TRADERUN
MOODUL TRADERUN
MODULE BUSINESS PECULIARITIES IN THE EU,
RUSSIA AND
EASTERN PARTNERSHIP COUNTRIES
ÄRI ERIPÄRAD EUROOPA LIIDUS, VENEMAAL JA IDAPARTNERLUSRIIKIDES
Lecturers: Ryhor Nizhnikau (
responsible ) Giorgi Gaganidze,
Sergei Proskura, Andres Assor
P2EC.00.202 (UT
code ), RIE 7044 (TLU code)
Reading materials: Business peculiarities in Russia
Lugemismatejal: Äri eripärad Venemaal
Created by Sergei Proskura Tartu 2013
TABLE OF CONTENTS
INTRODUCTION ....................................................................................................................................... 3
1. LEGALIZATION OF A COMPANY WITH A
FOREIGN OWNER IN RUSSIA ....................................... 4
1.1.
Laws ............................................................................................................................................. 4
1.2.
Documents for
registration of the company ........................................................................... 5
1.3.
The Head of the new company ............................................................................................... 6
1.4.
Payment of the authorized capital of the company ............................................................... 6
1.5.
Address of the company ......................................................................................................... 7
1.6.
Activities of the company ........................................................................................................ 7
1.7.
Seal .......................................................................................................................................... 8
1.8.
Branch office accreditation ..................................................................................................... 8
2.
FORMS OF INCORPORATIONS (
TYPES , PROS AND
CONS ) ......................................................... 10
2.1.
Private
Entrepreneur ............................................................................................................. 11
2.2.
Limited
Liability Company ..................................................................................................... 11
2.3.
Closed
Joint -
Stock Company ................................................................................................. 13
2.4.
Company name ..................................................................................................................... 14
2.5.
Comparison of
different forms of incorporation of
companies ............................................ 15
3.
TAXATION , DUTIES AND EXCISES .............................................................................................. 17
3.1.
The
essence of the tax system, the principles and
functions of
taxes .................................. 17
3.2.
The main taxes ...................................................................................................................... 20
3.3.
Tax rates in 2013 in Russia .................................................................................................... 22
4.
LABOUR RELATIONS (
INCLUDING IMMIGRATION LAWS) ......................................................... 25
4.1.
Entry and
stay of foreign citizens in the
Russian Federation ................................................ 25
4.2.
Types of visas for foreign citizens in the Russian Federation................................................ 25
4.3.
Migration Registration of Foreign Citizens in the Russian Federation .................................. 28
4.3.1.
The procedure for bringing the
work of
highly skilled professionals (VKS) ...................... 30
4.3.2.
Your work permits for foreign citizens arriving in Russia in the
visa -free
regime ............ 33
4.4.
Responsibility for violation of immigration laws ................................................................... 34
5. BANKRUPTCY/
CLOSING DOWN THE COMPANY ....................................................................... 39
5.1. The procedures applied in the bankruptcy ................................................................................ 39
5.2. Fictitious or deliberate bankruptcy ............................................................................................ 42
5.3.
Criminal code......................................................................................................................... 42
6. ALLOWANCES/ PERMISSIONS NEEDED, PROCEDURES TO ACQUIRE ........................................ 43
6.1. The privileges granted to foreign investors ............................................................................... 43
6.2. Excise duties ............................................................................................................................... 45
7.
ACCOUNTING ............................................................................................................................ 49
7.1 Levels of the system of accounting
regulation in the Russian Federation ................................ 49
7.2. The Federal Law "On Accounting" ............................................................................................ 51
7.3.
Chart of
accounts and
other documents .............................................................................. 52
7.4.
Russian tax system ................................................................................................................ 53
7.5.
Banking system in Russia....................................................................................................... 53
ABOUT TRADERUN
PROGRAMME ......................................................................................................... 55
2
INTRODUCTION The
current reading
material focuses on the business peculiarities in Russia.
***
The aim of the Traderun programme course “FUNDING PROJECTS IN RUSSIA AND EASTERN
PARTNERSHIP COUNTRIES” is to provide the students with comprehensive and practical
overview of the fundraising possibilities in EU and Estonia. The course gives an overview of
EU structural support and regional implementing agencies, that are available for a
businessman to apply for a fund.
A successful student will be aware of and understand the EU fundraising possibilities in the
frames of cooperation with Russian and Eastern Partnership countries, and able to define the
financing criteria and priorities.
The current reading material summarises the main aspects covered by lectures and
structurises the information channels for the future.
The course supports the other Traderun courses, especially the course related to EU
cooperation with Russia and Eastern Partnership Countries.
3
1. LEGALIZATION OF A COMPANY WITH A FOREIGN OWNER IN RUSSIA Today the investment attractiveness of Russia is very high. In
addition to the
dynamic pace
of
development of the
economy , Russia
offers to foreign investors increasing every
year the
market of
goods and
services to consumer and business. Most often, this together with the
high
rate of
return on invested capital is a crucial
factor in the
decision to enter the Russian
market.
One possible way to
full implementation of business activities on the territory of the Russian
Federation - is the
creation of a
legal entity.
An enterprise with foreign capital - is created on the territory of the Russian business-
organization whose founders are foreign citizens or
organizations . Russian
legislation provides for the
establishment of
enterprises in Russia as a 100-
percent foreign ownership
and joint - with the participation of Russian and foreign shareholders.
Established on the territory of the Russian Federation entity with absolute or partial foreign
ownership will operate
within the
framework of the Russian legislation. That is, the laws of a
foreign
investor is limited to a
choice of the legal form of the enterprise, defined deadlines
for accounting and tax reporting
rules for transactions and other mechanisms for
making and
processing of business transactions.
Forms of organization of business organizations:
Public joint-stock company (otkrytoe akcionernoe obshchestvo, OAO).
Private joint-stock company (zakrytoe akcionernoe obshchestvo, ZAO).
Limited liability company (obshchestvo s ogranichennoj otvetstvennost'ju, OOO).
Association and
others .
1.1. Laws The main laws
governing the establishment and
operation of organizations in Russia (as with
foreign capital, as
without foreign capital)^
Civil Code, from 30.11.1994 № 51-FZ (the last version of 11.02.2013)
Companies Act, of 26.12.1995 № 208-FZ (the last version of 05.04.2013)
The Law on Limited Liability Companies, from 08.02.1998 № 14-FZ (the last version
from 29.12.2012)
On state registration of legal entities and
individual entrepreneurs, from
08.08.2001 № 129-FZ (as last amended on 29.12.2012)
4
1.2. Documents for registration of the company In
order to
register a company with foreign capital in Russia, it is
necessary to
carry out the
whole range of legal
actions that you want to implement Russian citizens in the registration
of legal entities without foreign participation. In addition,
there are some nuances
associated with the
special status of foreign shareholders.
To register a company with foreign capital must provide an expanded list of documents
compared with a
package of documents necessary for the registration of organizations with
Russian capital.
Consider the example of a package of documents on registration of a limited
liability company (LLC).
If the founder are individuals:
Document confirming payment of state
duty for registration of a limited liability
company, 4000 rubles (≈ EUR 100);
Decision on the establishment of the founders LLC (Minutes of the founders);
Application for state registration of the LLC in the form approved by the
Government of the Russian Federation (includes registered office of creating
company);
Charter Company (
Memorandum and
Articles of Association);
List of participants of the company, if the participants more
than one;
Notarized
translation of the passport (
identity card) in Russian, made in Russia (not
in a foreign
country );
If the
residence of a foreign
citizen in a foreign country is not listed in the passport,
certified translation of the document confirming the address of permanent
residence, the Russian
language , made in Russia (not in a foreign country).
If the founder are the legal entities:
Document confirming payment of state duty for registration of a limited liability
company, 4000 rubles (≈ EUR 100);
Decision on the establishment of the founders LLC (Minutes of the founders);
Application for state registration of the LLC in the form approved by the
Government of the Russian Federation (includes registered office created Ltd.);
Charter Company (Memorandum and Articles of Association);
List of participants of the company, if the participants more than one;
Copy of the document confirming the state registration (
Certificate of
Incorporation or
equivalent );
An extract from the commercial register (or its equivalent), which contains
information about the foreign legal entity;
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Notarized translation into Russian of the listed documents, made in Russia (not in a
foreign country);
Certificate from the
bank about the
account to confirm the investor's
ability to pay;
Certificate on tax number in the country of non-
resident ;
Power of
attorney for the
person responsible for signing the necessary documents
for opening accounts and registration of the LLC with foreign investments.
The
above documents is not
complete ,
since the registration of companies with 100%
foreign ownership and equity participation, there are some differences (other than the
contents of the package of documents depends on the list of founders of the legal entity).
We should also
focus on
such features of the Russian legislation:
1.3. The Head of the new company In Russia adopted the
basic name of the head - "General
Director " (CEO) (mostly used) and
the "Director". Appointment of Head of the newly created company - at the time of
registration of the legal entity they must necessarily be a citizen of Russia. If the founders
originally planned this way, and with the continued activities of the company will not have
any problems. But if it is assumed that the
firm created should be headed
alien , after its
state registration must be registered at the
Employment Center and get the
permission of
the Federal Migration
Service on the
admission of foreign
workers (
both the company and its
future foreign director).
Appointment to the post of Director-foreigner immediately
upon creation of the company,
without obtaining permission mentioned, is a gross violation of immigration laws. Permitting
Federal Migration Service is a very complicated procedure, which will be discussed in Lecture
4.
1.4. Payment of the authorized capital of the company For different
organizational forms of companies have different
terms of payment of the
authorized capital. For a limited liability company 50% of the
share capital must be
paid up
to the
date of state registration of the company. The remaining
part must be paid within 1
year from the date of incorporation. For the company (Public joint-stock company or Private
joint-stock company) 50% of the share capital must be paid no
later than 3 months from the
date of state registration of the company. The remaining part must be paid within 1 year
from the date of incorporation. Payment of the authorized capital can be made both in
cash and
assets of the founders.
6
Payment of the authorized capital up to the moment of state registration of the company
made the
following ways :
money - by opening a temporary bank account from which you made after the
registration of the founders of the money is transferred to the main account of the
company;
estate - by transferring the property to the Head of the company (CEO) under the
act temporarily, and after checking company founders made by the head of the
property is transferred by an act of the company.
1.5. Address of the company The law does not
require documentary
evidence of the
location of the enterprise (exact
address) in the territory of Russia in his account, but later on, in the course of business, the
company will need to have the document on the
basis of which its registration is made at a
specific address specified in the statute.
Such a document can be:
certificate of ownership of any non-
residential premises
lease office (
production ) of non-residential premises (
usually with a copy of the
certificate of ownership of the lessor's premises);
Registration is also possible at the address of permanent residence (residence registration)
on the territory of St. Petersburg and the
Leningrad region of its head (CEO).
The tax authorities have the right to inspect the actual location of the company at the
address specified in the statute. In the absence of registration at the company
could be
fined in the
amount of 5,000 rubles (≈ EUR 120).
Most often, the
fact of being the company's registered address is checked by
banks , customs
authorities and leasing companies.
However , a recent
increase in the address verification by
the
security services of
major Russian companies with state participation. For major tenders
for the
supply of goods or services for the implementation of large companies such checks
can be carried out in
secret .
1.6. Activities of the company Any commercial organization in Russia may
engage in any
activity that is not prohibited by
law. Of the individual activities
required to obtain licenses (for example, passenger
transport, trade in
alcohol ,
mining , educational activities). Main activities of the company
are declared at check-in and
specify the unified state register of legal entities. Moreover,
there is the
concept of "core business". The main
purpose - to determine the amount of the
premium social security of workers.
7
In the future, you can
change as many
times as the main activity. The procedure for
changing it
takes a
period of 7
days and require the payment of the state fee of 800 rubles (≈ EUR 80).
