Russian Tax Legislation

Russian Tax Legislation:

1. Value Added Tax (VAT)

2. Profits Tax

3. Assets Tax

4. Unified Social Tax (UST) completely disappeared from the Russian Tax Code and was replaced by social contributions payable to:

- the State Pension Fund,

- the Social Security Fund,

- the Federal Medical Insurance Fund,

- the Territorial Medical Insurance Fund.

5. Personal Income Tax

To be more precise, Russia is a federal state with a rather high degree of centralization. The core of the Russian tax system is the Tax Code, which covers all federal, regional and local taxes. Federal taxes include the following major corporate taxes: VAT(Value Added Tax), profits tax and UST (Unified Social Tax) replaced by social contributions (see clause 4 above).

At the regional level, property tax and transportation taxes are levied, and at the local level, land tax.

Federal taxes and tax concessions are set at the federal level and cannot be changed by the regional or local authorities.

An exception provided by the Tax Code is the 24% profits tax, which is payable to both federal (6,5%) and regional (17,5%)  budgets. Regional authorities are authorized to reduce the regional portion of tax by no more than 4%, and this is often used by regional authorities to attract investment.

However, the regional authorities cannot influence, for example, VAT or UST. Regional taxes are regulated by both federal and regional legislation.

Regional legislation can only provide tax concessions which do not contradict federal law.

Often, property and land tax concessions are provided through a reduction in the tax rate (the maximum rate is 2,2% and 1,5%,respectively) or through the exemption of certain companies or property from taxation. Such exemptions are normally conditional on meeting specific investment criteria in the region.

How To Get Russian Visa

Tourist visa is valid only for 30 days. If you come to Russia for business purposes your should apply for a Business visa. The latter can be valid up to 12 months and is the most popular type of Russian visa for businesspeople.

There are different categories of Business visas: single-entry, double-entry and multiple-entry. Period of stay in Russia: from one day to one year.

Single-entry or double-entry Russian visas can be valid for 1 or 3 months. Multiple-entry visas can be valid for 6 or 12 months. Limited extension of a Business visa is possible with the help of the Russian company that invited you to Russia and is mentioned in your Russian visa.

Important!
According to the New Regulation (Decree signed by Prime Minister), foreign citizen with a multiple-entry visa can stay in Russia only 90 days within each 180.

Foreigners can receive Russian visas only in their own country (citizens of EU – in any country of the EU). To receive the visa in the third country one will have to present residence or work permit in this country.

You need Visa Invitation to apply for visa. Visa Invitation is a business Invitation letter issued by the local department of Federal Migration Service (FMS) in Russia by the request of Russian companies accredited by the Administration of Federal Migration Service (AFMS) of Russia in Moscow.

Note: A Business Invitation can also be issued by the request of an international organization accredited with the Consular Department of the Russian Ministry of Foreign Affairs.

Terms and price for the Visa Invitation depend on the terms of the inviting organization.

Terms and price for issuing a visa at the Russian Consulate depends on the Consulate and sometimes on your citizenship. Usually, the Consular fee is higher for Multiple-entry visas and for longer periods of stay in Russia. You may also pay more for express processing at the Consulate.

Russian Consulates In The USA

New York

9 East 91 Street, New York, NY, 10128, USA
phone. +1 (212) 348-1717, 348-5762; fax +1 (212) 831-9162;

Email:  mail@ruscon.org

http://www.ruscon.org

Washington

Consular Division, Embassy of the Russian Federation, 2641, TUNLAW RD., N.W., WASHINGTON D.C., 20007, USA
phone +1 (202) 939-8907, 939-8911; fax +1 (202) 939-8919;

Email: waconsru@prodigy.net

http://www.russianembassy.org/CONSULAT/okrug.htm#dc

Houston

1333 West Loop South, Ste.1300, Houston, TX 77027
phone +1 (713) 337-3300; fax +1 (713) 337-3305;

Email:  info@rusconshouston.org

http://www.rusconshouston.org

San-Francisco

2790 Green Street, San Francisco, CA., 94123, USA
phone +1 (415) 292-5555; fax +1 (415) 929-0306;

Email:  consulsf@sbcglobal.net

http://www.consulrussia.org

Seattle

2323 Westin Building, 2001 6th Avenue, Seattle, WA., 98121, USA
phone +1 (206) 728-0232; fax +1 (206) 728-1871;

 Email:  сonsul@seanet.com

http://www.netconsul.org

Russian Consulates Abroad

Austria. Vienna.

