Transcript Title

Doing business
in Russia
David Simek | PETERKA & PARTNERS Law Firm| Moscow
«Jogi konzultáció»|25.04.2014| Magyar Kereskedelmi és Iparkamara, Budapest
PRAGUE | BRATISLAVA | KYIV | SOFIA | MOSCOW | BUCHAREST | WARSAW | MINSK l BUDAPEST|
www.peterkapartners.com
Doing business in Russia
 Legal environment in Russia
 Tax system
 Customs union
 Entering Russian market
www.peterkapartners.com
Legal environment in the RF
 Russian Federation – 83 federal subjects (provinces,
republics, territories...),
 Federal /centralized /„Vertical of power“
 Russian legal system
• National (Russian) law x International law
• Federal legislation x legislation of federal subjects
• Constitutional law x federal laws x Decrees, regulations, orders
 Database of legal information
• Portal of Justice Ministry : http://zakon.scli.ru/
• Portal of Euro-Asian Economic Commission: http://www.eurasiancommission.org
• Commercial legal databases : «Consultant Plus» http://www.consultant.ru/,
«Garant» http://www.garant.ru/
www.peterkapartners.com
Legal environment in the RF
 Civil Code (FZ- N 51, effective from 1995)
•
•
•
•
Basic Russian private law codex
Priority over other civil legislation
Basic principle – contractual freedom
Non-mandatory and mandatory norms, interpretation of
contractual provisions, public ordre
 Contractual law
• Form of contracts: in writing/ notarized / officially registered
• Choice of the governing law in contracts between Hungarian and
Russian entities (limited: public order and supra-mandatory norms)
• Note the practical legal specifics of international deals with RF,
such as foreign exchange law (Passport sdielki) or Russian tax and
accounting rules (TORG 12, KS-2, KS-3, mutual protocols on services rendered...),
www.peterkapartners.com
Legal environment in the RF
 Court system
• Commercial (“arbitrazhnye“) courts / general civil courts
• Special centralized court for the industrial property disputes (since 06/2013)
• 4-instance system: First-instance court > court of appeal> FAS > VAS
 Enforceability of law
•
Relatively rapid decision-making process of courts
(legal deadlines: first-instance court – 3 months, court of appeal – 2 months, term of appeal – 1 month)
• Database of commercial courts decisions : http://kad.arbitr.ru
a)
b)
c)
•
Commercial disputes (businessman - businessman),
Insolvency proceedings (insolvent debtor - creditor)
Administrative disputes (businessman – State authority, e. g. Tax service
Dispute resolution: Litigation in state courts or Arbitration?
-
International Commercial Arbitration Court in Moscow attached to the Chamber of Commerce and Industry of
the RF (http://www.tpprf-mkac.ru)
International Arbitration Court attached to ICC, Court of Arbitration attached to the Hungarian Chamber of
Commerce and Industry, VIAC and others
• Recognition and enforcement of decisions of Hungarian courts and arbitration
awards in special proceedings before Russian courts
www.peterkapartners.com
Legal environment in the RF
 Execution of decisions in the RF
• Based on final court decisions judgment creditors may
a) apply for the so-called «ispolnitielny list» (document confirming the enforcement
title, source document for the execution of the court decisions),
b) file an application for the declaration of insolvency (in case of insolvency).
• The enforcement is carried out based on the original of the ispolnitielny list `
submitted to the “Court enforcement service” («Sudiebnyi pristav») or
directly to the bank, which the debtor´s account is maintained with (the bank
is obliged to secure respective funds)
• Nevertheless a successful enforcement of decisions is b ased on stability,
financial history and intents of the obligor
 Certain other practical sources of information
•
•
•
•
Database of enforcement proceedings: http://www.fssprus.ru/iss/ip
Database of insolvent debtors: http://www.fedresurs.ru
Commercial Register/EGRUL: www.egrul.nalog.ru
Commercial Journal: http://www.vestnik-gosreg.ru/publ/vgr
www.peterkapartners.com
Tax system in the RF
 Basic tax norms
– Tax Code (FZ-N 117) – comprehensive tax regulation
– Interpretations of the Federal Tax Service and the Finance Ministry of
the RF
– Bilateral Russian-Hungarian treaty on avoidance of double taxation
in relation to income and property tax from 1 April 1994
 Tax regimes for - tax residents (entrepreneurs):
I.
II.
General system of taxation (OSNO)
Unified taxation system of imputed income (ENVD) – unified 15
percent tax on the imputed income determined for the respective
economic activity
III. Simplified system of taxation (USN) – unified 15 percent from profit
(difference between income and expenses) or 6 percent from income.
Applies only to the annual turnover which does not exceed RUB 16 million.
www.peterkapartners.com
Tax system in the RF
Corporate income tax [20 percent]
- Basic rate – 20 percent (a reduced tax
rate from / to 13.5 percent applies in
certain SF and special economic zones),
- Withholding tax on dividends paid by
Russian companies to foreign legal
entities is 15 percent ( RU»HU DTT - 10
percent!)
VAT[18 percent]
- No special VAT registration is requested
- VAT always applies, except for special tax
regimes (USN and ENVD) and certain
services whose place of supply is outside
the RF.
Basic rate is 18 percent and reduced rate is
0 percent or 10 percent based on the type
of the supply and members of transactions
Individual income tax [13 percent]
- Basic rate applicable to residents of the
RF – 13 percent (dividend – 9 percent),
-Basic rate applicable to non-residents of
the RF – 30 percent (dividends – 15
percent),
- Taxation on income of non-residents
VKS 13 percent
- Withholding tax – paid by employers
Insurance premiums paid by employers
[30 percent]
- Pension insurance 22 percent (further 10
percent after exceeding the total cap)
- Social security 2.9 percent (further 0
percent after exceeding the total cap)
- Mandatory health insurance 5.1 percent
(0 percent after exceeding the total cap)
The total cap for the calculation of
www.peterkapartners.com
insurance – RUB 568,000
Tax system in the RF
 Separate keeping of books and tax records
 Quarterly duty to file financial statements and tax returns / reports
 «Tax Agent» – legal entity – resident of the RF who is obliged to file (VAT, income)
tax returns on behalf of foreign entities who have no registered branch or
permanent establishment in the RF
 Most frequent tax problems:
• Tax service does not accept expenses applied to reduce the tax base (income
tax is additionally calculated)
• Tax service does not accept offsets of VAT and calculates VAT additionally, or
does not refund VAT
• New transfer pricing regulation
- Article 105.1-105.25 TC RF substitutes the former “20 percent rule”
- Term „controlled transactions between related parties“
- Duty to notify basic transaction parameters and contractual parties in 2012 to tax authorities by 20
November 2013 (by 20 May 2014 for 2013)
- Tax authorities may additionally request a detailed price analysis which is to justify the pricing in the
holding and the compliance of it with market prices
- Notification duty if the limit turnover of RUB 100 million (2013 – RUB 80 million)
is exceeded
www.peterkapartners.com
RF-BY-KZ customs union
• Customs Union(CU): Russia/ Belarus/ Kazakhstan
• Unified customs and economic area
• Joint customs legislation: = Unified Customs Codex CU
took effect on 1 July 2010, Unified Customs Tariff CU
(«Tamozhenyi tarif») is effective from 23 August 2012,
many technical regulations containing similar qualitative
and safety requirements for products imported to the
area of CU from 15 February 2013
• Guarantee for liabilities arising from the accession of
Russia to WTO (22 August 2012) by Belarus and
Kazakhstan (no members of WTO)
www.peterkapartners.com
RF-BY-KZ customs union
 CERTIFICATES