Each activity is indicated by the statistical software. Full list of
states in the classifier NACE
(National Classification of
Economic Activities) (in Russian transcription is “OKVED”).
It is always desirable to specify the exact name of the activity in
accordance with the
qualifier that there was no refusal to register the company on
formal grounds .
1.7. Seal Every commercial organization in Russia is
bound to have a
round seal. Seal is not registered
anywhere,
manufacture seals deal with a lot of companies - enough to
express your wishes,
and you manufacture any seals. A reprint of a round seal is required at the bank and the
customs authorities. The company also has the right to have an unlimited amount of any
stamps and use
them on your own. However, all the basic documents of the company must
be certified by a round seal it. For example, the notary does not notarized document without
the round seal.
1.8. Branch office accreditation It is necessary to distinguish the creation of companies with foreign investments from the
opening of a branch office accreditation of a foreign legal entity in Russia. This branch - is a
separate subdivision of a foreign legal entity located
outside of its location and performing
all or part of the functions, including the
function of representation. Registration is
done by a
branch of its accreditation in the
manner determined by the Government of the Russian
Federation. The branch is
considered to be accredited if the information on it is listed in the
state register of branches of foreign legal entities.
Stages of registration of the company with foreign capital:
1. Founders are
holding a
meeting of the founders,
develop bylaws, sign the
necessary documents (minutes of the meeting and the Articles of Association).
2. The head of the notary signs the application for registration of the company.
3. The founders (one or all at
once )
issues the power of attorney to the representative
of conducting to supply and
delivery of documents to the tax office.
4. Founders paid registered capital in cash or property.
5. Any person (the head of the company (CEO), the founder of the company or a
representative by the power of attorney) pay the state fee for registration of the
company.
6. The representative of the founders of the company passes to the tax office all
documents for the registration of the company.
8
7. Federal Tax Service carries out the state registration of the legal entity. Carried out
simultaneously with the registration of tax registration, obtaining codes of State
Statistics
Committee , registration with the
Pension Fund, the Social
Insurance Fund
and the Fund of obligatory
medical insurance.
8. The representative of the founders of the company receives the documents after
registration.
9. The head of the company (CEO) or a representative of the
proxy opens a bank
account.
After committing all of
these activities, the company is a registered business entity, and may
work legally.
Some of the timelines:
Registration with the Tax Authorities 5-7
working days
Company Seal production 2 working days
Registration with the State Statistics Committee, with the non-budgetary funds
(Pension Fund, Social Insurance Fund, Obligatory Medical Insurance Fund) is done
by the tax authorities
Opening of bank accounts depends on the bank
Registration with the Federal Service for Financial Markets of
shares emission 30
working days
Limitations of foreign participation
There are features and limitations of participation of foreign investors in Russian companies.
Such features are set for the banking and insurance activities in these areas, the state
provides certain restrictions for foreign investors. There is also a restriction on the
purchase of shares by foreign investors, the largest Russian companies with state capital (
Gazprom ,
Rosneft and others).
9
2. FORMS OF INCORPORATIONS (TYPES, PROS AND CONS) Starting your own business, it is
important to
choose the
best form of incorporation of the
enterprise. Currently in Russia there are different forms of business enterprises as well as
private enterprise. This lecture will address the most common form of the creation of the
business, as well as a
brief description of all existing forms of incorporation of companies in
Russia.
Key used form of business organization in Russia:
Individual Entrepreneur (individual’niy predprinimatel, IP);
Limited Liability Company (LLC) (obshchestvo s ogranichennoj otvetstvennost'ju,
OOO);
Closed Joint Stock Company (CJSC) (zakrytoe akcionernoe obshchestvo, ZAO).
Each of these forms has advantages and
disadvantages .
Selection of a
particular form of
incorporation of the enterprise depends on many different factors. The set and the
effect of
these factors are different for different types of businesses.
For example,
before the start of the business may have some
questions :
Do you like independence?
Do you want to start a business with
someone else ?
Are you willing to provide a large document in the company?
Are you
going to buy large quantities of goods on
credit ?
Are you able to independently make the required amount of capital?
As is often the
case , you may
find that your answers suggest
several possible solutions. You
will also, eventually, will have to choose the best form of incorporation of your company.
The answers to the above questions may
lead to the following conclusions:
You have decided to conduct a joint business activities. Do you want to start a
business with someone else, then you should think about the Closed Joint Stock
Company or a Limited Liability Company.
Your
sales activity is associated with a
greater risk, it may be
wise to think about
the Closed Joint Stock Company.
If you
cause difficulty maintaining the register of shareholders and additional
reporting on the shares, you should choose a Limited Liability Company.
You are going to buy large quantities of goods on credit, then it is better to
choose a Closed Joint Stock Company.
Some of the findings may
seem contradictory. All the
same , the
final selection of the optimal
variant is
yours . It is necessary to analyze the pros and cons.
10
First , try to understand what
lies behind the
term "Private Entrepreneur":
2.1. Private Entrepreneur Private Entrepreneur - is a natural person who is engaged in business activities
independently.
NB! Private Entrepreneur can only be a citizen of Russia, so in the context of this lecture,
this form of business is irrelevant. However, some consider this form.
Private enterprise has its advantages:
a minimum of organizational formalities;
a minimum of accounting documents;
economic independence;
there is no need to make share capital (at registration is not required).
The main disadvantage of an Private Entrepreneur is that it is liable for its obligations with all
its assets.
Serious problems can
arise from a private owner in the event of his
illness or
absence from. If not pre-think the
issue may be in trouble.
Now let us consider
another legal form of the enterprise - the limited liability company:
2.2. Limited Liability Company Many companies use this particular form of incorporation. Limited Liability Company is a
grouping of
physical and (or) legal entities for joint economic activities. The authorized
capital is
formed only
through the contributions of the founders. The minimum capital of
10,000 rubles (≈ EUR 250). Limited Liability Company is a legal entity and has its own name.
All
members of a Limited Liability Company is liable for its obligations within their deposits.
This distinguishes this form of incorporation of a Private Entrepreneur as an Private
Entrepreneur
shall be liable for its obligations with all its assets.
The main
advantage of a Limited Liability Company is that the solvency of each
participant in
the company's obligations is limited to the amount contributed by them to the authorized
capital in accordance with the contract. This is significant in that case, if you're going to take
large amounts of money on credit or a large number of goods to market, or is
planning to
implementation any risky business transactions. Limited Liability Company continues to
exist even if some of the participants decided to withdraw from it or died. This does not
affect the
state of society as a whole. Another advantage is that your
children can participate in a
given society is inherited.
But this form has some shortcomings:
any deal for the transition of ownership of the share capital (
sale , donation, etc.)
must be notarized;
11
significantly
increases the time for the issue of a large number of accounting
documents;
every time you have to disclose the
details of their business, presenting to the
authorities the necessary financial documentation
all founders of agreement to make a
total of
half of the share capital at the time
of registration.
How to register a Limited Liability Company?
This can be done in three ways:
1. You can register a Limited Liability Company on their own,
2. You can contact the law firm which is engaged in business registration, and
setting out their demands, they can issue a Limited Liability Company,
3. You can buy
ready -made Limited Liability Company.
Self-registering your
costs will
include :
state fee for registration of a company in the tax office (4000 rubles) (≈ EUR 120);
payment notarized signature on the application for registration of the company
(≈ 1,000 rubles) (≈ EUR 25);
payment of at least 50% of the share capital (min≈ 5,000 rubles) (≈ EUR 125);.
If you go to a law firm, your costs will be about three times as much, but the time for the
preparing registration of the enterprise significantly reduced.
If you buy a ready-made company, the
cost will be about the same, registration will take a
bit of time, in which case you get someone else's articles of association, someone else's
name, etc., and if you later want to change
something , it will require additional costs.
According to statistics, the
majority of Russian entrepreneurs prefer to conduct business
registration through specialized law
firms . It is most likely due to the
complexity of filling
special forms for registration of the company. Before you expand business operations and
begin to fill in the
relevant financial documents, consult an
accountant who can give you
good advice about the establishment of the accounting profession in your enterprise. This is
no small
matter , as the director is responsible for the state of accounting at the enterprise.
The Limited Liability Company has been
operating under a Statute.
The Statute includes:
the name and type of society;
the
object and purpose of economic activity;
size of the authorized capital;
provision of limited liability;
management structure and governance;
order of reorganization and liquidation, etc.
The Statute must
contain all the main features of:
type of society;
12
the object and purpose of its activities;
the founders;
name and location;
size of the authorized capital;
economic activities;
procedures for
calling and conducting meetings;
rights and duties of the director;
change the order of the director and his term of office;
rights and obligations of the company;
describes how the financial
control and the
dividend is declared, the procedure
for their payment;
description of liquidation and reorganization;
order of the creditors and the liquidation of the
budget , etc.
Now is the time to say a few
words about a third of the form of incorporation of the
company:
2.3. Closed Joint-Stock Company This form of incorporation of the enterprise as a whole is
similar to the Limited Liability
Company. However, there are some differences. Closed joint-stock company is established
as a Limited Liability Company, one or several founders. But only the
corporation has the
right to issue shares, and these shares in the Closed Joint-Stock Company are distributed
among its founders. The number of shareholders in a Closed Joint-Stock Company shall not
be more than 50, or to carry out the transformation into a Public Company. The founders of
the agreement is
signed on the establishment, which expires after the private Limited
Liability Company and run by the founders of all their responsibilities to create it. In all
official documents before the name of the enterprise should
present the abbreviation
"ZAO." Responsibility, as well as for a Limited Liability Company - to the
value of the shares
of participants. The minimum capital - 10,000 rubles (≈ EUR 250).
Self-registering your costs will include:
state fee for registration of a company in the tax office (4000 rubles) (≈ EUR 120);
payment notarized signature on the application for registration of the company
(≈ 1,000 rubles) (≈ EUR 25);
payment of at least 50% of the share capital - not later than 3 months from the
date of registration of the tax office;
state duty for registration of the shares in the Federal Service for Financial
Markets (20,000 rubles) (≈ EUR 500)
A key advantage and
difference from the limited liability company is that to sell (give way,
etc.) their shares without
shareholder may notarization of the
transaction . The register of
13
shareholders
while the company may carry on their own.
Transfer of title to the shares
makes the head of the company (CEO). Another key advantage is that the shares are
transferred to the shareholder in the
trust , which allows you to not disclose the information
about the owner of the business. Otherwise, the Closed Joint-Stock Company is very similar
to a Limited Liability Company.
At present, in Russia there is a big law discussion about the elimination of such
organizational form as a Closed Joint-Stock Company, just for this reason. It is assumed that
there will only be a Public Joint-Stock Company.
The disadvantages of this organizational form:
any deal for the transition of ownership of shares (sale, donation, etc.) not be
notarized, which may provide an
opportunity for fraud;
requires registration of the shares in the Federal Service for Financial Markets
(apply for registration of shares needed for 1
month from the date of
registration, registration
deadline is 1 month);
significantly increases the amount of reporting on the shares of the Federal
Service for Financial Markets.
2.4. Company name Having determined the optimal organizational and form of incorporation, should seriously
consider the choice of company name. You can safely use your name or the
names of their
partners . It is desirable that the name of your company is not repeated the names of existing
businesses, but
during registration tax authorities cannot
refuse because of the coincidence
of names with other companies. This relates to the
field of copyright
protection .
You must use the official company name in official correspondence, invoices, receipts,
invoices, etc.
You must specify:
abbreviation of the legal form of the company (ZAO or OOO);
official corporate name;
the location address of the organization.
Try wherever possible, to use them to advertise your business. It should be noted that there
are some
items that cannot be used without permission. For example: the words “Bank”,
“Bank of Russia”, “Russia”, “Moscow”, “Insurance”, etc. For the use of
proper names of
cities, countries, etc., in the name of the company will be charged an additional fee. In
addition, the use of the
emblem of the country, the
republic , the city also requires a special
permit and payment.
