Russia Country profile

Opening Hours and Days

Banks and administrative offices are closed on Saturdays and Sundays. You find can bureau de change everywhere, and are likely to accept USD and EUR above all. Some of them are open on weekends.

Shops and bureau de change are open on Saturdays and until about 8:00 p.m. during the week. You may find some that are open all day, every day.

Public Holidays

Holiday Compensation

When a public holiday falls over the weekend, the Russian authorities announce if the day will be celebrated on the preceding Friday or the following Monday. The authorities can declare days as holidays to create long weekends. These days are usually made up for on other close dates.

Periods When Companies Usually Close

Hotel reservation websites

2014 Public Holidays

Tax Rate For Foreign Companies

Russian legal entities pay taxes on their worldwide income. Foreign legal entities pay tax on Russia-source income derived through a permanent establishment at the standard 20% rate. Furthermore, they are subject to withholding tax on Russian-source income not related to a permanent establishment (from 10% to 20%, depending on the type of income and the calculation method).

Foreign tax credit is available but may not exceed the amount of Russian tax payable on foreign income.

Starting from December 2022, the Russian Government Commission has enforced a "contribution" charge of 10% on the transaction price for any change of ownership of a Russian subsidiary. However, in March 2023, the fee was modified to 5% based on the fair market value of the Russian subsidiary.

Capital Gains Taxation

Capital gains are treated as ordinary business income and taxed at the standard corporate tax rate of 20%.
Capital gains received from 2018 derived from the sale of (i) unlisted shares or participations in Russian companies, and (ii) shares in Russian companies held for more than five years, can be subject to a participation exemption, provided that real estate properties located in Russia represent less than 50% of the companies’ directly or indirectly held assets.
A participation exemption also is available for capital gains on the sale of listed shares in high-technology Russian companies that are held for more than one year.

Main Allowable Deductions and Tax Credits

Expenses are deducted on an accrual basis and have to be properly documented and aimed at generating income to be tax-deductible.
Expenses related to all types of mandatory insurance are deductible and subject to government tariff limitations, wherever established. Voluntary insurance expenses are deductible to the extent that they relate to the insurance of damage and losses related to certain classes of assets, and the insurance of construction activity risks. The deductibility of long-term life and pension insurance is limited to 12% of the payroll fund, the one for voluntary medical insurance to 6% of the payroll fund.

R&D expenses are deductible within one year after completion (in some cases they can be multiplied by a coefficient of 1.5). Furthermore, a provision for future R&D expenses may be accrued for tax purposes.
Losses in the form of bad debts that are written off are usually deductible. Charitable contributions deductibility is capped at 1% of revenues (conditions apply). Taxes are generally deductible, fines are not.

Regarding net operating and capital losses, the amount of a recognised loss of periods prior to 1 January 2017 cannot exceed 50% of the current year tax base for corporate income taxation purposes. Starting from 2021, recognition of the entire amount of losses became possible again. The carryback of losses is not permitted.

Numerous tax incentives are available, including regional tax reductions for investment projects, tax reductions for technology and software companies, a ten-year tax holiday for the Skolkovo Innovation Centre, a 0% profits tax rate for specific educational and medical services and a 150% profits tax deduction for qualifying R&D expenditure. Since 1 January 2021, regions may also establish investment tax credits for R&D activities. Other special tax regimes (e.g., regional investment projects, special investment contracts, or “territories of advanced social and economic growth”) grant a 0% profit tax rate, property tax reduction, and other benefits.

Other Corporate Taxes

Regional authorities set taxes including property tax (it cannot exceed 2.2% of the taxable value), transport tax and gambling tax.
Stamp duty is applied for state registration of certain rights and contracts. A Mineral Resources Extraction Tax (MRET) is levied on coal, oil, gas, and gas condensate and is calculated using the extracted volume of the relevant resource (the tax rate varies from 3.8% to 8%; reduced MRET rates apply to investors in the Russian Far East). A water tax is levied on taxpayers consuming water for specific purposes.
Moscow applies a trade levy on the assets used in retail and wholesale trade.

From 01.01.2023, Federal Law 269 of 05.07.2023 united the Russian Pension Fund and the Social Insurance Fund into a new fund - the Russian Pension and Social Insurance Fund. Hence, there is now a unified insurance contribution tariff applicable to mandatory pension insurance contributions, mandatory social insurance contributions for temporary incapacity for work and in connection with maternity and mandatory health insurance contributions.
The single tariff for these categories of contributions is set as follows:

• within the established unified maximum amount of the base for calculating insurance contributions - 30%
• above the established unified maximum amount of the base for the calculation of insurance contributions - 15.1%

The unified maximum insurance contribution base in 2023 is equal to RUB 1,917,000.

Other Domestic Resources

Federal Tax Service of the Russian Federation

Country Comparison For Corporate Taxation

Source: The World Bank - Doing Business, Latest data available.

