Russia, export, import and invest

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The third stage of the TyumenAgro greenhouse complex was launched in the Tyumen region

Jewelers will be able to sell jewelry abroad for cash

Russia's first industrial production of CLT panels launched in the Vologda Region

The Ministry of Industry and Trade told which building materials are most often counterfeited

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Russia purchases almost 30% of all advanced technologies it uses abroad. In 2011, the share of imports exceeded 21%, according to a study by the Center for Statistics and Monitoring of S&T and Innovation at HSE University.

The development of domestic innovative solutions in the country is slow. Every year, Russia covers less than one percent of its total demand for advanced technologies (1,565 products developed in 2018). Mostly financial and economic centers and regions with diversified economy (Tatarstan and the Tomsk and Novosibirsk regions) are engaged in research and development. According to experts, over 50% of Russian-made industrial solutions are developed by these three regions.

Clearly, it can’t continue this way. The crisis has boosted demand for technologies that allow for cutting expenses and improving the performance of companies and the wellbeing of people.

Directives are not enough

The country’s research and innovative facilities have not yet managed to make a technological breakthrough. For instance, it took decades for the microclimate of the Silicon Valley to yield its first results. It means that technology cannot be developed or created at a request or directive. This work always takes a long time. In IT and innovations, it is important to see the perspective for at least the next 5–10 years. For instance, cloud services appeared in 2006 when Amazon presented its web service infrastructure, while investments in cloud solutions have become profitable only recently.

Growth points

However, there is some progress due to the efforts of high-tech startups. Digital twins, the Internet of Things, drones, 5G expansion and other technologies are currently contributing to a new efficient environment for living and doing business.

Air purifiers

The pandemic has created a steep rise in demand for air purifiers and humidifiers, as well as disinfection devices for homes, offices and production facilities.

If you are constantly catching a cold, have allergies, asthma, seasonal rhinitis, or live in a big city you know how important these solutions are. After using an air purifier for a couple of days, you will not want to return to the dusty environment. Our products are not cheap and are unique for the Russian market. It could be cheaper to purchase air purifications systems in Europe. But there is still demand in Russia and we are expanding our product range for the country. Our new equipment has integrated smart home tech

The high demand for air cleaning systems will encourage an inflow of investment in the market and development of Russian competitive solutions, with smart products for cleaning air and surfaces, providing safety and protection against viruses and bacteria; all of them will be in a long-term demand following the pandemic.

Health gadgets

The pandemic has led to a wide array of new developments for remote monitoring of patients as well as for assessment and control over sports achievements. Those include various wearable devices and applications, most of them based on IoT solutions. According to IDC, the smart wearables segment will reach $222 mio by 2021, with the market’s average annual growth of 18.4%.

We observe high-tech companies in other countries restructuring to meet healthcare challenges, with new startups developing products at the crossroads of technology and medical industry. The SmartHealth segment for such companies could well become a driver for development for years to come.

Digital cities and utility sector

In 2019, the Russian Ministry of Construction, Housing and Utilities approved the standards for smart cities. The project should be implemented in all towns and cities with the population of over 100,000 within the next five years.

The crisis has put a halt to most projects related to introducing IoT in residential and business buildings, schools, and hospitals. Yet, the symbiosis of a ‘smart’ home and a city that unite into a seamless ecosystem will provide for significant improvement of urban living standards. As the economic situation stabilizes, we will see a renewed interest for all technologies that allow for achieving this goal, such as video surveillance systems and smart street lighting systems, emergency alarms, and others.

A breakthrough in this regard is related to predictive analytics, when the sensor data sends an alert to indicate a possible problem so it can be eliminated before it occurs. It is no coincidence that the ‘smart’ housing and utilities sector has become the core of a digital smart city.

Investors are actively seeking alternative investment projects, with the technology segment becoming increasingly appealing as innovations can be efficiently used for solving such pressing tasks as cost optimization and even taking care of your home and loved ones from a remote environment.

By Mikhail Petrov, Sales Director at MiaAir

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A new galvanic production workshop was launched at the Kursk electrical apparatus plant

A complex for storing petroleum products for 5 billion rubles will be built in St. Petersburg

In Russia, the details of the idea of ​​grocery cards were revealed

In Russia, the transition to a new procedure for technical inspection is postponed until October

Taste the products of the Moscow region cheese cluster this year

Pesticides and chemicals will be limited access to Russia

Chernyshenko: The National Project will allow doubling the number of jobs in the tourism industry

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The falling bank deposit rates, along with the new legislation that levied an income tax on interest accrued on deposits exceeding 1 million rubles are pushing even the staunchest supporters of bank deposits to cast about for alternative ways of investing idle cash.

In this context, it is small surprise that private investors are showing a steady trend to diversify their projects between investment products and crowdfunding. Both markets are controlled by the Central Bank, provide good returns and are an alternative to the stock market.

It should also be taken into account that lending to SMEs and financing factoring projects are well-structured low-risk transactions that also fund real operating businesses. The creditor retains the right of claim for their products that have already been shipped and put up for sale.

As for the stock market, it is too unpredictable in Russia, and the generally low financial literacy makes things even worse. The situation has somewhat improved lately through the efforts of the Central Bank and market participants, but mainly in relation to specific products, not with respect to general financial planning or stock market operations.

They meant it for the best

A few months ago, the government limited ‘non-professional’ investment to RUR 600,000 a year, in a policy aiming to protect the interests of private investors and preclude pyramid schemes.

However, this requirement has actually limited people’s opportunities in crowdfunding and also restricted small businesses’ access to private individuals’ money. This kind of lending will simply make no sense — an individual investor will use up the year’s limit after one deal to finance a small company’s deferred payment or cash gap; but investment is about making your money work non-stop.

Essentially, the actions of the regulatory authority watching over investors have so far increased risks for investors. While some private investors are looking for new high-yield but unregulated markets and falling victim to financial pyramids there, others are opening accounts with foreign brokers. As was already noted, the risks of investing in Russian securities are high, which means that those investors’ money will be funding Western economies instead.

The future of crowdfunding in Russia

In these circumstances, marketing costs and the costs related to servicing non-professional investors turned out to be too high for platforms attracting collective investment.

One platform needs thousands of individual investors to be a successful business. Therefore, it seems more lucrative to have a bunch of large investors such as funds or banks. Based on international experience, the b2b model can be scaled up faster and can become more convenient for SMEs in general.

The Russian crowdfunding market is developing towards building cooperation with market professionals such as management companies, factoring companies and banks. Last December, Ozon.Invest decided to become a full-fledged b2b platform. It will no longer post any offers for private investors. Lemon.online, an online crowdfunding service that is a member of the Finbridge Group, requested that the Central Bank review its investment limit calculation methods for non-professional investors; otherwise Lemon.online plans to stop attracting investment from individuals.

I believe it will not take long before we see similar statements from other major platforms involved in raising collective funds. Apparently, crowdfunding platforms are taking an indefinite raincheck on its objective of bringing money to the real sector of the economy faster. Only professional players will be able to invest through most of them and the platforms will not become a widely used funding tool for entrepreneurs seeking private investment.