14
In
conclusion , let's
compare some of the main parameters considered in this
chapter of
forms of incorporation of companies.
2.5. Comparison of different forms of incorporation of companies Private entrepreneur
There can only be a citizen of Russia.
The responsibility for liabilities - all its assets.
Accounting - accounting procedure for an individual entrepreneur is
easier :
income and expenditure and business transactions conducted by individual
entrepreneurs by fixing the “Book of income and expenditure and business
transactions”.
Taxes - taxation, depends on the tax system, there are some pros and cons for
both Private Entrepreneur and legal entities.
Discontinued operations - order the termination of an individual entrepreneur is
much easier to order liquidation of legal entities.
Registration - Registration deadline in tax office is 5 working days.
Limited Liability Company
The responsibility for liabilities - Limitation of Liability: You only lose their capital
contribution Accounting - Requires conducting official accounting and reporting in accordance
with the formal
requirements . The Company maintains records in accordance
with the requirements of the Federal Law "On Accounting" (from 21.11.1996 №
129-FZ).
Taxation - Taxation of, depends on the tax system, there are some pros and cons.
Discontinued operations - order of liquidation of a long and laborious.
Preparation of reports - Enough time-consuming procedure.
The authorized capital - The authorized capital of the company shall not be less
than 10,000 rubles (≈ EUR 250).
Any deal for the transition of ownership of the share capital (sale, donation, etc.)
must be notarized
Registration - Registration deadline in tax office is 5 working days.
Closed Joint-Stock Company The responsibility for liabilities - to the extent of the value of its shares.
Accounting - Requires conducting official accounting and reporting in accordance
with the formal requirements. The Company maintains records in accordance
15
with the requirements of the Federal Law "On Accounting" (from 21.11.1996 №
129-FZ).
Taxation - Taxation of, depends on the tax system, there are some pros and cons.
Discontinued operations - order of liquidation of long and laborious
Registration - Enough time-consuming procedure
Preparation of reports - Enough time-consuming procedure
Share Capital-The authorized capital of the company shall be not less than 10,000
rubles (≈ EUR 250).
Any deal for the transition of ownership of shares (sale, donation, etc.) not be
notarized.
Registration - Registration deadline in tax office is 5 working days.
Required state registration of the shares in the Federal Service for Financial
Markets (apply for registration of shares needed for 1 month from the date of
registration, registration deadline is 1 month)
In the first part of the lecture was
briefly considered some of the most popular to date forms
of incorporation of companies in Russia. Then in the second part of this lecture will provide a
brief overview of other existing Russian legal forms of companies.
16
3. TAXATION, DUTIES AND EXCISES 3.1. The essence of the tax system, the principles and functions of taxes The state, representing the interests of society in various cferah life, develops and
implements appropriate policies - economic, social, environmental, demographic, and
others. Through tax contributions generated financial resources of the state, accumulated in
its budget and
extra -budgetary funds. Taxation is
based on 15 social laws, the law on the
budget and the tax code.
Taxes - mandatory fees and charges levied by the state to individuals and businesses in the
budgets of the appropriate level or extra-budgetary funds at the rate established by law.
Payments are mandatory and free of
charge .
Taxes - a flexible
tool to influence which is in constant
motion economy: they help to
promote or constrain certain activities, to
guide the development of certain industries,
impact on economic activity of entrepreneurs, to
balance the effective
demand and supply,
to regulate the amount of money in circulation.
The tax system of the Russian Federation represented by:
•
collection of taxes, duties, fees and other charges levied in the established order in
the country;
• targeted payments to about 15 state budget funds;
• competent authorities in the field of taxation and the ways they interact with each
other;
• methods of calculating taxes, and tax control.
According to the
method of levying taxes are
direct and
indirect . Direct taxes are levied by
the state directly to the income and property taxpayers. The
subject of income tax
acts (
wages , profits,
interest , etc.) and the value of the property taxpayers (
land ,
fixed assets,
etc.). Indirect taxes are established in the form of surcharges to the
price of the goods or
service tariffs (excise, VAT and customs duties). These taxes are accrued to the enterprise so
that it
kept them from other taxpayers and donate the
Finance Ministry.
Depending on the
nature of betting distinguish regressive, proportionate and progressive
taxes.
Progressive tax - a tax that is increasing faster than income grows. For different sizes of
income set several scales of tax rates. Regressive tax is characterized by levying a
higher percentage of low-income and low percentage with higher incomes. This is a tax that grows
more slowly than income. Indirect taxes are often regressive.
17
Proportional tax - this is where a
single rate applies to income of any size. Proportional tax
may be regressive, if income derived from actual costs required to deduct
remain discretionary income that can
grow or
decrease after the introduction of new taxes.
Depending on the
authority , in order that emits certain taxes, federal and
local distinction.
There are federal taxes
base : income, profits and customs duties. The main type of local tax
is the property tax.
Taxes on their use are
divided into general and special. General taxes are intended to finance
current and capital expenditures of state and local budgets without any assignment to a
certain type of expenditure. Special taxes are earmarked. The legislation established that the
objects of taxation are:
profit ,
revenue , cost of certain goods, value-added
products , assets
of businesses and individuals, the transfer of property, separate transactions, certain types
of activities, the monthly minimum
wage , etc.
Taxes depending on the
sources of their coverage are grouped as follows:
1. taxes, the costs of which are
included in cost of goods (
works , services) - land tax,
insurance premiums;
2. taxes, the costs of which are included in net sales of products (works, services) - VAT,
excise duties,
export tariffs;
3. taxes, the costs of which are included in the financial result, income tax, property tax,
advertising , some targeted taxes;
4. taxes, the costs of which are covered by the profit
left at the disposal of enterprises -
the license fee for the right to trade, the collection of transactions executed on the
stock exchanges.
A method for implementing public use taxes as a tool of the cost of distribution and
redistribution of income expressed as a function of taxes.
The first and most consistently implemented tax function acts fiscal function, which
consists in the
formation of monetary income of the state of the state apparatus, the
army , the
development of
science and
technology , support for children, elderly and sick people, for the
cost of education, children's homes, healthcare, construction of public buildings, roads,
protection of the environment.
Another function of the tax - economic, which consists of exposure through taxes on social
reproduction, encouraging, restricting or
controlling the various processes. Benefits
encourage the development of that for which they are given, for example, if the
levy is not
part of the profit on the development of new technology, it encourages
technological progress, to
charity , to solve social problems. If you increase taxes on
excess profits, then
controlled by the
movement of the prices of goods and services. With the
growth of tax
18
revenues to the
treasury will decrease as proportion of entrepreneurs go bankrupt, will take
part in the
informal economy, incentives to work will fade.
The perfection of the tax system depends on the elasticity of demand and supply of goods or
services. Sellers
shift taxes on buyers when demand is inelastic. If the
proposal is inelastic,
then taxes are
passed on to the vendors. When tax rates are
reasonable , we
know their
purpose, their payment is usually not shy.
There are three ways to increase tax revenue: the expansion of the
circle of taxpayers, an
increase in the number of objects from which the tax is raised, raising tax rates. Tax rates
should be so high as to prevent inflation, but at the same time so low to stimulate capital
investment, to ensure the development of production.
Limiting the level of taxation is determined by the following criteria:
1. if the next increase of the tax rate revenues are
growing disproportionately
slow or
declining;
2. if the reduced rate of economic growth, reduced long-term capital investment,
deteriorating financial situation of the population;
3. the growing "shadow" economy, i.e. implicit or explicit tax evasion. The main
features of the tax system are summarized in Table 7.
In the tax system, there are a variety of benefits such as tax exemption for a number of
years , reducing tax rates, subtract the deductible
expenses , which the State concerned, the
establishment of discounts during the formation of different funds, the return of previously
paid taxes, tax credit or deferral of payments of taxes, exemption limit, the removal of
certain
elements of taxation, exemption of certain categories of taxpayers, etc.
In case of violation of tax legislation taxpayer liable to a penalty the
entire amount of the
concealed (undervalued) income or the amount of tax for a
hidden object of taxation, as well
as a fine of the same amount and interest at the rate of one three-hundredth of the
refinancing rate for each day of
delay . Repeated or deliberate concealment (determined by
the
court ) shall be
punished by a 2-and 5-
fold .
The Tax Code provides an evolutionary reform of the tax system, the establishment of the
level of taxes that taxpayers will be able to
survive , but it does not
hurt the budget. Should
be
provided with certainty, predictability and
transparency of the tax system. Corrects the
benefits are mostly only investment and social benefits. For small businesses, organizations,
retailers, and service
sector organizations, for all those who provide paid services for a
transition to a simplified system of taxation.
19
3.2. The main taxes In Russia, according to
claim 1 of Article 19 of the Law "On the basis of the tax system in the
Russian Federation" tax expense (income) of enterprises refers to federal taxes. Provided
that it is a regulatory budget sources, i.e. of the
incoming tax may be transferred to the
budgets of Russian
regions .
Payers of
income tax are enterprises - legal entities, their branches, foreign legal entities.
Subject to tax profits from the sale of goods (works, services), income from the sale of fixed
assets and other assets and income from non-operating transactions. Profit (loss) from sale
of goods (works, services) is defined as the difference
between the proceeds from the sale of
goods (works, services), value added tax and excise taxes and the cost of production and
sales, which is included in cost of goods (works, services).
Gains on securities of gaming, from
agency stand out from the gross profit and taxed at a
different rate. The
subjects of the Federation independently determine the tax rate. The
federal tax rate is 13% and the
maximum territorial law 22% (30% mediation).
Examples of
the benefits of income tax is a 100%
reduction in the amounts of income tax for public
organizations of disabled persons and specialized orthopedic companies, the application of
accelerated depreciation, which is a
condition for the provision of benefits to the
target using the money for the purchase of fixed assets. Tax incentives should not
reduce the
amount of tax calculated without the
benefit of more than 50%. Income taxes paid in Russia
has
advanced . Significant benefits for income tax are small businesses. The newly created
small enterprises first two years do not pay income tax, if engaged in the production and
processing of agricultural products, farm goods,
building materials, medicines,
housing construction, including repairs, provided the proceeds from this activity 70%, third year 25%,
4 years 50% (90% of revenues). At the termination of the tax
returns and increases the
percentage of the Central Bank.
Value Added Tax (VAT) - an indirect tax on goods and services, which has an input tax paid
to suppliers and output accrued on its own
turnover . In the taxable turnover is
almost everything: the cost of goods
sold , services, financial assistance from other companies, funds
received from fines, penalties penalties, advances on export enterprise
losses , barter
transactions, interest for the provision of money on credit. When calculating the taxable
turnover of goods, which are charged with excise taxes, customs duties, it includes the
amount of excise and customs duties.
The current legislation establishes a list of turns, not subject to VAT, as well as a list of
products, goods, works and services that are exempt from the imposition of this tax. These
revolutions, in particular, the goods (works, services) produced and sold medical-
industrial workshops in psychiatric and neuropsychiatric
institutions , non-governmental organizations
for the disabled. VAT payers are legal entities and individuals (end-payers). Do not pay the
20
tax individuals engaged in
entrepreneurial activities without forming a legal entity (before
the tax code).
Currently, the VAT rate set as follows: 10% on food (except for excisable goods) goods,
goods for children on the list approved by the Government of the Russian Federation, and
20% for other goods (works, services), including excise foodstuffs. On 01.01.1997 in the
Russian Federation introduced the method of invoicing, which governs the
process of
registration of the settlement documents for goods, works and services, so that is not
enough to allocate tax, we
still have a tax invoice.
The amount of VAT to be a contribution to the budget, calculated as the difference between
the amount of tax received from customers for sold them goods (works, services), and the
amount of tax paid to suppliers.
