Some facts about doing business in Russia

Establishing a legal presence in the Russian Federation:

• A representative office (for 1, 2 or 3 years) or branch (from 1 to 5 years) of a foreign company.
• Legal entity (Limited Liability Company or Joint Stock Company).

While establishing a legal entity it is required by law to appoint a Director General in a company. It is not possible to register a company without such a person. Meanwhile it may take about two months to obtain a work permit to take such a position for a foreigner.

Taxation

The Russian Federation Tax Code, Regional and Local Law establish different taxes.

Federal taxes:

• Value-Added Tax (VAT)
• Excises
• Individual Income Tax
• Corporate Profit Tax
• Tax on Natural Resources
• Water Tax
• Charges for use of wildlife objects or for use of biological objects
• State Duty

Regional Taxes:

• Corporate Property Tax
• Gambling Tax
• Vehicle Tax

Local taxes and levies:

• Individual Property Tax
• Land Tax

Taxation systems:

According to the General taxation system all corporate taxpayers pay full scope of federal and regional taxes above listed (i.e. corporate income tax, VAT, property tax, etc.). This form of taxation system is mostly applied by manufacturers, constructing and engineering companies.

Small business may apply Imputed taxation, if they run activities like trading with general public in cash: small retail and food service outlets, hotels, taxi companies etc. Imputed tax, at rates set by local authorities (per square meter of shop space, per vehicle etc.) replaces regular taxes.

Using Simplified taxation system small businesses have opportunity to reduce the tax burden and simplify their taxation. These small companies pay only a single tax according to the simplified system. There are two options to choose from:

• Taxation of total revenue (cash method). The tax rate is 6%.
• Taxation of net receipts. In this case the tax rate is 15%.

Taxation system for agriculture (including animal farms and fisheries) replaces regular taxes with a flat unified tax levied at 6% on gross margins, with its own unique set of accounting rules. There are no requirements on size of the company as long as at least 70% of its income is generated by sales of own farm produce.

Having been established a new Company its top-managers may wish to invite highly skilled specialist from abroad. The procedure of obtaining working visa and work permit is quite long and complicated.

First of all a working visa in Russia is mandatorily for those who is coming for job to Russia. The working visa in Russia gives the right to work and receive a salary in the Russian Federation.