Certificate of compliance with GOST-R
Declaration of conformity with GOST – R
Certificate of conformity with technical regulations of CU
Other („fire safety certificate“, confirmation that goods are
not subject to any mandatory certification, voluntary
certification and so on)
www.peterkapartners.com
Legal forms of doing business in the RF
 Without forming a separate entity having rights and
duties (legal entity under Russian law)
Branch of a foreign entity.
Typically, in the form which must be officially registered (accreditation)

representation office (представителство) or

branch (филиал) of a foreign person.
 Forming a legal entity under Russian law
Subsidiaries formed by foreign founders usually have the form of a
 Limited liability company (ООО)
 Closed joint stock company(ЗАО)
 Open joint stock company (ОАО)
www.peterkapartners.com
Legal forms of doing business in the RF
BRANCH
SUBSIDIARY
No separate legal entity. The founder is liable for
obligations of the branch in the entire extent.
A legal entity under Russian law.
Members / shareholders are not liable for
obligations of the subsidiary
Profit recorded by the branch is taxed in the RF.
Profit after tax is the founder´s income and not
dividend.
Profit after tax is distributed as dividends among
members and shareholders and is subject to the
withholding tax of 10 percent
Preferential regime if it employs foreigners
Employing only foreigners who hold the work
permit and visa
Limited possibility to clear goods imported to the
RF for the purpose of their resale
It clears goods purchased from the parent
company and resells them in the RF.
Founder´s funding: direct – transfer of own funds
Funding by members / shareholders: contribution
in the registered capital, loans, payment for
mutual contractual supply
Head of the branch acts under the founder´s
power of attorney. If foreigner, no strict need of
employment contract in Russia and work permit.
Executive director (director general) of the
subsidiary acts based on the appointment by the
general meeting and employment contract.
Entities of both forms may act as employers under Russian law, render services and provide work on the
Russian market, apply for licences for certain activities, carry out productionwww.peterkapartners.com
activities and so on.
RUSSIA
CZECH REPUBLIC
MOSCOW
4. Tverskaya-Yamskaya 22
RU – 125047 Moscow
T.: +7 499 251 87 87
T.: +7 495 739 28 58
PRAGUE
Karlovo namesti 671/24
CZ – 110 00 Prague 1
T.: +420 246 085 300
SLOVAK REPUBLIC
POLAND
BRATISLAVA
Kapitulska 18/A
SK – 811 01 Bratislava
T.: +421 2 544 18 700
WARSAW
Śniadeckich 10
PL - 00-656 Warsaw
T.: +48 22 696 72 01
ROMANIA
BULGARIA
BUCHAREST
41 Aviatorilor Blvd, 1st
District
RO – 011853 Bucharest
T.: +40 21 310 48 82
SOFIA
96, Georgi S. Rakovski
BG – 1000 Sofia
T.: +359 2 984 11 70
BELARUS
UKRAINE
Ádám Illés, Partner
MINSK
29, Surganova, 1
BY – 220012 Minsk
T.: +375 17 290 05 98
PETERKA & PARTNERS Iroda
Apáczai Csere János utca 11.
1051 Budapest
Tel.: +36 1 235 10 90
E-mail: [email protected]
KYIV
Business Center
"Renaissance"
24, Vorovskoho
UA - 01054 Kyiv
T.: +380 44 581 11 20
HUNGARY
Thank you for your attention!
David Šimek, Partner, Moscow
[email protected]
Contact in HUNGARY:
BUDAPEST
Apáczai Csere János 11.
HU – 1051 Budapest
T.: +36 1 235 10 90
www.peterkapartners.com