Excise tax - Indirect taxes included in the price of goods. Excise duties levied on these
products (products) ethyl alcohol of all kinds of raw materials, alcohol,
wine , drinking
alcohol, vodka, liquor, cognac, champagne, wine, natural, other alcoholic beverages,
beer ,
tobacco, jewelry, motor gasoline, cars . Rates of excise on excisable goods shall be the same
throughout the Russian Federation and are provided as annexes to the law.
Amount of excise duty to be a contribution to the budget, calculated as the difference
between the amount of excise tax, which is calculated on taxable turnover excise taxes, and
the amount of excise tax paid to suppliers for excise goods. Crediting mechanism introduced
by the Law on excises. For example, if the purchase of alcohol excise tax paid, and the
alcohol used in the production of non-excise products (medicines), the amount of excise
duty shall be compensated from the budget.
Property tax - In accordance with the instructions of the tax inspectorate of the Russian
Federation are subject to taxation,
plant and
equipment , intangible assets, inventories and
expenses on the balance of the paying company. Fixed assets, intangible assets, low value
items for tax
purposes are recorded at net book value.
For tax purposes is determined by the
average annual value of the property business.
This cost for the reporting period is determined by dividing by 4 the amount obtained from
the addition of half the value of the property on
January 1 of the year and the first day of the
following month of the reporting period and the amount of value of the property on the first
of every month all the other quarters of the reporting period. The maximum amount of the
tax rate on the assets of the enterprise may not exceed 2% of the tax base, and by the
decision of the local government, this percentage can be set to a smaller size.
Property tax businesses to financial
results . Payers of income tax are individuals as having
and not having a permanent
place of residence in the Russian Federation. The object of
taxation from the citizens is the total income earned in a
calendar year, either in cash or in
kind (salaries, bonuses, fees,
dividends , profit distribution, gifts, tickets, food, subscription,
21
payment for children in
child care centers, etc. .). The
composition of the total income of
citizens also include the amount of material and social benefits provided by companies to
their employees personally and the amount of material
gain on borrowings and deposits in
banks. In a combined annual income does not include all types of pensions paid under the
pension legislation of the Russian Federation, severance pay, paid severance, compensation,
employee benefits paid to them within the rules (
travel , field allowances, the use of private
vehicles for official purposes).
Individuals whose income for the year did not exceed 5,000 rubles taxable amount is
reduced by the amount of income equivalent to twice the
statutory minimum wage and the
same amount for the children and dependents of each month. When combined income
reaches 5000rubley and 1 penny to 20000rubley benefits are determined in the amount of a
single statutory minimum wage. The table given the
scale of income tax on the taxable gross
income received in a calendar year. Income tax exemptions are given for housing once in a
lifetime for a period not exceeding three years 5000 minimum wage.
An example of local taxes can be land tax. The object of land tax are land granted to legal
persons and citizens. Land tax is calculated based on the area of land that is taxed and
approved by the local authorities, land tax rates based on the normative price of land in
rubles per hectare.
Tax on advertising - One of the most significant in terms of volume of incoming payments of
local taxes is a tax on advertising. Payers of the ads are the advertisers. The tax rate for
advertising is up to 5% of the cost of advertising works and services from the advertiser.
Other examples of local taxes are local taxes from transactions made on the stock
exchanges, the fees for the right to trade, landing fees to
Police and other such purposes.
In conclusion it should be mentioned that recently a very important issue for
entrepreneurs is the abolition of the single tax (ENVD - Ediniy Nalog na Vmenenniy Dohod),
when it will be and how it will be replaced. Cancel ENVD
really planned in the
near future.
Since it was
reported that the Ministry of Finance of the existing solutions that are making
fundamental changes in the activities of the business sector of the Russian economy.
However, it is in the
plans to cancel the
flat tax only for certain categories of entrepreneurs,
and for the
rest - in the long term.
3.3. Tax rates in 2013 in Russia This text is a short, simplified certificate at the rates of the main taxes in
force in Russia in
2013. For
perfect accuracy , it should go directly to the texts of the laws on taxes and fees. It
should be borne in mind that it is extremely important not only to a particular tax rate, but
also the object of taxation, to which this rate applies.
22
VAT rate: VAT rate - 18%. It is used most often.
The VAT rate on certain groups of goods - 10%
VAT rate - 0%, mainly export, trade precious
metals ,
space , more precisely, see sub-
paragraphs 1 through 10 of Article 164 of the Tax Code of the Russian Federation
In certain instances, the so-called settlement rates:
derivative of the VAT rate 10% - calculated as (10 / (100 +10)) * 100%
derivative of VAT at 18% - calculated as (18 / (100 + 18)) * 100%
These VAT rate effective from the 1st of January 2009.
The income tax rate:
Since January 1, 2009 effective basic rate of income tax - 20%. Of which 2% to the federal
budget, and 18% is credited to the budgets of subjects of the Russian Federation.
In addition to the basic rate of income tax set so-called special rates:
income tax rates for certain types of
bond : 0%, 9%, 15%
The size of the tax rate of income tax on income received in the form of dividends -
0%, 9%, 15%
The size of the income tax rate for foreign companies, the income is not related to
the activities in the Russian Federation through permanent - 10%, 20%
The income tax rate for the CBR 0%
The tax rate on personal income: The basic rate of income tax in 2013 - 13%.
Suitable for any income, except those for which special rates of personal income tax - 9%,
15%, 30%, 35%
Personal income tax rate 35% applies to:
A. the proceeds of the cost of prizes and
awards , exceeding the amount of the
B. income from interest on deposits in banks in excess of the specified dimensions
C. the amount of interest savings for the taxpayer receives
loan (credit) funds in excess
of the specified dimensions
Personal income tax rate of 30% is imposed on:
Income received by individuals who are not tax residents of the Russian Federation, except
for income received as dividends from equity participation in the activities of Russian
companies
15% personal income tax rate applies to:
23
Income received by individuals who are not tax residents of the Russian Federation, in the
form of dividends from equity participation in the activities of Russian organizations
9% personal income tax rate is applied to:
A. Income from equity participation in the activities of organizations received in the
form of dividends, individuals who are tax residents of the Russian Federation
B. The interest income on mortgage-backed bonds, issued before January 1, 2007, and
the income of the trustor mortgage obtained on the basis of acquisition of mortgage
participation certificates issued by the mortgage to manage January 1st , 2007.
Tax rates for the use of special tax regimes:
1. Rate
ESHN (Ediniy Selskohozjastvenniy Nalog) (unified agricultural tax) - 6%
2. Rate ENVD (Ediniy Nalog na Vmenenniy Dohod) (single tax on imputed income) -
15% of the imputed income
3. Rate USNO (Uproschennaja Sisteme NalogoOblozhenija) (simplified taxation
system)with the object of taxation revenue (simplified taxation system) -6%
4. Rate USNO (Uproschennaja Sisteme NalogoOblozhenija) (simplified taxation
system) with the object of taxation revenue minus expenses - 15%
However, the laws of the Russian Federation can be differentiated rates are set by the USNO
(Uproschennaja Sisteme NalogoOblozhenija) (income minus expenses), in sizes from 5 to
15%.
24
4. LABOUR RELATIONS (INCLUDING IMMIGRATION LAWS) 4.1. Entry and stay of foreign citizens in the Russian Federation Traditionally, Russian law divides the foreign nationals residing in the territory of the Russian
Federation into two categories, arriving in the order, which requires a visa and arriving in the
visa-free regime. For each category of foreign nationals
running its own procedure for
processing the documents.
The period of temporary stay of foreign citizens in the Russian Federation is limited:
•
validity of visas for citizens entering Russia visa regime;
• 90 days for citizens entering Russia visa-free (except for foreign nationals who have
permission to work).
Foreign citizens for which a visa is necessary to
remember that:
A. the purpose of his
visit to Russia must match the type of visa
B.
continuous stay of foreign citizens in the Russian Federation on the basis of a
multiple of annual business visa cannot exceed 90 days out of every 180 days
Every foreign national who
comes to the territory of the Russian Federation is obliged to fill
in a migration card, issued to him at the border. A completed entry part of the migration
card is
withdrawn officials customs control, and completed an
exit part - is a foreign citizen.
When leaving the Russian migration card is dealt at passport control.
In order to legally stay in the territory of the Russian Federation a foreign citizen must have
the following documents:
valid passport;
valid visa (entry visa, if available);
migration card;
notice of the migration registration (tear-off coupon);
work permit (if the purpose of the visit to Russia - employment).
4.2. Types of visas for foreign citizens in the Russian Federation Depending on the purpose of his visit to the Russian Federation a foreign citizen is issued a
Russian visa. Russian visa may be single,
double and multiple.
Single-entry Russian visa allows a foreign citizen to
cross the state border of the Russian
Federation once on entry and once on departure from the Russian Federation.
Double-entry Russian visa allows a foreign citizen for double entry into the Russian
Federation.
25
A multiple-entry Russian visa allows a foreign citizen the right to a multiple (more than two
times) to enter the Russian Federation.
Federal Law of the Russian Federation
dated August 15, 1996 № 114-FZ "On the
Procedure for Exit from the Russian Federation and Entry into the Russian Federation,"
identifies the following visas:
Diplomatic visas are issued based on the decision of the Ministry of Foreign Affairs of the
Russian Federation, with a circulation (
Note Verbale) of the Ministry of Foreign Affairs, the
diplomatic or consular
mission of a foreign state, an international organization or a
representative office in Russia for foreign citizens who have diplomatic status.
Business visa is issued based on the decision of the Ministry of Foreign Affairs of the Russian
Federation, with a circulation (Note Verbale) of the Ministry of Foreign Affairs, the
diplomatic or consular mission of a foreign state, an international organization or a
representative office in Russia for foreign citizens who have official status.
Ordinary visa depending on the purpose of the visit of a foreign citizen can be private,
business,
tourist , educational,
labor , humanitarian, to enter the Russian Federation in order
to obtain
asylum .
An ordinary private visa is issued for a period of up to 3 months, foreign nationals
who enter the Russian Federation with a guest visit to an
invitation issued at the
request of the citizens of the Russian Federation, foreign citizens with a residence
26
permit in the Russian Federation, or a legal entity. In addition, the visa can be
issued in
connection with the need for
emergency treatment or due to serious
illness or
death of a close relative. The visa may be single or double.
Ordinary business visa can be single or double for a period of up to 3 months, or a
multiple of up to 1 year. Continuous residence on the basis of a multiple business
visa issued by one year cannot exceed 90 days out of every 180 days. The visa is
issued on the basis of an invitation to enter the Russian Federation, issued by the
inviting party. The visa is issued to foreign nationals who enter the territory of the
Russian Federation for the purpose of negotiations, presentations, to address
specific business issues: the conclusion and
renewal of contracts, commercial
services, and participation in conferences, symposia, congresses and other events,
bearing trade and economic nature, to
improve training and retraining; drivers of
vehicles carrying out
regular passenger and freight services,
crew members of
aircraft and ships, for medical examination and treatment, adoption; lectures at
colleges and professional
schools , and for the time reporters and technical
staff of
foreign media representatives. In addition, on the basis of ordinary business visa
enter foreign nationals deported to the Russian Federation from the territory of
foreign states, in accordance with agreements on readmission.
An ordinary tourist visa is issued to foreign nationals for up to 1 month, entering
the territory of the Russian Federation as a tourist, on the basis of a contract for
the provision of tourist services (travel
voucher ), and confirmation of receipt of the
organization, the
tour operator . The visa can be single and double, individual and
group.
An ordinary training visa is issued to foreign nationals who enter the territory of the
Russian Federation for training in educational institutions. The visa is issued for a
period of up to 3 months, with the possibility of extending continuously for the
duration of the agreement on education concluded in accordance with the laws of
the Russian Federation, but not more than 1-n for each subsequent year visa.
