Investment in a Russian Holding: Your Strategy to Minimise Tax Risks (article from Private Equity Russia & CIS Journal №6)
  
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INVESTMENT IN A RUSSIAN HOLDING: YOUR STRATEGY TO MINIMISE TAX RISKSIrina Suvorova, KPMG in Russia and CIS
Michael Johnston, KPMG in Russia and CIS
Maria Semenova, KPMG in Russia and CIS
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CONTENTS OF THE ARTICLE
Strategic investors should always consider tax implications when investing in Russia. Where the target is a big Russian holding with a complex structure, the proper addressing of tax exposures could have a material impact on the effectiveness of the transaction and the overall result of the investment. The benefit from an appropriate tax focus could crystalise not only at the bidding stage, allowing the investor to propose a competitive price, but could also have a material effect on the results of its subsequent disposal.
Normally investment funds are interested in acquiring minority stakes and analyse limited information in relation to tax issues in order to determine whether the investment is worth pursuing. However, they may subsequently decide to increase their shareholding and become majority shareholders of a Russian holding. A majority stake imposes additional risk and responsibilities on the investor and therefore requires additional attention to tax matters. This article provides an overview of the tax issues to be addressed, depending on whether a minority or majority stake is planned to be purchased.
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