By Leonid Kornilov, Managing Partner, Finbridge Group

The Central Bank is ready to discuss Sberbank’s initiative to convert non-cash rubles into digital tokens, RBC reports.

The country’s biggest lender earlier proposed doing this instead of introducing the digital ruble to ensure better control over operations.

However, the regulator has not abandoned the idea of ​​a digital ruble.

“From a purely IT point of view, this tokenization boils down to adding one more field to the database,” explains economist Sergei Khestanov, Associate Professor at RANEPA. “The process is quite inexpensive, given the cost of modern data storage systems, even with the long-term storage of each wallet history. At the same times, the prospects are mind-boggling — including automatic taxation, full control, and even targeting the yield curve of selected bonds”.

The main motive behind the idea is fiscal, the expert emphasized. But there can be many other applications for it as well.

Russian business news headlines in English so that you can decide what to translate.

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"Selectel" Mirilashvili and Levieva found billions for new data centers

Marginality and loyalty: private brands flooded the market

Russian pharmacy sales hit a record 1.5 trillion rubles

The analyst explained the dependence of the price of goods on packaging

'Consumer price dynamics' No. 1 • January 2021

Gazprom Neft delivers a 3.5-fold increase in sales of environmentally friendly marine fuels in 2020

Denis Manturov met with the management of the EXPO 2020 organizing committee and examined the construction progress of the Russian pavilion

Russia to provide soft loans for hotel construction

Russian Post and the Ministry of Culture will support subscription to newspapers and magazines

High-speed train will be developed in Russia

The Ministry of Industry and Trade explained why waste collection is needed and how it affects tariffs

World record for aluminum production

The first serial production of domestic electric trucks will start in 2021

The share of St. Petersburg on the wine market fell by almost a third over the year

Assembly of a new model of 622G motor graders has begun at the John Deere plant in the Moscow Region

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All purchases made by Russians using credit cards will be shown in their accounts on the website of the Federal Tax Service.

Representatives of the Federal Tax Service claim it will simplify the tax rebate procedure for taxpayers, TASS reports.

Essentially, it will be a copy of a bank statement that one can see in their online banking service, comments tax expert and the director of the Uproshchyonka website on taxation Nikolai Yepikhin.

“If pensioners, for example, are cautious about it, they shouldn’t be. All their information will be private and only accessible using their account data for the Gosuslugi public services website. The new Federal Tax Service account showing receipts will make it easier to apply for a tax rebate for paid medical services and medication, among other things.”

Russian business news headlines in English so that you can decide what to translate.

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Creatio group of companies attracted minority investments to develop business in the international market

A modernized workshop was launched at the Renault plant in Moscow

Chemezov allowed the production of a supersonic business jet in Russia

FCS of Russia informs: the registration of flower products is proceeding without delays, despite the record volume of imports

REC will present a stand of Russian products at the first offline international agricultural exhibition in 2021

Foreign companies are buying up Russian "clouds"

Two new robotic dairy farms opened in the Kurgan region

An analogue of Land Cruiser will appear in Russia

"Selectel" Mirilashvili and Levieva found billions for new data centers

Marginality and loyalty: private brands flooded the market

Russian pharmacy sales hit a record 1.5 trillion rubles

The analyst explained the dependence of the price of goods on packaging

'Consumer price dynamics' No. 1 • January 2021

Gazprom Neft delivers a 3.5-fold increase in sales of environmentally friendly marine fuels in 2020

Denis Manturov met with the management of the EXPO 2020 organizing committee and examined the construction progress of the Russian pavilion

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GenerationS, a platform for the development of corporate innovations from RVC, and Lenta, the largest Russian hypermarket network, summed up the selection of international startups in the field of retail. The best teams implement paid pilot projects on the company’s infrastructure, they will receive advice on product localization in the Russian market and will be able to continue long-term cooperation with Lenta.

Chose the best of the best

The selection involved teams from Europe, Asia, the USA and Israel with decisions in the field of automating operations, marketing, logistics and customer service. In total, 270 applications were received, only 15 reached the pitch session, and only 7 teams will receive opportunity to launch paid pilots and possibility of long-term potential cooperation with both Lenta and other corporations of the investment group Severgroup.

Among the finalists of the selection of Lenta and GenerationS there is a service for navigation inside the store. The solution helps the customer build the shortest “route” through the store according to a shopping list and offers items from similar product groups “on the way.” Thus, improving customer experience and increasing the cost of the check.

Another project is developing a new type of eco-friendly packaging that withstands wide temperature fluctuations, it can store liquid, hot and fatty food. Lenta plans to test the hypothesis of using this package for the sale of own brand goods. For example, you can warm food in a microwave oven in a package, this is safe for health.

Another interesting solution is a robot for positioning own brand products, that’s unique for the Russian market. By drawing the robot’s attention to specific goods you can improve the management of your layout and product assortment.

Vladimir Sorokin, CEO of Lenta, noted that if claimed hypotheses are confirmed the company will provide start-ups with the necessary methodological support for promotion in the Russian market.

Russian startups meet global trends

The selected technologies largely correspond to world trends — contactlessness, reducing the influence of the human factor in routine affairs, seamless docking online and offline.

In accordance with them, for example, the Swiss startup Scandit has developed a platform that enables barcode scanning, optical recognition of characters and objects, and also AR on any intelligent device equipped with camera. Platform users are stores that can now create apps for customers who can scan products from their smartphone and pay for them through app.

The technology completely eliminates the interaction of the buyer with the seller. With such a scheme It is easier for sellers to mark goods, process orders, manage them. In Europe Tesco and Globus store chains already use such a platform.

Another example is the Canadian company Paramount Fine Foods, which opened in Toronto fully automated restaurant Box’d. The cloud platform allows customers to order in advance using a mobile app or through a digital kiosk in the restaurant.

When food is ready, guests receive phone notifications and pick up orders from special boxes separating the dining area from the kitchen.

In the Near Digital Future

What awaits us next? Perhaps more digitalization. Not so long ago, we got acquainted with such a concept as digital dress, or virtual clothing. The idea was realized thanks to Dutch startup The Fabricant. Artists from the Dapper Labs project and AR creator Johanna Yaskovska joined creative forces to create a digital dress called Iridescence. What can be more incredible than digital dresses? The fact they’re being sold! Richard Ma, Quantum Stamp CEO, bought a dress for his wife Mary Wren at Ethereal Summit in New York for $9,500.