Ordinary work visa is issued to the diplomatic mission or consular office of the
Russian Federation, foreign citizens entering the territory of the Russian Federation
in order to work on the basis of an invitation from the organization, which is an
employer or customer service. Ordinary work visa is issued for a period of 3 months
with the possibility of
further extending continuously for the territorial
body of the
federal
executive body in charge of migration, the duration of the employment
contract or a civil contract, but not more than 1 year for each subsequent visa.
Work visa is issued for a highly qualified professional for the duration of the work
permit, which is valid
until 3 years on the basis of a labor contract.
27
Humanitarian visa is issued to foreign nationals who enter the territory of the
Russian Federation for
scientific , cultural,
political , sporting or
religious ties and
contacts, pilgrimage and charity or humanitarian aid. The visa can be single or
double for a period of up to 3 months, or a multiple of up to 1 year. Continuous
residence on the basis of a multiple business visa issued by one year cannot exceed
90 days out of every 180 days. The visa is issued on the basis of an invitation to
enter the Russian Federation, issued by the inviting party.
An ordinary visa to enter to the Russian Federation in order to obtain asylum issued
to a foreign citizen for a period of up to 3 months based on the decision of the
Ministry of
Internal Affairs of the Russian Federation on the recognition of refugee
status of a citizen in the Russian Federation. This visa can only be a single.
A
transit visa is issued to a foreign citizen for transit through the territory of the Russian
Federation or to the evacuation of a foreign citizen who has
arrived in order to require a visa
(for
passengers of cruise ships, citizens of countries with which there is an agreement on
visa-free entry, and passengers who commit visa-free transit to 24
hours ). The visa is issued
for up to 10 days. If the foreign national must be through Russian territory by air, the visa is
issued for a term of not more than 3 days. If a foreign citizen who
goes through the territory
of the Russian Federation in the country of destination for passenger cars, a visa is issued for
the period necessary for travel by the shortest route, calculated on the basis of daily
vehicle travel of 500 km. Visa code TP1 can be only once, and with the code TP2 single or double. A
transit visa is issued only if all required, in accordance with the legislation of the Russian
Federation, the supporting documentation.
Temporary residence visa is issued to foreign citizens with temporary residence permit at
the place of authorized residence. Temporary residence visa is issued for a period of 4
months of a foreign citizen who is
allowed to enter the territory of the Russian Federation
for temporary accommodation with an
option to
extend it by issuing multiple-entry visas for
the duration of the temporary residence permit. A foreign national who has received a
temporary residence permit in the period of temporary stay in the territory of the Russian
Federation issued a multiple-entry visa temporary residence for the duration of the
temporary residence permit.
4.3. Migration Registration of Foreign Citizens in the Russian Federation In accordance with the Federal Law "On Migration Registration of Foreign Citizens and
Stateless Persons in the Russian Federation" temporarily staying in the Russian Federation a
foreign citizen must stand on immigration registration after seven working days from the
date of arrival at the place of stay. For migration registration, a foreign national upon arrival
at the place of sojourn, the receiving side photocopy of your passport with a valid visa (for
visa entry to the territory of the Russian Federation) and the migration card. The receiving
28
party applies to the bodies authorized to carry out registration of foreign citizens in the place
of stay (offices of the Federal Migration Service of Russia and the post office), with the
notice, and then passes the detachable part of the Notification foreigner. Note in the
detachable part of the Notification (humps) in the form of a stamp is a confirmation of the
migration registration.
Removal of foreign citizens with migration control, i.e. fixation of this fact in the public
information system of migration control by
organs FMS automatically in the following
cases :
When setting the foreign citizen registered as migrants in their new place of
residence; - when leaving a foreign citizen of the Russian Federation (data
transferred from border control);
as well as some of the other cases provided by law.
That
means that the receiving side above the duty is removed.
In cases where a foreign national to stay in hotels, lodges, spas, etc. migration registration is
carried out in the administration of the
hotel during the day.
Specific details of migration control for the highly skilled
specialist (hereinafter – “VKS” –
“Visoko Kvalificirovanniy Specialist”), as well as members of their
families :
1. VKS, as well as their family members are exempt from the need to migration
authorities provided the entry and stay in the territory of the Russian Federation up
to 90 calendar days;
2. If the
length of stay VKS, as well as his family members is more than 90 days, you
must carry out the procedure of the migration registration within 7 working days
after the 90-day period;
3. VKS and members of their families are exempt from the need of migration
registration when
moving to a new place of residence in the territory of the Russian
Federation, provided that they have the current migration registration and their
location in the new location less than 30 days;
4. If the length of stay in the new location will be more than 30 days, the migration
registration must be made within 7 working days after the 30-day period.
The procedure to get the work permits for foreign citizens arriving in Russia in the visa:
In order to work a foreign national entering the territory of the Russian Federation in the
visa, the employer must make the following documents:
1)
Permit for invite a foreign labor Permission to
hire foreign workers is valid for one year within the quota, which is
approved annually by the Government. Permission to
attract indicate information such as
the number of employees, their positions, citizenship, and the territory or territories to
which the document.
29
It should be noted that
prior to the
submission of documents for the issue of a permit to hire
foreign workers must complete the quota, i.e.
filing applications for quota by 1 May for the
coming year, and a month before going to the immigration authorities to file a civil service
employment information on the requirements for employees.
2)
A work permit The work permit is issued for one year under a permit to hire foreign labor.
3)
Notice of solicitation for employment of the foreign national. At the conclusion of an employment contract or a civil contract with a foreign national
entering the territory of the Russian Federation in the visa, the employer shall within ten
days notify the local tax authority.
4)
Accreditation for the visa and registration support. Accreditation for the visa and registration service gives companies the right to invite
foreign citizens, ie issue invitations to the business and work visas.
5)
Work visa Your work visa consists of two phases:
issuance of the invitation for a single work visa valid for three months;
remap single work visa to multiple work visa for a period not more than a year.
6)
Notice of the migration registration (tear-off coupon). 4.3.1. The procedure for bringing the work of highly skilled professionals (VKS) VKS recognizes a foreign national who has
experience , skills and achievements in a particular
field of activity, if the
conditions to attract him to work in the Russian Federation
involve receiving their salaries (wages)
1) in an amount not less than one million rubles at the rate of one year (365 days) - for highly
skilled professionals who are scientists or teachers, in their invitation to engage in research
or teaching activities of the state-accredited institutions of higher education, public
Academies of Sciences or their regional offices, national research centers or public research
centers;
2) without
taking into account the size requirements for wages - for foreign citizens
participating in the
project "Skolkovo" in accordance with the Federal Law "On the
innovation center" Skolkovo ";
3) in the amount of not less than two million rubles at the rate of one year (365 days) - for
other foreign nationals.
30
NB! Foreign nationals may not be required to work in the Russian Federation as a highly
skilled
occupation for preaching or other religious activities, including the commission of
worship and other religious rites and ceremonies, religious instruction and religious
education of the followers of any
religion .
Features of the application of the legislation on highly qualified professionals:
A. Employers may be the only VKS:
Russian commercial organizations;
Russian scientific organizations, educational institutions, professional education
(with the exception of vocational religious education (religious educational
institutions);
health agencies, and other organizations engaged in research, scientific-technical
and innovation activity, experimental development,
testing , and training in
accordance with national
priority areas of science, technology and
engineering of
the Russian Federation, if they have in the cases provided by law the Russian
Federation, the State of accreditation;
duly accredited in the Russian Federation, branches of foreign legal entities.
and not subject to administrative punishment for violation of foreign labor for 2
years from the time the motion of calling for VKS.
B. To attract VKS should observe the following conditions:
in the payment of wages in the amount provided by law;
VKS and his family should be provided with voluntary health insurance from the
time of entry into the Russian Federation shall have the right or on the basis of the
contractual arrangements entered into by the employer or customer of works
(services) from a medical institution to receive
primary health care and specialized
care.
C. Features:
The work permit is issued for a term of employment contract, but not more than 3
years. Period of validity of the work permit may be repeatedly extended for the
duration of employment (contract), but not more than three years for each such
renewal.
In the implementation of employment in some regions, the work permit may be
issued for several subjects of the Russian Federation;
The work permit and an invitation to enter the Russian Federation issued a
qualified specialist without quotas.
Stages of registration VKS:
1. Obtaining a work permit;
2. Accreditation is inviting companies on visa and registration service of the Federal
Migration Service of Russia;
31
3. Making a working visa / invitation to get a working visa. If a foreign citizen in the Russian
Federation is based on a work visa, then upon receipt of a work permit for highly qualified
professional, such a visa is reissued in a working visa VKS with the new employer. This visa is
issued without a break in the territory of the Russian Federation;
4. The notification of the territorial tax authority on attracting foreign citizen (made within
10 working days from the date of hiring a foreign citizen);
5.
Statement of the foreign national tax registration (INN);
6. Notification of the migration authority on setting VKS registration in tax authorities of the
Russian Federation (made within 30 days of receipt of a highly qualified specialist work
permit);
7. Notifications immigration authority to
perform the obligations to pay wages. Employers
are obliged to
report quarterly on the last working day of the month following the
quarter to
notify immigration authorities about the
performance of its obligations to pay salaries
(wages) VKS as well as cases of termination of employment cases with VKS and
providing them leave without wages for more than one calendar month during the year.
Important features of migration registration procedures for highly qualified professionals,
and members of their families:
1. VKS as well as their family members are exempt from the need to migration authorities
provided the entry and stay in the territory of the Russian Federation up to 90 calendar days;
2. If the length of stay VKS, as well as his family members is more than 90 days, you must
carry out the procedure of the migration registration within 7 working days after the 90-day
period;
3. VKS and members of their families are exempt from the need of migration registration
when moving to a new place of residence in the territory of the Russian Federation, provided
that they have the current migration registration and their location in the new location less
than 30 days;
4. If the length of stay in the new location will be more than 30 days, the migration
registration must be made within 7 working days after the 30-day period.
The period of temporary stay of a foreign citizen who has arrived to the Russian Federation
in a manner that does not require a visa, and are highly skilled professionals, time and
temporary stay in the Russian Federation of his family members are defined period of
validity of the work permit.
You should also note:
Highly qualified
specialists and their family members upon written request may be
issued a residence permit in the Russian Federation;
The family members VKS recognized his
spouse (husband), children (including
adopted), spouses of children,
parents (including adopted), spouses of parents,
grandparents, grandchildren;
32
The family VKS have right to work if they have a work permit. At the same time
their employers not be obligated to getting permission to hire foreign workers;
Work permits for foreign citizens - accompanying family members are made out of
highly qualified specialists, excluding allowances.
4.3.2. Your work permits for foreign citizens arriving in Russia in the visa-free regime Here are the main steps of the legalization of a foreign national to enter the territory of the
Russian Federation in the visa-free travel:
1. A foreign citizen must stand on migration registration at the place of residence within 7
days from the date of entry into the territory of the Russian Federation.
2. In order to work and opportunities to be formally adopted by the staff of the employing
foreign nationals who enter the territory of the Russian Federation in the visa-free regime,
must obtain a work permit. This document contains only data about the employee (except in
cases where the documents submitted to the government by "the company's motion") and,
therefore , entitle a foreign national to work in any company within the period and area of
action to which it was issued.
Work permit foreign
worker can obtain on their own, or through a representative to the
territorial authority of the Federal Migration Service of the place of residence, as well as
from the Employer in the territorial authority of the subject of the Russian Federation.
3. Upon receipt of a work permit within 30 days, a foreign citizen must be submitted to the
appropriate state agency - a medical conclusion about the absence of seven
diseases . In case
of
failure to provide such a medical certificate - a work permit is canceled.
4. Based on a work permit foreign national and the employer may conclude an employment
(civil) contract for the duration of the permit.
5. It should be noted that the employment of a foreign citizen imposes certain obligations on
the employer. For example, when an employment or civil contract with a foreign citizen
entering the territory of the Russian Federation in the visa-free regime, the employer shall
within three days notify the territorial center of employment and migration service, and
within ten days of the tax office.