Accounting System

Accounting Standards

In Russia, accountancy is mainly interpreted as the rules defining the way of keeping accounts books. IFRS Standards became mandatory for the filing of consolidated financial statements by domestic and foreign companies in 2012. Russian Accounting Standards (RAS), which are converged to a great extent with IFRS, are required for standalone statements. SMEs currently use accounting standards issued by the Ministry of Finance.
For further information, consult the ICAEW website.

Accounting Regulation Bodies

Russian Central Bank

Accounting Law

Accountancy is defined in Russia by the State rather than by professional organizations.

The Russian accounting framework is defined at three levels:
- The Federal Law on Accounting, Federal Law on Consolidated Financial Statements and Federal Law on Introducing Changes to the Separate Legislative Acts
- The Russian Accounting Standards (RAS) defined by the Ministry of Finance and the Chart of Accounts ;
- The accounting standards governing the banking and finance sectors developed by the Central Bank.

Difference Between National and International Standards (IAS/IFRS)

IFRS Standards are required for listed companies, financial institutions and some government-owned companies. Russian accounting standards (RAS), which are required for standalone financial statements, are largely converged with IFRS. Furthermore, the latter applies automatically in areas not covered by RAS (including Joint Arrangements, Hedging, Pension Plans, Share-Based Payments).

Accounting Practices

Tax Year

From 1 January to 31 December.

Accounting Reports

Company annual accounts must be composed of:
- a balance sheet,
- a profit and loss account,
- notes.
Small companies can produce simplified accounts.

Publication Requirements

Only certain companies, such as insurance or joint-stock companies, are requested to publish their accounts with an audit.

Accountancy Profession

Accountants

The term accountant is generally applied to those working inside the company. Outside contributors are called auditors and regulated at the state level. The Ministry of Finance has overall responsibility for the regulation of the auditing profession under the Federal Law on Auditing Activities. The Federal Treasury conducts quality control review of auditors providing services to public-interest entities (PIEs) such as listed companies, financial institutions and state corporations. Accountants are self-regulated through the membership requirements of the Institute of Professional Accountants of Russia (IPAR) (membership is voluntary).

Professional Accountancy Bodies

IPBR, Russian Institute of Professional Accountants

Member of the International Federation of Accountants (IFAC)

Russia is a member of the International Federation of Accountants (IFAC).

Member of Other Federation of Accountants

Russia is a member of the European Accounting Association.

Audit Bodies

Companies with an annual turnover greater than RUB 400 million or total balance sheet assets exceeding RUB 60 million in the previous year must have their financial statements audited annually. You can contact the Russian Institute of Internal Auditors.

Allowable Deductions and Tax Credits

In general, the deductions are available only to tax residents and are usually limited to RUB 120,000 per annum.
An exemption of RUB 1,400 per month is available for a first and second child and RUB 3,000 for a third and each subsequent child (only if the cumulative annual income of the parents is below RUB 350,000).

Tax deductions are available for property-related allowances, social allowances, business expenses and standard allowances. Qualifying gifts and inherited property are tax exempt.

Donations to certain non-commercial organisations and qualifying charities are deductible from taxable income within certain limits. Individuals can deduct from taxable income the costs of their own and their children's education in Russian-licensed institutions (up to RUB 50,000 per child), as well as the costs of medical services (for themselves and close relatives) and medicines.

Expenditures incurred by an individual on the acquisition or construction of an apartment or house and related plot land, as well as payment of interest on the respective loans, are allowed as a deduction of up to RUB 2 million with respect to expenditures plus the amount of interest of up to RUB 3 million (available only to tax residents and only once). Taxable income from the sale of property (except for immovable property) owned for less than three years may be decreased by expenses incurred, or by a minimum deduction of RUB 1 million (for immovable property owned for less than five years), and RUB 250,000 (for other property, except securities).

Certain statutory allowances, state pensions (and certain other pensions) and revalued shares (issued as a result of statutory revaluation, merger or reorganisation) are exempt from taxation.

Special Expatriate Tax Regime

Russian residents are taxed on worldwide income, while non-residents are taxed on Russian-sourced income.
A Highly qualified specialist (HQS) is a foreign national with work experience, skills, or accomplishments in a specific field who is employed in Russia at a monthly salary of RUB 167,000 minimum (with certain exceptions). Income earned from labour activity by non-resident individuals with HQS status is taxed at standard rates instead of the 30% tax rate that applies to such income earned by non-residents who do not have HQS status.
Income earned by foreign employees hired under the highly qualified specialist regime is exempt from social security contributions (only accident insurance contributions are due).

Capital Tax Rate

No capital duty. A special 35% rate applies to certain income including voluntary insurance contributions, deposits on foreign currency and interest on certain bank deposits.
A real property tax is imposed annually at rates ranging from 0.1% to 2% of the cadastral value or the total inventory value, adjusted by a “deflator” coefficient.
Social security contributions are borne only by the employer. Self-employed individuals must contribute to social security.
A land tax of 0.3% applies to agricultural and residential land and 1.5% on other types of land.
Dividends are taxed at a rate of 13% for residents and 15% for non-residents.