Author: Vasily Lvov

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Gazprom will spend 41 billion on Levashovo airport in St. Petersburg

The timing of the experiment on beer labeling in Russia has been announced

The Ministry of Construction of Russia has made changes to the set of rules for the design of fire stations

Two wood processing plants launched in the Sverdlovsk region

Rospatent will protect geographic names in the marking system

How to apply for an investment protection and promotion agreement can be simplified

It became known about the possible appearance of a new tax in Russia

A new line for the production of geotextile was launched in the Volgograd region

Sleepwear sales rise in pandemic

Exporters will be able to insure transactions with commercial insurers

Information on product certificates can be found by the international GS1 GTIN barcode

Russian companies may be allowed to register without a physical address

The first garbage truck for separate waste collection was assembled in St. Petersburg

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The world’s most popular cryptocurrency has reached a new mind-boggling high in 2021, crossing $48K (about RUR 3.5 mio) on February 9. This kind of performance predictably aroused the interest of retail investors who are increasingly looking for better returns amid the progressing decline of bank interest rates. The problem is quite relevant for Russia, which is experiencing a true stock trading boom with private investors moving into stocks, as 10 mio new investors have registered with the Moscow Exchange. The participants in the discussion on The Future of Bitcoin (held as part of the Wise Men Online series at the Financial University) have discussed crypto investment and the risks it poses to retail investors and even entire countries. Check out the highlights of the discussion below.

Private fiat money

Anatoly Aksakov, Chairman of the State Duma Committee on the Financial Market, highlighted the risks associated with investing in cryptocurrencies. He also reminded the audience that the bitcoin exchange rate cannot grow indefinitely. In the meantime, large investors are trying to profit on it by investing impressive funds in cryptocurrency. One example is Elon Musk, whose Tesla has bought a $1.5 bln worth of bitcoins.

“Elon Musk has spurred on the interest in bitcoin, and now he can sell what he had bought with a profit. Large players can make good money by fueling interest in this currency, and this is what they’re doing, as far as I can see,” Anatoly Aksakov said.

“Bitcoin is a private currency, neither backed by any physical commodity nor supported by an issuing authority. It is not legal tender in any jurisdiction, so sooner or later, this game should be over,” Aksakov added.

Moreover, he did not rule out that the emergence of cryptocurrencies had to do with some government agency (in the United States, for example), which needed to test the instrument.

Settlements, not savings

The world’s most popular cryptocurrency, the bitcoin, cannot be a store of value. And yet, it is this role that cryptocurrencies are claiming strongly today. According to Artem Genkin, Doctor of Economics, Professor, President of the NPO “Center for Protection of Bank Clients and Investors,” the fate of bitcoin has looked very promising since its emergence around 2010.

“For almost eight years, bitcoin has been a particularly convenient payment tool for certain types of transactions involving specific products. You could benefit from speedy transactions and low costs, anonymity or all these things at the same time. That was what made bitcoin so popular,” Artem Genkin comments.

However, there has been a U-turn since January. This year started with a sharp surge in the exchange rate of the biggest cryptocurrency and bitcoin’s market cap has soared above $1.3 trillion. Right now, bitcoin is trying to become a hoarding asset although it still lacks public trust to become one.

“Cryptocurrencies have become mainstream, so to speak. But that still doesn’t make them worth being a hoarding asset. Bitcoin lacks some unconditional factors of trust which, in its case, just don’t and can’t exist by default,” Artem Genkin notes.

He also stressed that the bitcoin exchange rate can’t grow indefinitely and retracement is inevitable at some point.

Shortage of strong assets

Nevertheless, investors, including retail investors, are interested in cryptocurrencies for a good reason. There are more conventional assets on the market with rather questionable unconditional reliability. According to Viktor Dostov, Board Chairman of the Association of E-Currency and Money Transfer Market Members, experts are skeptical about bitcoin as a savings instrument; however, there is also a shortage of unquestionable alternatives. Even gold is not saving the day.

“The amount of derivative instruments circulating around gold on the market, including options, principal protected notes and futures, is many times bigger than the physical amount of this metal.”

One could certainly buy gold coins but it would not be a way to invest significant funds.

“In the context of the stock market, bitcoin requires the same approach as stocks. It is a gamble, a lottery. If this is what you gravitate towards, why not invest — as long as it is not your last money. You might win, you might lose; in this sense bitcoin is not better or worse than most other assets,” Viktor Dostov said.

To regulate or to prohibit?

At the same time, cryptocurrencies, or more specifically, operations with them, could become a source of additional tax revenue. According to Artem Genkin, it can be made possible using a transparent taxation of transactions that use bitcoin as a payment tool. True, there is a serious problem of adjusting the cryptocurrency exchange rate to the conversion rate (as in the case with freely convertible currencies), but it is still doable. Maybe, Artem Genkin adds, the circulation of cryptocurrencies should be subject to a tax similar to the Tobin tax.

“It would be best both for the sector and the state to adopt a pragmatic approach that comprises three elements: legalization, fiscalization and protection of the rights of various investors from risks related to this kind of assets,” Artem Genkin said.

According to Viktor Dostov, the biggest problem with crypto transactions is the compliance with legislation to combat money laundering and financing of terrorism. However, if transaction participants are identified as far the state is concerned, some circulation could be allowed. On the other hand, there are not many options for spending bitcoins.

The law On Digital Financial Assets does not prohibit people from owning cryptocurrencies and conducting transactions with them, but does not allow for using them to pay for goods and services in Russia. In the meanwhile,

“This is not a payment tool anymore. The cryptocurrency has become a tool of investing and saving,” Anatoly Aksakov said.

Protecting retail investors

The growing bitcoin exchange rate creates risks for mass retail investors and calls for protection of their market activities. Otherwise there is a real risk that numerous deceived crypto investors will appear, as it has already happened in the banking sector. Artem Genkin believes that if this issue is not addressed and the risks related to crypto investments are not eliminated, this forecast may come true. Apparently, it is necessary to counteract openly unscrupulous market participants at the state level with the involvement of the law enforcement system. Information space also requires particular attention, in a good way – and the government could address this issue as well.

Efforts should also be taken to improve financial awareness and literacy.

Obviously, helping everyone is simply not possible, and there will always be people who will lose their money in a street shell game; yet, according to Viktor Dostov, boosting the process is doable — and the more so as efforts are already underway regarding the security market and various financial instruments, with the set of measures aimed at protecting interests of private investors to be expanded. For instance, a draft law has been submitted to the State Duma that obliges financial institutions to provide information on potential risks of investment assets, including to unqualified investors.

Wandering money

Cryptocurrencies create risks not solely for mass investors, including those in Russia. With the developing cryptocurrency market, cryptocurrencies are becoming an increasingly relevant factor for global instability; they are creating challenges for central banks as well as for monetary and credit policies of the worlds’ major economies, Artem Genkin emphasizes.

According to him, the digital asset is drawing inevitable attention from speculators, who can mobilize efforts by small investors for their own benefit, including through social engineering mechanisms. In such circumstances, it cannot be ruled out that the cryptocurrency market will attract part of the finances that US President Joe Biden‘s administration plans to allocate for supporting the economy (nearly $2 trn). This is just one of several possible scenarios. We can only imagine shocks that may result from such a capital flow, a prime example being transformations that followed the implementation of the Marshall Plan and introduction of the so-called Eurodollar in the European market, a currency totally detached from the traditional issuer, the expert notes.

“Cryptocurrencies are in fact ‘wandering’ money, a factor for global instability which will be a threat to central banks as well as to monetary and credit policies of the worlds’ major economies. It is not about their criminal essence but about laws that rule such macroeconomic processes,” Artem Genkin concludes.