6. At the final stage of the foreign citizen must apply to the body of migration control is
appealing to extend the term by presenting a work permit and a copy of the employment
contract. These documents are the basis for extending the stay of a foreign citizen for the
duration of the signed contract, but no more than one year counted from the date of its
entry into Russia.
33
According to the law temporarily staying in the Russian Federation a foreign citizen has the
right to enter into a new employment contract or a civil contract for works (services) or must
leave the Russian Federation in the event of the expiration of the period of temporary stay.
In the event that a foreign citizen for the duration of the work permit of a new employment
contract or a civil contract for works (services) the foreign citizen within 7 working days shall
apply to the territorial agency of the federal executive authority in the field of migration to
make changes in the information contained in the permit for the work.
4.4. Responsibility for violation of immigration laws Russian law provides for liability of both natural and legal persons for non-compliance with
the order of stay of foreign citizens and foreign nationals order to implement the work in the
territory of Russia.
See below →
34
Responsibility for violation of immigration law for foreign nationals or for officials offense for person for legal entities stateless persons people citizenship Violation of the rules of
crossing the border of the Russian
Federation entities and (or) means of transport, or violation of the
RUR
RUR
RUR
order of such persons and (or) means of transport from the Russian
400 000 ÷ 800
―
2000 ÷ 5000
30 000 ÷ 50 000
border to border crossing points of the Russian Federation and in
000
the opposite direction
to 1,000 rubles with
deportation from
In violation of the checkpoints on the border of the Russian
to 1,000 rubles
the Russian
―
―
Federation
or warning
Federation or
without
from 2,000 to 5,000
rubles from
Violation of a foreign citizen or a stateless person, the rules of entry
deportation from
into the Russian Federation or the stay (residence) in the Russian
―
―
―
the Russian
Federation
Federation or
without
35
Violation by an official organization that takes in the Russian
Federation a foreign citizen or a stateless person or a Russian
from 2000 to 4000
from 2,000 to
from 40,000 to
from 400,000 to
citizen or permanent residents of the Russian Federation a foreign
rubles
4,000 rubles
50,000 rubles
500,000 rubles
citizen or a stateless person, the rules of stay of foreign citizens and
stateless persons in the Russian Federation
Failure to comply with the
host country responsibilities in
from 2,000 to
from 40,000 to
from 400,000 to
―
connection with the implementation of migration control
4,000 rubles
50,000 rubles
500,000 rubles
from 2,000 to 5,000
rubles from
Implementation of a foreign citizen or stateless person work in
deportation from
Russia without a work permit or a
patent , if such permission or are
―
―
―
the Russian
required by patent law
Federation or
without
from 250,000 to
Attraction to work in the Russian Federation a foreign citizen or
800,000 rubles or
stateless person in the absence of a foreign citizen or stateless
from 2,000 to
from 25,000 to
administrative
―
person a work permit or a patent, if such permission is required
5,000 rubles
50,000 rubles
suspension of
either for a patent in accordance with federal law
operations for up
to 90 days
from 250,000 to
Attraction to work in the Russian Federation a foreign citizen or
800,000 rubles or
stateless person without obtaining permission in the prescribed
from 2,000 to
from 25,000 to
administrative
―
manner to the employment of foreign workers, if such
5,000 rubles
50,000 rubles
suspension of
authorization is required under the law
operations for up
to 90 days
36
Lack of notice of the territorial agency of the federal executive
from 400,000 to
body authorized to
exercise the functions of control and
800,000 rubles or
supervision in the field of migration, executive authority in charge
from 2,000 to
from 35,000 to
administrative
of employment in the corresponding subject of the Russian
―
5,000 rubles
50,000 rubles
suspension of
Federation or the tax authority to bring to work in the Russian
operations for up
Federation a foreign citizen or stateless person, if such notification
to 90 days
is required by law
from 800,000 to
Failure by an employer or customer of works (services) established
1,000,000 rubles or
in accordance with the law in
respect of foreign citizens and
from 2,000 to
from 45,000 to
administrative
―
persons without citizenship restrictions on the exercise of certain
4,000 rubles
50,000 rubles
suspension of
activities
operations for up
to 90 days
from 2000 to 5000
Failure to comply with a foreign citizen or stateless person
rubles with
established in accordance with the law in respect of foreign citizens
administrative
―
―
―
and persons without citizenship restrictions on the exercise of
expulsion from the
certain activities
Russian Federation
or without
from 800,000 to
Failure to comply with a foreign entity, its branch or representative
1,000,000 rubles or
office established in accordance with the law with respect to
administrative
―
―
―
foreign organizations restrictions on the exercise of certain
suspension of
activities
operations for up
to 90 days
37
from 2000 to 5000
rubles with
Inconsistency stated purpose of entry into the Russian Federation
administrative
actually performed during the stay (residence) in the Russian
―
―
―
expulsion from the
activity or occupation
Russian Federation
or without
Under the Criminal Code of the Russian Federation in respect of the employer or customer of works (services) for organizing an unauthorized entry
into the Russian Federation foreign citizens or persons without citizenship, their
illegal stay in the Russian Federation and the illegal or transit
through the territory of the Russian Federation provides for criminal liability:
fine of up to 200,000 rubles or the salary or other income for a period of 18 months,
compulsory work for a period up to 180 hours
correctional work for up to one year,
imprisonment for a term not exceeding two years, with the restriction of liberty for up to one year, or without it.
Under the Criminal Code of the Russian Federation for the same acts committed by an organized group, and (or) the purpose of committing a
crime on the territory of the Russian Federation, provides for liability:
imprisonment for up to
five years with a fine of up to 500,000 rubles or the salary or other income for a period of up to three years or
without it, and with the restriction of freedom for up to two years, or without it.
38
5. BANKRUPTCY/ CLOSING DOWN THE COMPANY Bankruptcy (insolvency) - is the inability of companies to pay off the creditors, to pay for
goods, works, services, pay wage arrears, to ensure compulsory payments to the budget
and extra-budgetary funds. Bankruptcy is the actual failure of a natural or legal person, ie,
the inability to satisfy the claims of creditors on monetary obligations.
The main law
governing bankruptcy in the Russian Federation - Federal Law "On Insolvency (Bankruptcy)".
Signs of bankruptcy:
Legal entities - the amount of
debt of more than 100 000, the period of existence of
the debt - more than 3 months;
Individual Entrepreneur, the amount of debt of more than 10 000, the period of
existence of the debt - more than 3 months;
According to the law of the Russian Federation "On Insolvency (Bankruptcy)" debtor
must apply for bankruptcy if the company cannot pay, and is not calculated on financial
liabilities:
The debtor, the bankruptcy
creditor , the competent authorities have the right to appeal to
an
arbitration court to declare the debtor bankrupt possess. he right to appeal to the Court
of Arbitration occurs in a bankruptcy creditor, the authorized body under liabilities on the
date of entry into force of the court or the arbitral tribunal for the
recovery from the
debtor's funds.
5.1. The procedures applied in the bankruptcy
When considering the case of bankruptcy of the debtor - legal entity shall apply the
following procedures:
1. surveillance;
2. financial recovery;
3.
external control;
4. bankruptcy proceedings;
5. the settlement agreement.
When considering the case of bankruptcy of the debtor - a citizen, the following procedures:
1. bankruptcy proceedings;
2. the settlement agreement.
If the value of the assets of the debtor - legal person against
whom the decision to liquidate
is not enough to satisfy the claims of creditors, such an entity must declare bankruptcy. This
39
procedure will be
simplified procedure of bankruptcy and called bankruptcy liquidation of
the debtor. Such as bankruptcy supervision, financial rehabilitation and external
management in bankruptcy liquidation of the debtor shall not apply.
The fact of failure in a liquidation of the legal entity of the property, the sale of which would
allow to satisfy all creditors' claims shall be determined on the basis of accounting, as well as
the report of an independent appraiser on the value of the assets of the liquidated legal
entity.
Bankruptcy is a legal procedure in the
hands of a professional is a great tool that allows you
to:
Is it legal to get rid of "any debt" before "any creditor";
Secure themselves from
vicarious liability to creditors;
Keep personal property managers, promoters and property of the enterprise;
Restore the solvency of the company;
Continue or start doing business again;
Fully settle with creditors.
Under bankruptcy, fit the following companies:
Legal entity - LLC, JSC;
Individual entrepreneurs;
State-owned enterprises and institutions.
To whom can exist debts:
Before banks, other credit institutions;
Prior to any legal persons, individual enterprises;
Before individuals - their own employees (wage arrears);
Prior to any other individuals;
Prior to the tax authorities;
Prior to any state-owned enterprises and institutions;
Bankruptcy proceedings may be initiated:
The head of the legal entity;
The owner of the legal entity;
The founders (founders) of the debtor;
Creditors;
Any interested party (budgetary and non-budgetary organizations);
State Attorney.
NB! If the head of the debtor does not initiate bankruptcy proceedings, he puts himself at
risk, the company and the founders of the company, as at any time to initiate bankruptcy
proceedings may creditor under the law. 40
The main
danger of the introduction of bankruptcy creditors is the following risks:
Lenders will appoint to the bankruptcy of "their" trustee;
"The liquidator creditors" can attract vicarious liability of the debtor;
The liquidator from creditors can evaluate personal movable and immovable
property
manager and company founders "for
nothing " and sell the
affiliate organizations;
The liquidator from creditors can evaluate a wealth of enterprise "for nothing", and
affiliates to sell or transfer to creditors;
The liquidator from creditors may seize the movable and immovable property, as well
as the accounts of the debtor, which in
turn paralyze the company and jeopardize the
continued existence of the company;
The liquidator from creditors in bankruptcy can discern the signs of fictitious and / or
deliberate bankruptcy of the debtor and to bring to justice. This measure is a
legitimate and effective in collecting debts from the debtor;
A bankruptcy unscrupulous criminal creditors legally can
completely away business of
the debtor;
The liquidator from creditors may deliberately undermine the recovery of the
debtor's ability to pay;
Creditors may undermine the reputation and credibility of the debtor's business
environment.
Therefore, in the event of insolvency of the situation it is recommended:
select and hire "your" trustee;
to be the first to initiate bankruptcy proceedings;
This way, you can
protect yourself from these risks and find freedom from financial
obligations!
Trustee in bankruptcy must be independent and disinterested person filing for bankruptcy,
but as the liquidator hired you, and therefore you are paying for trustee and the liquidator,
in the first place, will
listen to your wishes.
Head of the debtor is liable with the debtor if the accounting documents and (or) the
reporting obligation for the collection,
compilation ,
maintenance and
storage of which is set
by the legislation of the Russian Federation, at the time of the determination, the
introduction of monitoring or decision to declare the debtor bankrupt or don’t contain
information about the assets and liabilities of the debtor and their movement, collecting,
recording and summarizing which are mandatory according to the legislation of the Russian
Federation, or if this information is distorted.
41
5.2. Fictitious or deliberate bankruptcy
1. Fictitious bankruptcy, that is knowingly
false public announcement of the manager or the
founder (participant) of the legal entity of the insolvency of the legal entity or individual
entrepreneur for bankruptcy if such action does not contain a criminal offense -
punishable
by an administrative fine on officials in the amount of RUR 5,000 to 10,000 or
disqualification for a period of six months to three years. 2. Deliberate bankruptcy, is the head of the commission or the founders (participants) of the
legal entity or individual entrepreneur actions (inaction), obviously entailing the failure of
the legal entity or individual entrepreneur to fully satisfy the claims of creditors on monetary
obligations and (or) to fulfill the obligation to make mandatory payments if such actions
(inaction) do not contain criminal offenses -
punishable by an administrative fine on
officials in the amount of RUR 5,000 to 10,000 or disqualification for a period of one to
three years. 5.3. Criminal code
Article 196. Deliberate bankruptcy
Deliberate bankruptcy, is the head of the commission or the founders (participants) of the
legal entity or individual entrepreneur actions (inaction), obviously entailing the failure of
the legal entity or individual entrepreneur to fully satisfy the claims of creditors on monetary
obligations and (or) to fulfill the obligation to make mandatory payments if such actions
(inaction) caused major damage - shall be punished by a fine of RUR 200,000 to 500,000 or
the salary or other income for a period of one to three years, or imprisonment for up to six
years with a fine of up to RUR 200,000 or the salary or other income for a period of eighteen
months, or without it.
