As Russian companies in the Far East face rising taxes and costly loans, many are opting to register their operations in China. This development was highlighted by Aleksander Kalinin, head of the entrepreneurs’ organization Opora Rossii, as reported by The Moscow Times.
Kalinin referred to the “other side of the river,” alluding to the Amur River, which partially marks the border between Russia and China. He noted that Chinese partners are offering Russian firms lower taxes, loans with a 3% interest rate, and subsidies to help cover capital expenditures.
Lower Taxes in China
According to the Lithuanian news outlet lrytas.lt, the firm Delovye Resheniya i Tekhnologii (DRT, formerly the Russian branch of Deloitte) has confirmed that businesses are exploring the option to relocate to China.
Currently, around 3,800 organizations with Russian capital operate in China. These include importers, electronics and equipment manufacturers, consumer goods suppliers, automotive parts companies, and light industrial firms.
In China, the VAT rate for most goods significantly undercuts that of Russia, at 13% compared to Russia’s 22%. Additionally, smaller companies in China can benefit from a reduced tax rate of 3%. The financing available in China is also more affordable, which contrasts with the high-interest rates that have made financing difficult to access in Russia.
However, one of the primary challenges remains settling payments with Russian partners. DRT representative Chobrakova pointed out that banking requirements related to such transactions are continually changing. Some financial institutions may limit transactions based on the counterparty, type of goods, or payment structure. All operations involving foreign entities in China are subject to bank and currency control.