By Olga Blinova

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The Ministry of Economy proposed to expand the mechanism for encouraging investment

Russia proposed to reduce tax for exporters of intellectual activity

Telegram will place bonds for $ 1 billion for a closed circle of investors

Daniil Egorov summed up the work of tax authorities in 2020

Innovation will help the paint and varnish industry out of the crisis

RKS has developed and launched into production new on-board transceiver devices

Breaking even for the first time: Ozon reports significant growth in turnover in 2020

Vladimir Efimov spoke about the new production of electric vehicles in Zelenograd

Crimean customs officers stopped illegal import of dental equipment and materials

JSC "Transneft-Upper Volga" held a "Supplier Day" for representatives of small and medium-sized businesses of the Nizhny Novgorod region

Rosakkreditatsiya and GS1 RUS signed an agreement on cooperation

Russians acquire storage rooms for their own needs

Russian Post started selling medicines in Moscow

The Ministry of Construction of Russia is developing modern national standards for wooden structures

More than half of Russian freelancers receive less than RUB 30,000

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Prefabricated construction, or Prefab, is a method that uses components manufactured off-site, in a factory, which are then put together on-site to create a structure. Such buildings are popular in the United States, Canada and Europe. A similar technology was used in the Soviet Union — in particular, to build the low-cost ‘Khrushchovka’ five-story apartment blocks in the 1960s. The philosophy of prefabrication was given a new boost in the 2010s. ITERIUM.TECH is one of the most fast growing Russian companies in the prefab construction segment. General Director Maxim Mayorov shared how he got the idea to design collapsible houses and what is special about his projects.

From a private project to industrialized construction

Maxim Mayorov was fond of physics and astronomy as a child. He went to the All-Union Astronomical School; after graduating with honors, he joined degree programs at three universities: ITMO, Leningrad State University and Herzen State University.

In 1992–1993, he went to study in Germany; he is fluent in German and English. In 1993, he began doing business by developing projects in education and IT. His projects included a school of foreign languages, an Internet provider, and a company that developed platforms for online stores.

In 2014, Maxim decided to build an over-water bungalow for himself. Doing it right required seriously exploring new disciplines such as engineering and design, studying legislation and acquiring some blue-collar skills. Maxim applied to St Petersburg State Marine Technical University to hire tutors for subjects related to building floating structures. A garage in the local town of Sertolovo served as his workshop. Considering that the terrain in the Leningrad Region is predominantly marshy, he aimed for a structure that could be assembled manually, without using lifting machines.

Working on his project, Maxim realized that if buildings were prefabricated and moveable it would be their huge advantage. You don’t have to buy land but can simply move your collapsible house from one rented plot to another. Maxim spent a total of two years on studies, experiments and designing prototypes. He rebuilt the structure several dozen times and eventually created his first prefabricated dwelling, an autonomous floating bungalow he named Kon-Tiki. He invested around 15 mio rubles ($204.2K) of his own money in the project.

Just as an experiment, Maxim launched a website offering the bungalow for rent and posted an ad at a business center. It turned out there were plenty of people interested in having a small getaway in the private hotel. Maxim received dozens of calls over just a couple of days.

Hospitality businesses started getting curious about Maxim’s projects too. His first collaboration happened by accident. In 2017, Maxim stopped by a restaurant in St Petersburg where a waitress noticed his designs on the screen of his laptop. She invited the restaurant manager and it turned that the owners were planning to launch a new venue for events. Maxim’s ideas inspired the restaurant management and they ordered a 400 sq m floating platform. A year later, Maxim got another order, for two moveable 600 sq m banquet halls.

Seeing the huge potential of prefabricated moveable buildings, the entrepreneur set up an integrated manufacturing plant in Pskov. A year later, the company established its own design bureau and a design studio in St Petersburg. A woodworking shop was launched in Lomonosov. The group of companies was named Kon-Tiki Research and Production Association, engaged in design and manufacturing of innovative prefabricated demountable buildings.

What is a prefabricated building?

Mayorov’s company designs and manufactures buildings that can be assembled like a Lego set on practically any site: in the forest, on a slope, a concrete pad, riverbank or water (if there is no current and the building does not get in the way of boats). These structures do not require foundation, and therefore, a construction permit. A land plot can be rented for the construction and if the location proves to be disappointing, the building can be moved to another site.

The technology allows for constructing a house of any size and layout that can be easily adjusted. It is possible to remove a wall, a room or even a bathroom using only hand tools.

The houses are equipped with utility lines to connect to power grids, as well as a suction-and-exhaust ventilation system with multi-layer air filters. All utility lines are hidden in the structural elements but are accessible at each square meter. If necessary, these buildings can be completely autonomous when the connection to the grid takes too long, is unviable or technically impossible. These buildings are fitted with a power generator, boiler room and a system to collect and store wastewater.

Structures can be used for various purposes; the company receives orders for building hotels, sports facilities, galleries, shopping centers, and amenities.

Building a prefab home

Until 2021, the company had fulfilled commercial orders only. Yet, an increased interest from individuals prompted the company to develop a new product. The company has entered the private housing market with the cubiq.house project, which offers prefab homes that can accommodate various lifestyles. The structure does not require any groundwork, with the SteadyFrame technological solution used instead — an adjustable support system that operates as a jack. The supports can carry a massive load of several tons, which is significantly more than the weight of the house with furniture, household appliances and belongings. The cubiq.house technology can be used for building houses on problem soils and slopes of up to 30 degrees. The prefabricated kit has all necessary items, including utility lines, hi-tech style finishing materials, furniture, and appliances. Upon production, the building can be assembled within two days on a land plot and is then move-in ready.

Plans and prospects

In the beginning of 2021, Kon-Tiki Research and Production Association was renamed ITERIUM.TECH. The rebranding was done due to expansion of the company’s activities as well as a growing interest from foreign customers. The company is now focusing on executing current orders, improving production, and investing in its development, advanced production equipment and software.

Last year, Mayorov’s company became a resident of the Moglino special economic zone in the Pskov Region. Further plans include construction of a full-cycle production plant, as well as facilities for manufacturing components and a finished product warehouse.

By Christina Firsova

Resources have always been a problem when it comes to cybersecurity. You are not always rewarded for doing security the way you are when you develop a new business application quickly. This usually leads to security teams being understaffed and overworked. At the same time, skilled cybersecurity professionals are in high demand, and there is significant turnover in cybersecurity positions.

In fact, when it comes to cybersecurity, a lack of resources can be a bigger threat than the criminals who have their sights set on stealing organizations’ data, money, time, and reputation. This has long been true, but COVID-19 turned the cybersecurity resource challenge into a full-blown problem, causing security to be overlooked in many cases.

In the best of times—or, at least, more normal times—talented cybersecurity resources are difficult to find, expensive to procure, and hard to retain. The pandemic has exacerbated the cybersecurity skills shortage as organizations’ focus and resources have shifted to shoring up, or even building from scratch, work-from-home capabilities. Proactive security has been put on the back burner for many companies, exposing big gaps between the cybersecurity resources.