Article 197. Fictitious bankruptcy
Fictitious bankruptcy, that is knowingly false public announcement of the manager or the
founder (participant) of the legal entity of the insolvency of the entity, as well as self-
employed for bankruptcy if the act caused large damage - shall be punished by a fine of RUR
100,000 to 300,000 or the salary or other income for a period of one to two years, or
imprisonment for up to six years with a fine of up to RUR 80,000 or the salary or other
income for a period of up to six months, or without it.
The issue of bankruptcy always relevant. Competent and complete consulting in the field of
bankruptcy can provide not every law firm. The introduction of the bankruptcy procedure
allows to solve many of the financial and economic problems of the organization: to protect
the business from unscrupulous creditors to
collect receivables, save property of the
organization, etc. Bankruptcy allows you to not only clean up the business of debt, but also
to sell or liquidate it.
42
6. ALLOWANCES/ PERMISSIONS NEEDED, PROCEDURES TO ACQUIRE 6.1. The privileges granted to foreign investors
The privileges granted to foreign investors and commercial organizations with foreign
investments, as well as other business entities:
Value added tax (VAT)
1. Not taxable importation into the customs territory of the Russian Federation, 11 kinds of
products, in particular:
technological equipment, accessories and
spare parts imported as a contribution to
the authorized (share) capital organizations;
goods (except for excisable goods and excisable
mineral raw materials) imported as
grant aid (assistance) of the Russian Federation in accordance with the Federal Law
"On the gratuitous aid (assistance) of the Russian Federation and the Introduction
of Amendments and Additions to Certain Legislative Acts of the Russian Federation
on taxes and establishing incentives for payments to the state budget funds for the
implementation of grant aid (assistance) of the Russian Federation ";
materials for the manufacture of immunotherapeutic
agents for the diagnosis,
prevention, and (or) treatment of infectious diseases on the list approved by the
Government of the Russian Federation;
natural
rough diamonds ;
currency of the Russian Federation and foreign currency banknotes that are legal
tender (other than for collectors), as well as securities - stocks, bonds, certificates,
promissory notes;
marine products caught and (or) of processed fishery enterprises (organizations) of
the Russian Federation.
2. Not taxable sales on the territory of Russian Federation services for the leasing of office
and (or) the premises to foreign nationals or organizations accredited in the Russian
Federation in cases where the same procedure established by the laws of a foreign country
in respect of Russian citizens and organizations, or if the exemption provided international
treaty of the Russian Federation.
3. Not taxable implementation (as well as transmission, performance, provision for their own
use) in the Russian Federation on 23 types of goods and services, in particular:
shares in the share capital of companies, shares in mutual funds of cooperatives
and mutual funds, securities and
instruments of futures contracts (including
forwards, futures contracts, options);
43
goods (works, services), except for excisable goods and excisable mineral raw
materials sold (performed, provided) under grant aid (assistance) of the Russian
Federation in accordance with the Federal Law "On the gratuitous aid (assistance)
of the Russian Federation and the changes and additions to certain Legislative acts
of the Russian Federation on taxes and the establishment of benefits payments to
the state budget funds for the implementation of grant aid (assistance) of the
Russian Federation. "
4. Not subject to taxation 21
species of operations, in particular:
Banks for the implementation of operations (except for the collection), including
raising funds from organizations and individuals in deposits; placement of attracted
funds of organizations and individuals on behalf of the banks and for the account
opening and maintenance of bank accounts of organizations and individuals, the
implementation of settlements on behalf of organizations and individuals, including
correspondent banks, through their bank accounts, cash management services for
organizations and individuals buying and
selling foreign currency in cash and non-
cash forms, transactions with precious metals and precious stones in accordance
with the law the Russian Federation, the issuance of bank guarantees, as the
issuance of guarantees for third
parties providing the fulfillment of obligations in
the form of money, services relating to the installation and operation of the system
"Client - Bank";
operations carried out by organizations that provide information and technological
cooperation between the settlement participants, including the provision of
services for the collection, processing and distribution of settlement participants
information on transactions with bank cards;
carry out certain banking organizations, which, in accordance with the legislation of
the Russian Federation shall have the right to make them without a license from
the Central Bank of the Russian Federation;
provision of insurance, coinsurance and
reinsurance insurance companies, as well
as the provision of services by non-state pension provision by non-state pension
funds;
lotteries, sweepstakes organization and other risk-based games (including the use
of
slot machines ) gambling organizations;
implementation of ore, concentrates and other industrial products containing
precious metals, scrap and
waste of precious metals for the production and refining
of precious metals;
implementation of precious metals and precious stones taxpayers the State Fund of
Precious Metals and Precious Stones of the Russian Federation, the Central Bank of
the Russian Federation and the banks;
implementation of rough diamonds processing enterprises of all forms of
ownership;
the provision of services by members of bar associations;
44
provision of financial services the loan in cash;
implementation of mass media, book production related to education, science and
culture;
editorial, publishing and
printing works and services for the production of media
products and
books related to education, science and culture. The action of this
benefit does not apply to products of media advertising and erotic nature, as well
as for book production and advertising of erotic nature.
5. VAT is not payable on the export of goods under the customs regime of exports. The same
procedure applies when the goods are placed under the customs regime of customs
warehouse , free warehouse or a customs-free zone in order to re-exportation of goods
(including processed products) in accordance with the customs regime of exports.
6. When the production-
sharing agreements entered into in accordance with the Federal
Law "On Production Sharing Agreements", the VAT is calculated and paid based on a number
of features:
exempt from VAT:
goods, works and services,
designed in accordance with the design documentation
for the performance of work under a production sharing agreement, including
imported into the customs territory of the Russian Federation, the investor, the
operator of the agreement, their suppliers, contractors and carriers and other
persons involved in the execution of works under the agreement on the basis of
agreements (contracts) with the investor and (or) operator, and the services
provided in the territory of the Russian Federation, foreign legal entities investors
or operators of production sharing agreements in relation to the performance of
such agreements;
turnover between the investor and the operator of a production sharing agreement
for the donation of inventory items required for performance of work under this
agreement, as well as operations to transfer funds to finance such work in
accordance with the estimates approved in the established order of the said
agreement;
the transfer of momentum investors of the newly created or
acquired property
used for the performance of work under the agreement, and to be transferred to
the state in accordance with the terms of the agreement.
6.2. Excise duties
1. The taxable 15 kinds of operations with excisable goods, in particular, the implementation
of excise goods placed under the customs regime of export outside the territory of the
Russian Federation.
45
2. When the production-sharing agreements entered into in accordance with the Federal
Law "On Production Sharing Agreements", from the payment of excise tax exempt
importation into the customs territory of the Russian Federation of excisable goods designed
in accordance with the design documentation for the performance of work under such
agreements. This provision covers the importation of excise goods (excluding tobacco
products, alcoholic beverages, automobiles) investors or operators of such agreements or
other legal entities participating in the performance of work under such agreements on the
basis of contracts with investors.
In carrying out these PSAs tax exempt investors implementation produced in the
performance of such agreements excisable mineral raw materials and products (except
jewelry), if such processing is provided by those agreements, if such minerals and (or) the
goods are in Under the terms of these agreements property investors.
Profits tax
For foreign companies significantly simplifies the procedure for exemption from taxation in
Russia under the relevant provisions of intergovernmental agreements on avoidance of
double taxation.
At the moment, the following system of deductions and exemptions on income tax:
1. When calculating the taxable income of the tax actually paid for costs and expenses from
the profit retained by the Company shall be reduced by the amount allocated for:
enterprise sectors of material production to finance capital investments in
production (including individual share) as well as the repayment of bank loans
received and used for this purpose, including interest on loans;
companies in all sectors of the economy to finance housing construction (including
by way of equity participation), as well as the repayment of bank loans received
and used for this purpose, including interest on loans.
directed by enterprises to carry out research and development work, as well as in
the Russian Foundation for Basic Research and the Russian Foundation for
Technological Development, but not more than 10% in total of the amount of
taxable income.
2. Not included in the tax base: received free enterprise funds from foreign investors to
finance capital investments in production, provided their use within one year of receipt. If
misuse of funds or in case of their failure to use within one year from the date they receive
are taxable as non-operating income in the period in which the realized misappropriation of
funds or expired use for its intended purpose.
3. Not taxable income received from the newly created production (excluding production
facilities set up by the trade, supply and
marketing and brokering organizations) for the
period of his return, but not more than three years. The newly created production is
46
recognized production allocated to a separate structural
unit based on the new (
purchased or constructed) production
capacity , in the presence of a feasibility
study , coordinated with
the state executive bodies of subjects of the Russian Federation. Is not recognized by the
newly established
manufacturing production, organized on the basis of production capacity
acquired as a property system.
Features of the taxation of profits and revenues in the performance of production sharing
agreements established by the Law of the Russian Federation "On taxes on profits of
enterprises and organizations."
Customs regulations, taxes, duties, excise and other mandatory payments
Exempt from taxation, duties, excise taxes and other obligatory payments (other than
income taxes and royalties) goods imported under production-sharing agreements. Levying
such taxes, fees and other charges is replaced by production-sharing agreement on the
terms.
Import duties
1. The Government of the Russian Federation establishes the form of tariff concessions and
the procedure for the provision of goods imported into the customs territory of the Russian
Federation as the contribution of the foreign
parent to the statutory funds of enterprises
with foreign investment, as well as exported by these enterprises kinds of goods produced in
the cases sharing agreements concluded by the Government of the Russian Federation.
Exempt from import customs duties goods imported into the customs territory of the
Russian Federation as the contribution of the foreign founder in the authorized (share)
capital of the organization, provided that the goods:
are not subject to excise tax;
refer to the basic production assets;
imported within the period specified by the constituent documents for the
formation of the authorized (share) capital.
2. Exempt from the payment of duty goods imported into the customs territory of the
Russian Federation and (or) exported from this territory as free help and (or) to charity by
states, governments, international organizations, including the provision of technical
assistance.
3. Exempt from the payment of duties: equipment, including machines, equipment, and
materials are included in the
scope of delivery of the equipment and
components (except for
excisable goods) imported into the customs territory of the Russian Federation in respect of
loans to foreign governments and international financial institutions accordance with the
international treaties of the Russian Federation. Exemption is made only in cases where this
is provided for by international treaties of the Russian Federation.
47
4. Exempt from customs duty goods imported into the customs territory of the Russian
Federation, including imported under lease, to perform work under a production sharing
agreement in accordance with the
program of work and a cost estimate, approved in the
established order of the said agreement, or exported from this territory in accordance with
the terms of the agreement. In this case the charging of import and export duties replaced
by production-sharing under a production sharing agreement entered into in accordance
with the Federal Law "On Production Sharing Agreements".
48
7. ACCOUNTING In the
late 1990's -
early 2000's. in the field of accounting and reporting in the Russian
Federation has undergone significant changes, largely predefined Program of Accounting
Reform in accordance with International Financial Reporting Standards.
The main instrument of reforming accounting and reporting the adoption of International
Financial Reporting Standards (hereinafter -
IFRS ). In the financial statements disclose: about
affiliates, events after the balance sheet date, contingencies, discontinued operations,
impairment of financial and other assets by
segment and other economic entities used in the
accounting and reporting methods for the
valuation of assets and liabilities, focused on
conditions of the market economy. The largest economic entities (oil, gas,
electric power,
metallurgy, automobile, chemical industry, the banking sector)
prepare consolidated
financial statements under IFRS or any other internationally recognized standards.