Botschaft der Russischen Foderation in Osterreich, Reisnerstrasse 45-47, 1030 Wien, Osterreich
phone +43 (1)712-3233, 712-1229;
fax +43 (1) 714-7612;
email rusemb@chello.at

Bulgaria. Sofia.

Blvd. Dragan Cankov 28, BG-1000 Sofia, Bulgaria
phone +359 (2) ) 963-4021, 963-1663, 963-0914, 963-0912;
fax +359 (2) 963-4116;
email consul_sofia@rusembul.org, info@rusembul.org

Canada. Ottawa.

52 Range Road, Ottawa, Ontario K1N 8J5, Canada
phone +1 (613) 236-7220, 236-6215, 236-0920;
fax +1 (613) 238-6158;
email ruscons@rogers.com

China. Hong Kong.

2106, 21/Fl., Sun Hung Kai Centre, 30 Harbour Road, Wanchai, Hong Kong
phone +852 28-77-7188, 28-77-5024;
fax +852 28-77-7166;
email russia@hknet.com

Cyprus. Nikosia.

Ag. Prokopiou street, Engomi, Nicosia, Republic of Cyprus
phone +357 (2) 77-6832,77-4622;
fax +357 (2) 77-4854, 77-3030;
email consul@cylink.com.cy , russia1@cytanet.com.cy

France. Paris.

40-50 Boulevard Lannes, F-75116 Paris, France
phone +33 (1) 45-04-05-01, 45-04-0550, 45-04-4030;
fax+33 (1) 45-04-44-09, 45-04-1765;
email conru@wanadoo.fr , ambrus@wanadoo.fr

Germany. Berlin.

Behrenstr. 66, 10117 Berlin, Deutschland
phone +49 (30) 22-65-11-83, 22-65-11-84, 229-11-10;
fax +49 (30) 22-65-19-99;
email infokonsulat@russische-botschaft.de , info@russische-botschaft.de

Merrill Lynch Is Agent To Sell 10% Of VTB

The Government of the Russian Federation has appointed Merrill Lynch Securities a subsidiary of the investment bank BofA Merrill Lynch  to be an agent to sell 10% stake in Russia's second largest bank VTB within the project for privatization of state companies in Russia.
"Indeed, the Prime Minister signed such an order, and soon it will be published", - said the press secretary of Russian Prime Minister Dmitry Peskov.
Head of VTB Andrey Kostin has informed earlier that the deal to sell 10% stake in VTB for $ 3 billion to the group of investors headed by U.S. investment fund TPG could be completed until mid-2011.

Mail.ru Group's IPO Is Over $1 Billion

Russian internet company Mail.ru Group and its shareholders gained from the sale of its shares during IPO more than $ 1 billion. To overcome psychologically important level helped the organizers of IPO - Morgan Stanley and VTB Capital, which implemented the option of redistribution and additionally purchased 3,290,000 ordinary shares of Mail.ru Group for $92 million. 


Thanks to the exercise of the option the total proceeds from the placement of shares and global depositary receipts (GDR) amounted to $1.003 billion when the share of free float (free float) of Mail.ru Group has reached 18,4%, said the Internet holding. 


During the IPO Mail.ru sold 36.22 million GDR (each receipt represents 1 ordinary shares) at a price of 27.7 dollars, that is on top of the range. Company's market capitalization amounted to 5.7 billion dollars, making Mail.ru Group  the largest traded Internet company in Europe. 