In a pre-pandemic study conducted by (ISC)², an international, nonprofit membership association for information security leaders, the cybersecurity workforce gap in the United States was estimated to be nearly 500,000. By combining its US cybersecurity workforce estimates and gap data, the association found that the cybersecurity workforce needs to grow by 62% in order to meet the demands of US businesses today. Using the workforce estimate of 2.8 million based on the 11 economies it studied and a global gap estimate of 4.07 million, the association estimated that the global workforce needs to grow by 145%.

Indeed, respondents to the survey that was used to develop the study said that a lack of skilled/experienced cybersecurity personnel is their top concern, and that the gap puts their companies at moderate or extreme risk. Research for the Ponemon Institute’s 2020 Cost of a Data Breach Report began months before COVID-19 had widespread impact, but supplemental questions related to the potential impact of remote workforces due to the pandemic revealed that 76% of organizations predict that remote work will make responding to a potential data breach more difficult.

With the Ponemon research estimating that the average total cost of a data breach is $3.86 million, preventing a cybersecurity incident in the first place is critical. But all is not lost. Solving the cybersecurity resource problem outright is not going to happen right away, but there are things that organizations can do beyond adding more security bodies. Here’s how to strengthen your cybersecurity position.

1. Establish internal security training and certification programs

Savvy organizations realize that true cybersecurity requires a cultural shift. Essentially, some level of cybersecurity must be part of each employee’s responsibility. That’s not to say that your marketing director will be on the security front lines, of course, but every employee should take part in security education and certification programs. And that doesn’t mean that you can just create a PowerPoint presentation that you force employees to sit through so they can check off a box; it means developing meaningful and relevant programs that engage employees and help them understand the cybersecurity threat and their roles in mitigating it. Think about “lunch and learns,” mock breaches, and even escape rooms.

2. Encourage security cross-pollination

If security is everyone’s job, then security resources should not be limited to the IT department. Think about ways security can cross-pollinate within the organization. Just as security is infiltrating the development arena through the growing DevSecOps movement, security resources could be integrated into other areas, as well. This will not only develop company-wide understanding of security issues, but it will also encourage cross-collaboration and the opportunity to build security into processes, products, and services from the ground up.

3. Take a hard look at your security tooling

Many organizations have security tools they don’t really need or that are out of date and can’t support new technologies such as cloud, containers, or Kubernetes. This wastes time and money. For example, many companies are running legacy security tools designed to protect systems that are no longer used.

Companies also often have too many tools to keep track of, leading to redundant tooling and the inability to manage the growing number of tools. Also, many companies aren’t making full use of security tools that are already built into existing systems, such as the operating system, container platform, or security tooling provided by the cloud provider. A thorough inventory of existing security tooling will reveal what’s needed (and not needed) to address current security concerns.

4. Put a consistent automation strategy in place

With so many moving parts in place, no human or group of humans could ever fill every security hole. Indeed, as IT environments and the world around us become more complex, so do the security events facing IT teams. A consistent automation strategy can help organizations more effectively mitigate risks by reducing human errors, remediate issues, respond quickly to security alerts, and develop repeatable security and compliance workflows.

It’s important to note, however, that automation isn’t one product or even a collection of products. Organizations should look for an approach that overlays a consistent automation strategy across app dev, infrastructure, security operations, and so on. In fact, Ponemon’s Cost of a Data Breach Report noted that organizations with fully deployed automation—versus those with no automation deployed—realize a savings of $3.58 million in average total cost of a data breach.

Is the cybersecurity resource problem unsolvable?

It’s true that, realistically, the resource problem can’t be completely solved, but it’s a problem that you can effectively address and manage with proactive planning, strategic technology implementation, and widespread, ongoing, and engaging security awareness training and collaboration.

By Lucy Kerner, Security Evangelist and Strategist, Red Hat

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There is a shortage of technical workers in Russia

Experts said that cars in Russia are among the cheapest in the world

Russia proposes to introduce excise taxes on sugar-containing drinks

The government will allocate 500 billion rubles for the modernization of the healthcare system

The Ministry of Industry and Trade has prepared the rules for mandatory labeling of bicycles

The government may change the rules for growing private forests

Bankruptcy reform will have to prove its worth

The investor will invest 2 billion rubles. in the production of footwear in Moscow

Almost 40% of transactions with new buildings in Moscow fell on three developers

The Ministry of Industry and Trade will receive additional information for inspections of the pharmaceutical industry

Aerosol production started at Novocherkassk Lubricants Plant

A polymer coating plant of the Metal Profile company was opened in the Moscow region

Moscow is back among the most attractive cities for investors

Tourism investors will receive preferential loans for 15 years

Welcoming speech of the Ambassador of Russia to Great Britain A. V. Kelin during the opening of the meeting of the rectors of Russia and Great Britain, February 11, 2021

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How has the coronavirus crisis changed Russia’s public finances? Has the pandemic hit federal revenues? How did the state bank react to the pandemic? How has the crisis influenced this year’s budget? Invest Foresight discussed all these issues with Sergei Drobyshevsky, Director for Research at Gaidar Institute for Economic Policy, in an interview during the 2021 Gaidar Forum at RANEPA.

Public finance during pandemic

— The 2020 federal budget had been planned long before the pandemic. I have two questions in this regard. Was there anything special about the state budget for 2020? And what changes did the pandemic make to the government’s financial plans?

— Initially, we expected the 2020 budget to be the first real financial plan that would fully incorporate the major national projects launched in 2018. What we saw in 2018-2019, in fact, were preparations, while many expenditures planned under those big projects had been postponed. So we hoped 2020 would be the first year when government spending on the national projects would finally be carried through; among other things, that was expected to give a certain boost to the economy. Understandably, the pandemic did make some very serious changes. The government had to re-channel resources to support the population and the economy as part of anti-crisis packages in order to minimize losses from the coronavirus infection. This greatly changed the structure of federal spending and the entire scope of the government’s budget policy. Instead of a surplus, we closed the year with a considerable budget deficit, and an increase in sovereign debt that was definitely too sharp for our traditional budget policy, and so on.

— How much have the national projects lost? What happened to them after all?

— It is difficult to say how much they lost, because in 2020, the Government adopted new National Development Goals. All the national projects are now being adjusted. It is clear that the new national projects will partially replicate those started in 2018, with a few additions. But the former national projects are, well, they are history. They have never been actually implemented. In the current context, it is difficult to predict what would have happened if everything had gone as planned in 2018.

— How did the pandemic affect public revenue?

— The federal revenue primarily comes from oil and gas earnings plus foreign economic activity proceeds and the value added tax. The last two were hardly affected by the pandemic. But oil and gas revenues crashed dramatically. Russia’s budget has lost at least a third of its planned oil and gas earnings. Still, this is not so much the effect of the pandemic as it is the result of falling oil prices which began even before the pandemic, after the breakdown of the OPEC deal in late February and early March 2020.

Other sources of tax revenue are rather stable. Clearly, VAT is closely linked to the GDP dynamic. Because our GDP has decreased only slightly, we lost very little amount of VAT (again, factoring in the entire scale of the crisis) — of course, also thanks to the efforts of the tax service and improved tax collection. The losses for the federal budget were eventually minimal.
Regional budgets suffered much worse because they are more affected by lowering personal income and the revenues of small and medium-sized businesses.