7.1 Levels of the system of accounting regulation in the Russian Federation The Russian Federation has established
four -level system of regulatory accounting.
The first level, the
highest . Federal Law "On Accounting". Separate rules governing
accounting, are contained in other pieces of legislation: the Civil Code, the Labour Code, the
Budget Code and Tax Code. The Federal Law "On Accounting" defines the
role and place of
the accounting system of legislative acts of the Russian Federation, its
goals and objectives,
general
practices and regulatory duties and responsibilities of organizations and institutions
of the order for the state of accounting and reporting.
The second level. By the regulations of the second level of regulation include the
Regulations on Accounting and Financial Reporting Regulations (Standards) accounting
records of individual objects. The main purpose of such provisions -
reveal the legal and
methodological norms enshrined in the Law "On Accounting". The provisions are general
regulations on accounting and business operations of his organization in enterprises and
institutions, the rules of compilation, presentation and publication of the financial
statements.
The third level of regulation includes regulations of the Government of the Russian
Federation, other government agencies, establishing basic rules that should be used when
drafting the provisions of the
fourth level.
The fourth level consists of
guidelines and recommendations for the organization and
accounting of certain types of assets, liabilities, and other business transactions. The
recommendations are designed to help organize the accountant accounting process, draw
49
up internal guidelines for businesses and other local regulations on the management of
primary documentation, accounting, registration and compilation of data. Normative
documents of the fourth level are not required for public use. Their purpose is different - to
define the rules of rational organization of accounting using advanced forms and methods of
accounting for the selection of each organization acceptable to her
choices . Documents of
this level, which are formed directly in the organizations and constitute the system of
internal rules and regulations that reflect the specifics of the organization.
The main purpose of the legislation of the Russian Federation on accounting - to provide a
consistent accounting of assets, liabilities and business operations of organizations, as well
as the preparation and presentation of comparable and reliable reporting about the financial
position, income and expenses necessary to third parties.
Regulatory documents are grouped according to the level of their establishment:
Codes of the Russian Federation;
The federal laws of the Russian Federation;
Provisions on accounting;
Resolution of the Government of the Russian Federation;
Guidelines and recommendations;
Letters and other regulatory documents.
Code is called a single
piece of legislation, systematizing the relevant area of law. The codes
contain the
essential requirements that govern the legal relations arising in the
implementation of various kinds of relations: property, labor, tax, and other relationships.
The Civil Code of the Russian Federation is a document that outlines the legal aspects of the
interaction of citizens, legal persons and other participants of business. The Civil Code
summarizes the rules, regulations and provisions that establish the legal regime of property
relations, personal rights and freedoms guaranteed by the Constitution of the Russian
Federation.
The Labour Code of the Russian Federation establishes the state guarantees of labor rights
and freedoms of citizens, creates favorable conditions of work, to protect the rights and
interests of workers and employers. Application of provisions of the Labour Code provides
optimal coordination of the interests of the parties to labor relations, the interests of the
state and the legal regulation of labor relations.
The Budget Code of the Russian Federation is the main regulatory document that establishes
the legal basis for the functioning of the budget system of the Russian Federation. Budget
Code governs the
relationship between the institutions, ministries, agencies and other
entities of the budget of legal relations arising in the process of planning, drafting,
approval and implementation of the budgets of all levels. In accordance with the Budget Code of the
budgetary institution is an organization created by the state authorities of the Russian
50
Federation at all levels, the activity of which is funded from an appropriate budget or the
budget of state extra-budgetary funds, including the Social Insurance Fund, based on the
estimates of revenue and expenditure.
The Tax Code of the Russian Federation establishes the fundamental principles of the tax
system, defines the types of taxes and fees and the levels of their establishment. The
provisions of the Tax Code, determine the forms and methods of tax control, establish
liability for tax offenses.
Under current legislation, legal regulation of accounting in Russia within the
competence of the Government of the Russian Federation - namely, the Ministry of Finance
of the Russian Federation. It develops and maintains binding on all subjects of business and
other activities of regulations on the methodology and the organization of accounting and
financial reporting.
7.2. The Federal Law "On Accounting" The law "On Accounting" defines the highest state level standards that must be guided in all
matters of accounting and reporting of the heads of organizations, accountants and other
officials. The law
took the existing accounting experience in a market economy, open
reference to the Russian
tradition and the current in the Russian civil, labor and business
law. It defines the conceptual provisions and the general principles of organization and
accounting, rights, duties and responsibilities of legal entities and individuals; measures to
ensure the
reliability of the financial information, the manner of publication of financial
statements, and the entire system of state regulation of accounting.
The content and sequence of presentation of the basic accounting tasks most definitely
indicates priorities and appointment information formed in the system of accounting.
Accounting and financial reporting are designed to meet the
needs of owners and managers,
as well as investors and creditors the necessary financial information to them.
Tax statements have been prepared for the purpose of monitoring compliance with the tax
laws is a secondary (derivative) task of accounting. It is based on data of accounting and
taxation as a separate, specially prepared for that purpose and, therefore, differs from the
summary information of financial statements. Tasks that address accounting and tax
reporting are
quite different: the accounting reporting is formed on the basis of accounting
data summarized information; tax reporting - from data recorded in the accounts and in tax
accounting. The law does not say that the accounting records contains information used to
calculate the tax and accounting reports for the benefit of taxation should be submitted to
the relevant tax authorities.
The Federal Law "On Accounting" applies to all organizations in the territory of Russia,
including branches and representative offices of foreign companies, if it does not contradict
Russian treaties with other countries. All legal entities registered under Russian law, unitary
51
enterprises, public institutions are required to maintain accounting records in compliance
with the Act.
Federal authorities say mandatory for all organizations in Russia:
Chart of accounts and instructions for their use;
Regulation (standards) of accounting, stating the principles, rules and methods of
accounting for business transactions and the preparation of financial statements;
Guidelines and recommendations on accounting.
The law "On Accounting" defines a list of some regulations that are approved by the heads
of those responsible for the organization of accounting.
7.3. Chart of accounts and other documents The Chart of Accounts contains a list of accounts and subaccounts synthetic accounting used
for the current accounting of business transactions. The accounts are required for the
application, and the sub-accounts are used as needed. Businesses have the right to specify
the content of some of them, delete or merge, as well as to introduce new sub-account.
Since the sub-account in the general ledger of the enterprise can be administered as
separate groups, they may make separate accounts. This
rule makes the system accounts,
flexible, able to adapt to any new objects of accounting.
Instructions to the Accounts defines the basic methodological principles and accounting
procedures. It disclosed economic
characteristics , structure and purpose of individual
accounts and subaccounts that are measured at their business operations. Resolution of the
Government of the Russian Federation establish basic rules that should be used in the
development of regulations third and fourth levels.
Federal Service of the Russian Federation on Statistics (ROSSTAT) has a program to unify
forms of primary records. Under the program, issued a number of resolutions on the
approval of the unified forms of primary records for accounting of various objects and
remuneration, fixed assets, intangible assets, materials, etc.
In connection with the introduction in Russia of compulsory social insurance against
accidents at work and occupational diseases of the Social Insurance Fund of the Russian
Federation has
developed a certification procedure of the primary business of insurance to
determine the
class of professional risk industries in which the Company operates the
insured.
The system of guidelines and recommendations consist of two
sets of regulations. The first
group includes documents developed to promote and complement the content of
accounting standards (Pravila Buhgalterskogo Ucheta – “PBU”), which are binding for all. The
52
second group of guidelines and recommendations form the instruments to concretize the
accounting standards in accordance with industry and other specifics of the organization.
The first group of regulations are guidelines and recommendations developed by the
Ministry of Finance, Ministry of Taxation of the Russian Federation, etc.
7.4. Russian tax system Federal taxes and fees:
Value-added tax
Excise tax
The tax on personal income
Insurance contributions (pension, health and
welfare )
Corporate income tax
Tax on mining
Water Tax
Charges for the use of
wildlife and for the use of marine biological resources
State Tax
Regional taxes:
Property Tax
Tax on gambling
Road tax
Local taxes:
Land tax
The tax on personal property
Special tax regimes:
The tax system for agricultural producers (unified agricultural tax)
Simplified Tax System
The tax system in the form of a single tax on imputed income for certain types of
activities
The tax system in the performance of production sharing agreements
The patent system of taxation
7.5. Banking system in Russia The modern banking system of the Russian Federation - a collection of a wide variety of
credit and financial institutions operating in the loan market and implementing the
53
accumulation and mobilization of revenue, which consists of a number of institutional
units ,
or tiers:
1. Central Bank.
2. Banking:
commercial banks;
savings banks;
mortgage banks.
3. Insurance sector:
insurance companies;
pension funds.
4. Specialized non-bank credit institutions.
The banking system is a set of banking institutions
Currently, typical of the Russian banking system are the following trends:
1. Dominated by small and
medium -sized banks.
2. The form of ownership are divided into mutual banks, joint-stock and mixed.
3. The main part of the banks is concentrated in the central region.
4. Increasing the number of branches, representative offices, both in Russia and
abroad .
5. For the Russian Federation is characterized by universal banks, is underdeveloped
network of specialized banks, such as mortgage.
6. The main purpose of the banking system is a credit economy in the
face of three economic
agents - people, businesses and government. In this regard, the Russian banking system is
far behind the
West . Crediting of the population is engaged almost exclusively Savings Bank.
Lending to businesses is relatively small place in the operations of commercial banks.
7. In the structure of passive operations occupy the
bulk of ruble deposits of individuals and
legal entities.
Gradually improving, the banking system of Russia is increasingly starting to become a
developed system, not only in appearance but also in substance of transactions. The
network of branches, representative offices and within the country and abroad, increasing
the network of non-bank credit institutions.
54
ABOUT TRADERUN PROGRAMME The aim of the one year study programme TRADERUN is to increase the development of Russian and Eastern Partnership
countries' environment and its impact on the business society to value the
quality and expertise of Estonian higher
education. The
goal of this multilateral MA training programme is to introduce a unified academic module that gives an
overview of economic, cultural, political, administrational business settings in Russia and Eastern Partnership countries.
The programme is developed in cooperation between
University of Tartu, University of Tallinn, Tallinn University of
Technology and Estonian School of Diplomacy and representatives of business, government and education sector. The
project raises the competence and ability of Estonian higher institutions to analyze economic and political-administrative
environment and to foresee the possible changes of business development of Russia and Eastern Partnership countries.
Furthermore, the module does not focus only on business awareness, but combines the economic, cultural and political
sciences and provide the problem-oriented
knowledge and abilities.
The programme is designed for MA students, entrepreneurs, managers, consultants, officials, public servants, wide public.
The BA
degree or equivalent is required. The programme is aimed to improve the cooperation between business and
educational institutions and to develop awareness of Eastern Partnership countries' culture,
economics , law and public
administration.
The programme is taught by the best academics of Estonian and foreign
universities and the experts and professionals
working in the field of cooperation with Russia and Eastern Partnership countries (see list of lecturers). The courses are
taught in
English .
2013/2014 academic year programme is made of 7 courses during one year (from September to June). Total amounts of
credits to earn is 30
ECTS . All the credits collected can be added to or used in the curricula. It is necessary to fulfill 4 courses
out of 7 in order to get a certificate.
Courses: Russian Economy
Business peculiarities in the EU, Russia and Eastern Partnership countries
Culture, identity and ideology: essential insights for
understanding Russia and Eastern partnership countries
Legal systems in Russia and Eastern Partnership countries: comparative
approach Institutional context of policymaking in economics and business: Russia and EU neigbourhood target countries
Specialized
seminar "Gripping lectures"
TRADERUN programme related
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