At the end of March 2023, the Sub-commission of the Government Commission for Foreign Investment Control changed the rules for calculating and paying a voluntary contribution to the budget when Russian assets are sold by legal entities from "unfriendly" states (exit tax). This step was prompted by government agencies both by macroeconomic factors (budget deficit) and by the change in the authorities' approaches to foreign investment in the context of the increasingly complicated foreign policy situation.

The adjustment of the mechanism gave exit tax a higher priority compared to the alternative which is installment payment for the transaction. Despite the fact that the installment is still formally listed as an alternative to exit tax, the practice of approval indicates the blocking of M&A transactions containing the condition of installment payment with no payment of a voluntary contribution.

It is also significant that the purchase price agreed between the seller and the buyer does not affect the payment of exit tax in the future - only the appraisal value is important. At the same time, the exit tax rate changes depending on the applied discount to the appraisal value, which affects the costs of the transaction. In general, the tightening of regulatory conditions requires additional efforts by the project teams of sellers and buyers, including GR support.

In this memo, we will consider the changes in the rules for calculating and paying exit tax in more detail.