Contingency plan

— Do you evaluate the scope of support provided by the government due to the pandemic? Is it possible to compare the amount of help with similar relief measures in other countries?

— Absolutely. We evaluated the scope of government support provided through budgetary channels in 2020 several times. There are certain nuances: some of the measures are not only considered support during the pandemic but simply a new concept of social policy. Therefore, numbers may vary. Overall, we estimate that the support has been worth at least 2.9% GDP.

— Do you have any comparative data about similar contingency plans in other countries?

— Of course, we have data. The scale of support varies significantly from country to country, from 2–3% to 15% of GDP. But you need to understand that the current crisis is not exactly an ordinary economic crisis. It is a one-of-a-kind crisis caused by a pandemic. It could be compared to a war or a natural disaster. When it comes to a crisis, the logic of the more support the better the outcome for the economy does not work. On the contrary, revenue is falling regardless of relief measures but consistent with the pandemic, the lockdown and other non-economic measures and their impact on the economy. Governments must work out fiscal measures depending on the depth of the fall. That said, more fiscal measures do not necessarily alleviate the economic collapse. Quite the opposite. Extensive budgetary support has been associated with deeper recession in other countries. Therefore, despite the scope of Russia’s relief measures being relatively modest (many European countries allocated 10–15% of GDP), considering the fact that Russia’s GDP experienced a significantly smaller loss in 2020 than the GDP of such countries as France, Italy, Spain, Germany and the UK, I believe the scale of budgetary support is adequate. Perhaps the government could have provided more support. The more money is spent the better.

But there was a high level of uncertainty: neither we nor the government knew how serious the second wave could be. I don’t think that we can be 100% sure that there will be no new shocks related to the pandemic and that no additional support will be required. I believe that the government, having spent as much as it did, still retains a margin of safety, and this is a totally correct and sensible policy.

— Did the anti-crisis assistance become a window of opportunity for the regions in terms of interaction between the regional and federal budgets?

— I don’t think so. In order to change something, it is necessary to change the mechanisms of the redistribution of taxes, powers, etc. at the legislative level. In 2020, the regions did receive unprecedented opportunities and independence as part of measures to combat the pandemic, but not in the financial sphere. In 2020, the situation required emergency measures, and the regions were provided with them. But I believe that in 2021, everything will go back to the pre-2020 model.

Pandemic and monetary policy

— In your opinion, was the pandemic a cause of inflation?

— I think it wasn’t, actually. Rather the opposite. The pandemic affected demand, since people did not have a physical opportunity to purchase goods, except for pre-lockdown panic-buying in late March. In this sense, the pandemic actually had an anti-inflation effect. Almost no analyst, including us, predicted the surge of inflation that we saw in the fall and early winter. The Central Bank didn’t foresee it either. A rise in inflation, in our opinion, is related mostly to the falling ruble and surging prices. The falling of the ruble was not related to the pandemic, but to the increased risks of new economic and financial sanctions as well as the global revision of currency risks in countries with developing markets. And again, it happened not because of the pandemic, but due to the assessment of their financial stability and growth prospects in the post-Covid world.

— Did the pandemic force our Central Bank to adjust its monetary policy?

— The Central Bank, while somewhat putting its reputation at risk, conducted a policy that really could support the population, banks and enterprises amid the pandemic and a strong negative shock caused by the falling oil prices in March-April. The softening of monetary policy in the beginning of the year despite the negative oil price shock was a measure almost all countries adopted. This past summer and early fall, when a certain easing of restrictive measures took place, the Central Bank’s interest rate cut allowed for a relatively fast restoration of consumer demand due to reduced price for consumer and mortgage loans. An opportunity also arose for supporting small businesses and real sector enterprises, which were offered reduced loan costs as well. This all allowed the Russian economy to respond to part of the deferred demand, which started occurring last April and May, as early as in 2020. Lower loan costs proved advantageous for both citizens and enterprises.

2021: a year of transition

— Speaking of the 2021 budget, what are its core characteristics?

— In any case, this year’s budget is transitional. On the one hand, this is a budget that has been adopted following the start of the implementation of new goals of national development and new national projects. On the other hand, work has only started to create a definite scope of measures and projects necessary for achieving these development goals. This is the reason this year’s budget cannot entirely be considered a development one. Obviously, it is partially affected by the anti-crisis measures introduced in 2020. Part of these measures will expire in the spring of 2021, and certain measures ended in late 2020. This all affects the budget structure in 2021 as compared to last year.

So this budget is special; it is hard to analyze it as a new format of the budget policy. We are aware that following the last year’s budget expansion aimed to support the economy and citizens, this year we have to implement a tougher policy, if only due to the abolition of the anti-crisis measures. Yet, we understand that the 2021 budget cannot fully include expenses for new national projects. Also, when the work was underway to draw up the budget for this year, we could see risks of new possible negative shocks that still persist, which may require new anti-crisis measures. When drawing up the 2021 budget, the Government has to consider a possible necessity for making adjustments to respond to any challenges.

— Does that mean Russia actually cannot afford a three-year budget now?

— A three-year budget has been adopted — but I believe that the 2022-2023 budget obviously cannot be representative in the current conditions. In the fall of 2021, depending on the situation around the pandemic and the world economies, budgets will be substantially revisited. I hope that by the late fall we will be able to forget about the risks and the necessity for pandemic-related anti-crisis measures entirely, and will view the budget economy as a tool for developing the Russian economy in line with the goals set by the President.

By Konstantin Frumkin

The popularity of social media and instant messengers is growing steadily every year. In 2020, over 3.6 bln people were using social media worldwide. The level of individuals and companies’ involvement in networking through social media and instant messengers is increasing annually, which naturally attracts investment to this market and ensures a constant growth in the volume of advertising and content. As of January 2020, the global social media usage rate was 49%, a number projected to increase further due to the expanding infrastructure and availability of cheap mobile devices in emerging markets.

Various large media agencies, organizations and companies do social network usage and growth research, such as AppAnnie, Deloitte, Global Web Index, We Are Social, Hootsuite, Statista, GSMA Intelligence, Locowise, Similar Web, Data Reportal, Mediascope, ExLibris and many others.

Their results suggest that digital and mobile technologies as well as social media have become an integral part of people’s daily lives around the globe, and that an average user was spending more than 6 hours a day on the internet in 2020, with a third of that time spent using social media.

The most popular social networking platforms and instant messengers by the number of users include Facebook, YouTube and WhatsApp. Facebook is the leader of the social media market with over 2.7 bln active users a month. The company also owns the four largest social media platforms: Facebook (main platform), WhatsApp, Facebook Messenger, and Instagram. Regional leaders include VK, a European service, the Japanese platform LINE, China’s WeChat and QQ, and the Douyin video sharing app. The Douyin platform has released an international version of its TikTok service.

Both social media apps and messengers have an abundance of various functions which actually makes it difficult to distinguish between them.

Messengers are usually rated based on the number of active users and the number of app downloads in Google Play for Android and in App Store for iPhone.

