Answers to Many Common Questions About Setting Up Business Operations in Russia
It is not unusual to have numerous questions about moving or expanding a business to Russia. Here, you will find answers to many common questions and information about how to get help with concerns that more specific to your unique business.
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What is the amount of the minimal monthly wage in Russia?
As of 1 January 2015, the statutory minimum monthly wage was RUB 5,965 per month (approximately USD 87). Russian Federation regions may set their own minimum wages at a higher level. For example, the City of Moscow’s minimum wage is periodically set by a relevant regional agreement, and effective 1 January 2015, it increased to RUB 14,500 per month (approximately USD 210).
What is the amount of state duty for representative of branch office accreditation?
The state duty for representative office or branch accreditation is currently RUB 120,000 (approx. USD 1,750). In addition, the Chamber of Commerce and Industry may charge a certain insignificant fee for a review of the documents required in order to agree on the number of expatriate employees for accreditation purposes.
What is the registration authority for branches / representative offices of foreign companies?
At the moment, most branches / representative offices should be accredited with the tax authorities except for the branches / representative offices of banks and organisations operating in the aviation industry. Branches / representative offices established before 1 January 2015 with accreditation that shall not expire before 1 April 2015 must report information about themselves to the tax authorities before this date, so that this information may be introduced into the new state register. Failure to observe this requirement may result in cancellation of the accreditation of a branch / representative office.
What is a limited liability company under the Russian law?
Under the Russian Civil Code, a limited liability company may be established by one or several persons whose charter capital is divided into shares. The liability of each participant in this type of company is limited to the value of their share in the charter capital. The participants may conclude a participants’ agreement to regulate how their rights are exercised. The number of participants in a limited liability company cannot exceed 50. The charter capital of a limited liability company determines the minimum size of the company’s property, thereby guaranteeing the interests of its creditors. The minimum charter capital of a limited liability company should come to at least RUB 10,000.
A limited liability company’s management structure is similar to that of a joint-stock company. Limited liability companies are considered to be non-public and, thus, may enjoy more flexible options in regards to organizing their management structure, relations between shareholders, and other aspects of their activity.
What are the governing bodies of a Russian joint-stock company ?
A joint-stock company’s higher management body is the general meeting of shareholders, which must convene at least once a year. A public joint-stock company must have a board of directors consisting of at least five members. The company’s executive body may be collegiate (board, directorate) and/or “one-person” (director, general director). It is also possible to have several “one-person” executive bodies in a joint-stock company that may represent the company jointly or separately (with a full or limited scope of authority). A joint-stock company’s executive body carries out the day-to-day management of operations and reports to the board of directors and the general meeting of shareholders.
What is a joint-stock company under the Russian law?
Under the Civil Code, a joint-stock company’s capital is divided into a set number of shares. The shareholders in a joint-stock company are not liable for its obligations and accept the risk of losses resulting from operations within the limit of their respective stakes. Shareholders may sign shareholders’ agreements that regulate how their rights are exercised.
Russian law stipulates that only joint-stock companies may issue stock, which is deemed as securities and subject to registration. In addition, it describes public and non-public joint-stock companies. The former are entitled to have their stock publicly traded, but they must comply with rather strict legislative requirements concerning the structure of their governing bodies, relationships between shareholders, obligatory reporting, etc. The latter companies, in turn, cannot arrange for public trade of their stock, but may enjoy more flexible regulation with respect to their corporate structure and operations.
A joint-stock company’s share capital is composed of the nominal amount of shares acquired by its shareholders. The minimum “charter” (share) capital for public and non-public joint-stock companies is 1,000 and 100 times the minimum monthly wage, so RUR 100,000 and RUR 10,000 respectively.
What is the difference between a Representative office and a Branch office of a foreign company?
An accredited representative office is not a Russian legal entity, but an officially recognised subdivision of a foreign legal entity. Representative offices of foreign entities are strictly limited to liaison and support functions. A branch’s legal status differs substantially from that of a representative office. Under Russian law, a foreign legal entity’s registered branch is treated as “an enterprise with foreign investment”. Therefore, while a registered branch can hold certain types of licences to conduct regulated activities, a representative office or unregistered branch may not. Branch offices are free to perform all of a foreign entity’s activities. Many investors opt for branch offices at the outset because these entities are able to engage in any kind of commercial activity. Furthermore, they are subject to less onerous reporting requirements than those in place for Russian companies.
What forms of legal presence are available in Russia for foreign investors?
Foreign investors can choose a number of different forms of business representation in Russia, from Russian legal entities to representative offices and branches of foreign legal entities. Russian legal entities may be established in various forms, including joint-stock companies and limited liability companies.
What are the duties and taxes to be paid importation of goods into Russia?
Import duties are applicable for most goods. The majority of customs duty rates in Russia are ad valorem. There are also specific duties for certain types of imports, calculated by volume, weight or quantity. Some duties have a combined rate. The import VAT rate for most goods is 18% of their customs value, inclusive of customs duty. Food, certain types of children’s goods and some other goods may be subject to 10% or even 0% VAT.
What is the process of importing of goods into Russia?
If goods are imported into Russia under a transaction between a foreign company and a Russian company, the Russian party is usually responsible for the customs clearance. In order to import goods into Russia and clear them through customs, an importer should make all customs payments due under the chosen customs procedure and comply with other requirements in customs legislation. The import of certain goods requires permission/licenses.