Earlier Mail.ru Group reported that funds from the IPO will be partly directed to purchase additional 7.5% of the capital social network Facebook for 112.5 million dollars. As a result, the share of Mail.ru in the social network Facebook will increase to 32.49%. Moreover, the company also secured an option to buy a similar package (7.5%) over the next year. Thus, at confluence of certain circumstances in 2011 Mail.ru Group's share in the network Facebook will be communicated to 39.99%. 


The company Mail.ru Group belongs to Yuri Milner, Gregory Finger and Alisher Usmanov. Previously, the company called Digital Sky Technologies (DST), but the pre-IPO, it was renamed. Between 2005 and 2009 the company (then known as the DST) has attracted and invested over $ 1 billion in more than 30 companies. 


Mail.ru Group owns the eponymous post and entertainment portals, instant messaging services ICQ, a social network Odnoklassniki.ru. The company also owns stakes in a social network Facebook, payment system Qiwi, a discount service Groupon and producer of games for social networks Zynga. 

TransContainer's IPO Attracts $400 Million

The placement price per share of TransContainer in the initial public offering (IPO) announced at $80, $ 8 per GDR (global depositary receipt).While 10 GDR certify the rights in respect of one share, TransContainer reported. 


Thus, the RZD's subsidiary was placed close to the bottom of the announced range (7,9-9,9 dollars per GDR). On the stock exchanges in Moscow and London it was planned to place 5 million 2 thousand 118 existing shares of the company. Based on the offering price, TransContainer attracts a little more than $ 400 million.

"Listing in London and Moscow is an important strategic step for TransContainer, but the deal will be a milestone in the ongoing reform of the railway industry in Russia. We will make every effort to develop TransContainer as a public company and increase its shareholder value" -, the words of its CEO Peter Baskakov are given in press release. 


Start of conditional trading GDR on the London Stock Exchange is expected today. Admission to the GDR's official list of the Financial Services and Markets of the UK as well as the beginning of unconditional trading GDR on the main market of London Stock Exchange under the symbol "TRCN" is expected on November 12, 2010. 

Shares are included in the list "И" of RTS and the list "И" of MICEX Stock Exchange. Start of trading on RTS and MICEX under the symbol "TRCN" is also expected on November 12, 2010.
TransContainer was registered in March 2006 on the basis of the center for cargo transportation in containers TransContainer (Branch of RZD) with registered capital of 13.9 billion rubles.


Before the IPO RZD owned 85% minus 1 share of TransContainer, the European Bank for Reconstruction and Development (EBRD) - 9,25%, Moore Capital Management, LLC - 2,5%, GLG Emerging Markets Fund - 2,5%, Troika Dialog Investments Limited - 0,75%. Net income of TransContainer under International Financial Reporting Standards (IFRS) for the I half of 2010 amounted to 197 million rubles,  revenue - 9.94 billion rubles. 

German Companies In The Russian Market

The classic way to develop the Russian market by German firms is as follows: first sales through representatives or through their own trading partners. If these transactions are successful, German firms establish their representative offices in Russia, in order to serve customers better. 


German companies usually take a decision to invest or establish manufacturing only in a few years in the Russian market. 


German medium-sized businesses today are represented in Russia mainly in the production of food and construction materials in the construction industry. 


Among the advantages of the Russian market are: first of all, it is every year increasing purchasing power of the Russian population, which is evident from the impressive data on the growth of retail turnover. Revenues are growing three times faster than the supply of goods and services. The Russian economy is still unable to meet this growing demand. 
Second, continued economic growth leads to an increasing demand for investment goods. Since the degree of deterioration of Russian machinery and equipment is high, it should be updated. Therefore, almost half of Russian imports are machinery and equipment, one third of which is German production.
And, last but not the least: political stability in Russia  is also an important argument for investment in Russian market. 