Telegram was the world’s sixth most popular mobile messenger as of October 2020 according to the number of active users per month, following WhatsApp, Facebook Messenger, WeChat, QQ and Snapchat. In April 2020, the cloud-based text messaging app reported 400 mio active users per month around the world.

Telegram is a cross-platform messenger for exchanging messages and media files in a variety of formats that prioritizes confidentiality, encryption and speed. The messenger is constantly adding more features and updates. For example, in 2019 Telegram launched location-based group chats and since 2020, users have been able to comment on channels, moderate groups anonymously, create audio conference calls and more.

In 2021, Telegram started to monetize extra features for business teams and premium users. Telegram founder Pavel Durov assured that all the basic features will remain free. Telegram will be offering a proprietary ad platform that will ensure users’ comfort and confidentiality as well as cover the company’s server and traffic costs.

Back in March 2018, Pavel Durov announced that the number of Telegram users in the world reached 200 mio. In March 2019, Telegram saw a surge of 3 mio new users over 24 hours when Facebook experienced outages worldwide. Thus, in just two years, the number of active Telegram users across the globe doubled from 200 mio to 400 mio, and on January 12, 2021, Pavel Durov posted on his Telegram channel:

“In the first week of January, Telegram surpassed 500 mio monthly active users. After that it kept growing: 25 mio new users joined Telegram in the last 72 hours alone.”

Telegram in Russia

According to the company data, the Russian audience of Telegram reached 26.7 mio people in August 2020 despite the app being officially blocked by the Russian Federal Service for Supervision of Communications, Information Technology and Mass Media (Roskomnadzor) for over two years. According to an ExLibris survey, the messenger ranks third in terms of popularity in Russia after WhatsApp and Viber, each with 70.6 mio and 36.2 mio users, respectively. Telegram is followed by Google Chat with 22.5 mio users, and Facebook Messenger with 7.1 mio users. As of early 2020, Telegram was in the top three most popular messengers in Russia.

After Roskomnadzor’s ban was lifted on June 18, 2020, the Russian Telegram audience grew by 1.2 mio within a month, TASS news agency reported citing the Mediascope press service.

With these numbers in mind, we can expect a new surge in downloads, channels and advertising on Russian Telegram. Together with the team of Telega.in, a major ad exchange platform, we have analyzed the advertising market size on Telegram. The research was based on the data by the Telemetr analytical service and the Telega.in exchange platform, with two calculation methods used: by the advertising cost and by the cost for 1,000 ad impressions (CPM). 

The analysis has revealed that last year’s advertising market in Russian-language Telegram channels amounted to 12.8 bln rubles ($162.7 mio), with top ten categories accounting for 74.5% of the total volume. The most popular ones include Business and Finance, Women’s Sections, and Mass Media.

The top ten popular categories are:

1. Business and Finance (20.1% of the total turnover);
2. Women’s Section (9%);
3. Mass Media (7.9%);
4. Culture, Education and Art (6.1%);
5. Sports (5.9%);
6. Internet and Marketing (5.9%);
7. Recreation and Entertainment (5.4%);
8. Cinema (5%);
9. Science and Technology (4.9%);
10. Motivation and Personal Development (4.4%).

In 2020, the number of advertising posts in Russian Telegram channels grew twofold, from 22.8 mio to 44.4 mio. The obtained data allows claiming that the phenomenon of advertising on social media in general and the messaging app in particular is highly relevant as a modern marketing tool. The full text of the study will be available on Telega.in website.

The research aims not only to determine the volume of native advertising in Telegram channels but also to publish a detailed method used for making these calculations. Regrettably, the advertising market size is often estimated only approximately, from experience, by ear, or by other unverifiable methods. Publishing a comprehensible research method is important for comparing the obtained results with those received through other studies that can be conducted by other groups of authors with the use of fundamentally different methods.    

By Dmitry Kornilov, Doctor of Economics, Professor at the Department of Innovation Management, Alekseyev Nizhny Novgorod State Technical University, full member of the Russian Academy of Natural Sciences

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Russian retailers face banana shortage

25 regions will receive 1 billion rubles for industrial development

The Ministry of Industry and Trade clarified the procedure for increasing the utilization rate for agricultural machinery

A pilot project to control forest from space starts in Russia

Russian software developers will be able to quickly get into the register of the Ministry of Digital Science

Pharmacists may be required to offer customers cheap analogs of imported drugs

Japanese waste disposal technologies are being tested in Russia

The 13th meeting of the Russian-Japanese working group on urban environment issues was held

The world's first power unit with a fast neutron reactor will be created in the Russian Federation

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Digital tax may appear in Russia

It will be easier to obtain the status of an individual entrepreneur

Russian pharmaceutical market grew by 9.8% in 2020 and reached two trillion rubles

Construction of new shellfish processing plants in the Russian Far East to serve EU market will begin

Yuri Trutnev held a meeting on the situation with the export of fish and shellfish products from the Far East fisheries basin

FMCG market in Russia slowed down growth to 3%

The Ministry of Finance clarified the procedure for calculating excise taxes on electric vehicles

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Cement plant in Slantsy will expand production for 8 billion rubles

The head of the Ministry of Industry and Trade launched a new line at a pharmaceutical enterprise in Saransk

A new solar power station was built in the Volgograd region

In 2020, an anti-record for the delivery of retail space for 10 years was recorded in Russia

Manufacturers of wooden houses will be rewarded for discounts to buyers

Competition in the meat market has intensified: who will win

Lesprom suffered the pandemic better than other industries

Russian electric plane covered the first distance

Rosakkreditatsiya and the National Association of Manufacturers of Building Materials, Products and Structures signed an agreement on cooperation

Russian fishing fleet will return to a number of areas of the World Ocean

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The year turned out to be difficult. It is generally accepted that in difficult times the poor are poorer, and the rich grow rich. The leaders of the American Forbes list stormed new peaks all year; in Russia the movement was multidirectional, yet the dramatic diminution of the reach citizens’ wealth did not happen. Apparently, for this reason, so many events occurred last year in the field of private capital management, affecting the wealthy part of our population.

Introduction of a progressive personal income tax rate

Despite the fact that the possibility of introducing progressive rates has been discussed for a long time – the left political agenda is popular in our country – the news was still unexpected. Since 2019, I have heard more and more questions from customers: when “they” raise the rate.

The professional community could not comment on the rumors, the bill was developed without wide public discussion. In fairness, it is worth noting, that even in an increased form, the income tax rate in Russia is still one of the lowest in the world. We do not record that due to an increase in the rate, any of our customers began thinking about changing Russian residency, as everyone who wanted to move to low-tax jurisdictions, have done this for a long time, although I admit that in some cases this could be the very last straw.

