatory condition to be included in agreements on providing subsidies or public investments to legal entities (with the exception of state [or municipal] institutions) to prohibit acquisition of foreign currency using the indicated funding, with an exception for operations conducted in accordance with the Russian Federation’s currency legislation to purchase imported high-tech equipment, raw materials and component parts financed by targeted funds, as well as a number of other operations.

February 15, 2016