Among the most important and interesting projects can be called an assembly production of BMW Group in the Kaliningrad region, a joint venture with DaimlerChrysler to produce agricultural machinery, the project company Bayer for the production of rubber and construction of chemical factory in St. Petersburg , the construction of chemical plant for methanol production in Arkhangelsk with the participation of MAN Ferrostaal, as well as participation of BASF (through a subsidiary - the company Wintershall) in projects for exploration and production of oil and natural gas. Store network of wholesale and retail company Metro, the German retail branch Swedish company IKEA, as well as the company's AVA (Edeka), which begins building its own network of hypermarkets «Marktkauf". 

It is noteworthy that in recent years, the Germans began to invest actively in the information sphere, realizing that most effectively exploit the potential of Russian market of programming can not by inviting specialists to work in Germany, and the execution of orders directly to German companies in Russia and the creation of joint companies. Good examples of such cooperation could be joint projects in Zelenograd, St. Petersburg and Novosibirsk. Unfortunately, in absolute terms such investments remains slow. 

If we talk about regional cooperation German investors prefer regions with political stability, good economic potential, rich labor and natural resources, with a constructive attitude toward foreign investors and having access to transportation and other infrastructure. Therefore, the highest priority for the region of the Russian Center and the North-west. Considerable interest has been shown also to the Volga and Ural regions. 

In recent years, not only Moscow and St. Petersburg, but also other Russian regions are becoming more attractive for investments of German investors.  In other words, more than half the funds were sent to other Russian regions.

American Companies In The Russian Market

Many business projects were developed well before this so called transformation or "reboot" in business-relations between Russia and the USA. The long term cooperation between VSMPO-Avisma and Boeing Corporation is just one example of many.

Emerson Electric, an American corporation, sets an example of successful cooperation by having organized production on the basis of a plant of Metran Industrial Group and established the high-tech engineering centre using the high intellectual potential of young Russian scientists. 

Another U.S. company - Carbo Ceramics, with headquarters in Texas - is running a successful plant in the Chelyabinsk Oblast. 

John Deere agricultural machinery assembly plant is working in Orenburg and these machines are already quite popular amongst Russian farmers. 

American companies, for instance Halliburton and Baker Hughes, have been successfully working in Russian oil and gas sector for quite some time. 

Leading brands of American food processing industry - Coca Cola, Pepsi, McDonald's and Subway - are also represented in the Russian market. These companies have brought with them the background of successful corporate culture that has taken root in Russia. 

These examples of cooperation clearly demonstrate that Americans highly value the intellectual potential of Russian specialists, the well developed engineering thought, and industrial potential of the regions. This is why high tech companies, for instance Microsoft, Hewlett Packard, and IBM also work successfully in Russia. The latter are the only small percentage of companies doing business here.

Joint Stock Company In Russia

A joint stock company is a commercial organisation registered capital of which is divided into a certain number of shares certifying contractual rights of the participants of the company (shareholders) in respect of the company.

Shareholders are not responsible for the company's liabilities and carry the risk of losses related to the company's operations only up to the value of their shares.

Shareholders have the right to divest the shares they own without consent of other shareholders and the company; the shareholders of a closed joint stock company have the preferential right to purchase the shares in question.

Individuals and legal entities may become shareholders of a joint stock company. Such company cannot have just one shareholder - another company consisting of a single individual.

A minimal registered capital:

* open joint stock company - 100,000 roubles (thousand times minimal monthly wage as set in Russia);

* closed joint stock company - 10,000 roubles (hundred times minimal monthly wage as set in Russia).

A joint stock company must have a company name and a round company seal (stamp).

The Articles of Association is the constituent document of the company.

The shareholders' general meeting is the supreme authority of the company.

The general management of the operation of the company is performed by the Board of Directors.

The management of the current operation of the company is performed by a sole executive authority of the company (director, director general) or by a sole executive authority of the company and a collegial executive authority of the company (executive committee, directorate).

The location of the company is determined by the place of its state registration of the location of the permanent executive body.