Obviously rate increases will not become the argument for the return either, although some of the individual measures described below may attract wealthy people who have left the country back to Russia. The next logical step to expect is introduction of other – more flexible – criteria for recognition of tax residency of Russia. Now a simple system of calculating days is used, while in most developed countries it is already the concept of a center of vital interests which has been in use for a long time: that is, taxes must be paid in that country with which you and your family have the closest connection. Such an approach can be indigenous in changing the approach of wealthy Russians to choosing a place of residence and force some of them to return to Russia, and others — to break all ties with the country. It is advisable that residency abroad or in Russia in current realities was associated with the presence and real life interests of the beneficiary: that is, according to the general rule, the beneficiary should be followed by his family, and his business, and his bank accounts, and possibly by his family office.

Fixed income tax on foreign companies

Proposal to introduce a fixed tax for controlled foreign companies (CFC) sounded unexpected for many experts – obviously, the tax service is considering the proposal like a certain carrot against the background of a stick — that is, the increase of the personal income tax rate. The idea is very simple – instead of a complex calculation of the income of foreign companies you just have to pay 5 million rubles annually.

Lump sum tax in Russia? Sounds interesting, everyone was waiting for details. When we got acquainted with the text of the law, the situation has become clear: in fact, we are not talking about a fixed tax, but about fixed fee for deferral of tax payment, since when distributing money from CFC to the level of the beneficiary, personal income tax will need to be paid. Until February 1 of this year, there is still time to submit a notice and use the new regime already for the 2019 financial year of the CFC – in fact, there is a rare opportunity to reduce the amount payable for the previous tax period.

We recommend considering a new mode in in the following cases: when significant profit is generated at the CFC level and there are no plans for its distribution, when in the future the beneficiary considers the possibility of moving to low-tax jurisdiction, when there are many foreign companies in the structure and their administration takes a lot of resources, when for one reason or another disclosure of financial statements to the tax service is undesirable. Perhaps this is the only positive news for 2020 for owners of large capital. To determine the feasibility use should carefully analyze each situation with the tax consultant.

Amendment of tax agreements with Cyprus, Luxembourg, Malta and the Netherlands

By the end of the year, it became clear that from 2021, taxation of cash flows with important non-offshore investors – Cyprus, Malta, Luxembourg and the Netherlands – will be changed. On the one hand, ) I want to react emotionally to modification of double taxation agreements (DTA) and say that Russia is only deepening isolation from the outside world. On the other hand, it is worth recognizing that DTA with these countries no longer encouraged real trade and did not stimulate investment from these countries, but helped Russian entrepreneurs to optimize the tax burden. Apparently, real foreign investors will suffer the worst – their interests are not protected now in any way. What’s next? Obviously, the same fate awaits all the agreements of Russia with any more or less significant trade volume.

All these new facts push entrepreneurs either to avoid using foreign structures in principle, or to use more complex business ownership and financing tools that are not covered by the new rules. Such options exist, but an entrance ticket for the use of the foreign structure will become significantly higher than it was before. As a result, we forecast, as the trend to receive its development in 2021, the creation of foreign companies with priority goals being not for business ownership in Russia, but for ownership of family liquid capital. In other words, family-owned purse companies will be more often created abroad that will be replenished with money from their shareholders, formally unrelated to Russian business families. At the same time, Russian business may be directly owned by Russian holding companies. This is a very correct approach – we always recommend sharing the ownership of the family business and the family business finance.

Interest on deposits

For a long time, interest on deposits in Russian banks was actually exempt from taxation, since this year the situation has changed. Since the tax will be withheld and I am sure that many citizens will not know that they began to pay more.

Such a benefit is rare abroad, most often income from deposits is subject to taxation. As a result, income taxation in Russian and foreign banks evened out; for wealthy citizens, most of whom have accounts on both sides of the border, this is an additional argument, unfortunately, not in favor of our banking system. In current market realities where rates are at unprecedented low levels, an alternative to deposits may be to place capital on the securities market based on Russian or foreign brokers or banks. Deposit and securities income are now the same, you still have to find a good manager whom you can trust for this job.

Increased demand for migration services and inheritance

Due to closed borders and covid panic, the professional community expected in 2020 that hereditary planning services and migration services should be in high demand.

According to the results of the year I can confirm: the number of requests for these services has actually increased. Customers made sure that the world is not as global as it seemed earlier, for movement without restrictions is impossible without residence permit or citizenship of another country, in addition to Russia. Meanwhile, in 2020 Cyprus closed its citizenship program for investments popular among Russians, so in Europe, in fact, only the Maltese program and a number of opportunities with residence permit remained. In 2021 we expect the closure of any citizenship programmes for investment in developed countries; probably, options will remain only with Caribbean countries, so anyone who has not yet thought about it earlier, is strongly recommended in 2021 to take up migration planning.

Among the options that exist today, I recommend to consider Malta, Montenegro, Portugal, Grenada and Saint Kitts and Nevis, in the case of citizenship. What about the USA? We recommend obtaining citizenship of this country only in cases where the family really plans to move there. The final choice must always be made based on life plans and goals. If you need a passport only for traveling without a visa, for these purposes relatively low-cost Caribbean programmes would suffice. When the family really plans to move, you need to be guided by the family’s preferences about where to live more comfortably. Our customers consider Portugal, Spain, Italy, Austria, Monaco, Dubai, Cyprus, Malta and a number of other countries as countries suitable for receiving residence permit.

As for hereditary planning, in 2020 everyone discussed several high-profile cases: among them the conflict of the heirs of Dmitry Bosov and the death of the head of Samsung Lee Kun-hee, when inheritance tax amounted to half of the property received. Both situations could be avoided with competent timely planning and creation of structure for capital transmission within the family. We worked on two large-scale hereditary projects in 2020; we are sure that one of the triggers of these tasks was pandemic, although clients did not explicitly confirm this. Unfortunately, the new Russian tools for hereditary planning, namely, hereditary funds, did not yet become popular, so consultants still use wills in Russia and abroad and complex foreign instruments such as trusts and foundations. In this area no novelties should be expected in 2021 – it is unlikely that the Russian jurisdiction will offer something to wealthy citizens for succession planning.

Our recommendation for 2021 is to audit the current structure and simulate stress -test: what will happen to family assets if the controlling shareholder dies? Usually such an exercise shows all the weaknesses of the ownership structure of family capital and identifies risks. Next, you need to draw up a roadmap for risk reduction, usually one of the solutions will be the establishment of a new family structure in the form of a fund or trust, there are no more effective solutions for large capital. We recommend to discuss the roadmap with the family so that its provisions do not become subsequently a surprise to successors.

In practice, the road map phase takes from two weeks to six months; this is the longest stage of hereditary planning. After the roadmap is agreed you need to start implementing its provisions, usually it is a composition of several instruments: will, establishment of a fund or trust, lifetime donation, change in corporate governance in the current structure. Very often, when revising a structure, non-inheritance risks, such as tax or corporate risks, are identified which also can be minimized along with reorganization initiated for other reasons.

By Nikolai Vargasov, head of Legal and Tax Department, UFG Wealth Management

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Russia in January increased imports of goods from non-CIS countries by 2.8%

The Ministry of Industry and Trade commented on the situation with the shortage of wood for furniture

The Ministry of Industry and Trade plans to impose a restriction on export due to a shortage of furniture

Digest of clarifications of the Ministry of Finance of Russia on the accounting of assets and liabilities: I half of 2020

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