Doing Business in Russia 2008

Russia — country profile

General Economic Overview

Russia ranking statistics

• Largest country in the world
• 2nd: Oil exports – 7M bbl/day
• 2nd: Rail network (85 thousand km)
• 3rd: Reserves of foreign exchange and gold: US$466.2 bn, (as of 29 December 2007)
• 9th: FDI confidence index (AT Kearney)
• 46th: FedEx “access” index (openness to trade)
• 52nd: UN Trade and Development Index
• 58th: WEF Competitiveness ranking (62nd in 2005)
• 62nd: AT Kearney Globalization Index
• 106th: Ease of doing business (IFC)
• 155th: Trading across borders (IFC)

Russian companies and global markets

Largest Russian Companies by Market cap (as of July 2007)

Source: RosBusinessConsulting

Financial Times Global Rank 2007

Source: FT.com

8 Russian companies were listed in Financial Times’ 500 largest global companies by market capitalization in 2007.

Foreign Direct Investment and Outward direct investments, $ bn

• Big increase in FDI inflows into Russia within the last couple of years
• Large and rapidly growing domestic market, rich human capital, benefits of natural resources wealth and political stability are the key driver of FDI growth. The domestic boom is beginning to attract significant volumes into consumer-related segments of economy
• Russian companies are the most dominant foreign investors in the CIS and are planning to push into the heart of developed markets

Business Environment

Pillars of  governments’ policy in Russia

1. Political and  economic stability
2. Development of the institutional structure of the market
3. Active role of the government in economic life
4. Economy diversification

Main features of Business climate

1. Economic growth — one of the fastest in the world
2. Structural reforms in due course
3. Increasing role of the State is the economy

Designed and implemented tools for further development

1. National Priority Projects,
2. Concessions agreements,
3. Special economic zones,
4. Investment Fund,
5. Bank of development,
6. Venture Fund,
7. Agency for mortgage crediting to housing construction
8. Mid-term budgetary system (three-year Federal budget ) etc.

Improved Legal and Tax environment

Table of contents

PwC office locations in Russia

CHAPTER 1.  Russia: country profile

1.1 Introduction
1.2 Government structure
1.3 Legal system
1.4 Population and social patterns
1.5 Economy
1.6 Foreign trade
1.7 Tips for business visitors

CHAPTER 2: Business environment

2.1 Business climate
2.2 International Agreements
2.3 Legal environment
2.4 Regulations for business
2.5 Property market

CHAPTER 3: Foreign investment
3.1 Foreign investment
3.2 Privatization

CHAPTER 4: Banking, finance and insurance
4.1 Banking system
4.2 Foreign currency market and foreign currency rules
4.3 Specialized financial institutions
4.4 Capital markets

CHAPTER 5: Importing and exporting
5.1 Trends in customs policy
5.2 Import restrictions
5.3 Customs Duties
5.4 Temporary import relief
5.5 Customs duties incentives
5.6 Documentation and procedures
5.7 Warehousing and storage
5.8 Re-exports

CHAPTER 6: Business entities
6.1 Legal framework
6.2 Choice of entity
6.3 Forms of business entities
6.4 Joint-stock company
6.5 Limited liability company
6.6 Full and limited partnership
6.7 Branches
6.8 Representative office

CHAPTER 7: Labour relations and social security
7.1 Labour relations
7.2 Working conditions
7.3 Social security system
7.4 Foreign personnel

CHAPTER 8: Accounting and audit requirements
8.1 Accounting
8.2 Chart of accounts
8.3 Audit requirements

CHAPTER 9: Tax system and administration
9.1 Tax system
9.2 Direct and indirect tax burden
9.3 Principal taxes
9.4 Legislative framework
9.5 Tax treaties
9.6 Tax returns and payments
9.7 Assessments
9.8 Appeals
9.9 Withholding taxes
9.10 Tax audits
9.11 Tax penalties
9.12 Advance tax clarifications

CHAPTER 10: Taxation of corporations
10.1 Corporate tax system
10.2 Incentives
10.3 Taxable income
10.4 Deductibility of expenses
10.5 Related party transactions
10.6 Foreign exchange
10.7 Tax computations
10.8 Energy, utilities and mining
10.9 Other taxes
10.10 Branch versus subsidiary
10.11 Holding companies
10.12 Thin capitalization

CHAPTER 11: Taxation of individuals
11.1 Territoriality and residence
11.2 Taxable income
11.3 Non-taxable income
11.4 Deductions
11.5 Taxation of non-residents
11.6 Tax compliance

CHAPTER 12: Value-added tax (VAT)
12.1 Scope of VAT
12.2 Zero rating
12.3 Exempt supplies
12.4 Taxable amount
12.5 Non-deductible input VAT
12.6 VAT incentives
12.7 Simplification measures
12.8 VAT compliance

CHAPTER 13: PricewaterhouseCoopers in Russia

APPENDICES
Appendix A — Main macroeconomic indicators of Russia in 1999-2007
Appendix B — Tax Rates
Appendix C — Useful sources of information

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