National Regulation and International Agreements

Equity of Judgments

Equal Treatment of Nationals and Foreigners

Foreigners cannot expect an impartial hearing in judicial matters.

The Language of Justice

Russian

Recourse to an Interpreter

Possible

Legal Similarities

The main source of the law is the Constitution of December 1993. The country's judicial system is based on a system of civil law and judicial reviews of various legislation.

The Different Legal Codes

Checking National Laws Online

Kodeks ( in russian)

Other Useful Resources

Russian Law News
Consultant Plus, (in Russian)

Country Guides

Lexadin, Courts and Cases Russia

The Jurisdictions

Court Officials

Lawyers/Barristers

Advise, represent and defend their clients.
About 20 000 spread over 100 colleges which intersect with judicial districts (like the Bar).
There are also about 20 000 lawyers who only work for a company (jurisconsults) and more and more American-style independent offices.

Judges

Examine cases and pass sentence.
About 20 000 who have passed an examination and then been co-opted.
Once in place, a judge has immunity and cannot be transferred.
Poorly paid and overworked, they are often suspected of corruption and lack of independence.

Prosecutors

In charge of supervising enquiries, of investigation and accusation.
About 40 000 under the Public Prosecutor.
They still have considerable power, even if this has been reduced over the last few years.

Customs Procedures

Import Procedures

Importers are required to complete a Russian customs freight declaration for every item imported. A declaration must be supported by the following documents (when applicable): contracts, commercial documents such as commercial invoices and packing lists, transport documents, import licenses, technical regulation of technical safety certificates, certificates of origin, sanitary certificates, import permission and licenses (e.g. for products containing encryption technology), and documents confirming legitimacy of declarants/brokers/importers. All customs import declarations are submitted electronically. The website of Russia’s Federal Customs Service contains the link to the portal for electronic declarations.

The Eurasian Economic Union (EAEU) maintains a unified list of goods to which import and export limitations and prohibitions apply, in order to monitor and control movement of goods classified as sensitive by the member states or by the international community. In Russia, import licenses are issued by the Ministry of Industry and Trade in accordance with the unified licencing rules of the EAEU.

Customs payments generally include: import/export customs duties, taxes, and customs processing fees. Some goods may also require payment of utilisation fees (e.g. wheeled vehicles), or the new ecological fee, introduced on 1 January 2015.

In addition, currency control regulations require issuance of a transaction passport for both exports and imports to ensure that hard currency earnings are repatriated to Russia. The regulations also ensure that transfers of hard currency payments for imports are for goods actually received and properly valued.

Specific Import Procedures

There is a licencing system for certain specific products (pesticides, jewellery and precious materials, electrical material, etc.), which represent about 3% of all the goods imported. These licenses are issued by the Ministry of Economic Development and controlled by the State Customs Committee.

Importing Samples

Commercial samples are exempt of customs duties and import TVA for a period up to two years if they are used only for promotional proposes. Biological samples and samples of medicines must be accompanied by specific certificates.

Customs Duties and Taxes on Imports

Customs threshold (from which tariffs are required)

Shipments with a CIF value of under RUB 5,000 enter without duty or tax.

Average Customs Duty (Excluding Agricultural Products)

Since its official entry to the WTO on 22 August 2012, Russia has committed to implement all the provisions of the WTO, including an average tariff of 6.1% for goods. For more information, see Russia's WTO tariff profile.

Products Having a Higher Customs Tariff

Finished products (15%), foodstuffs (20%), agricultural products.

Preferential Rates

The rates displayed in the Customs tariff are applied to countries which benefit from the Most Favored Nation clause (MFN), i.e. the majority of third countries, including those of the EU.
Russia has a free trade agreement with the CIS countries and Serbia. In addition, a common economic area with Belarus and Kazakhstan within the framework of the Eurasian economic community has been created.

Customs Classification

Russia implements the Harmonised Customs System.

Method of Calculation of Duties

85 % of tariff lines are taxed on an ad valorem basis. Russian regulations provide for methods of determining Customs value, generally the CIF standard in conformity with the rules of the WTO.
The rest uses a combined system: the tariff applied is the maximum between the ad valorem tariff and a specific tariff, often fixed.

Method of Payment of Customs Duties

Duties and taxes are collected by the State Customs Committee.
Customs also collects fees for carrying out Customs formalities.
Payment is made in cash when making the Customs declaration. Clearing Customs is only authorized with a certificate proving payment has been made.

Import Taxes (Excluding Consumer Taxes)

In addition to Customs duties, import excise taxes may be applied for limited categories of products, such as luxury goods, alcohol and tobacco products, cars, diesel and motor oil, and other petroleum products. Import excise taxes range from 20% to 570%.

Labeling and Packaging Rules

Packaging

There are no specific rules: the packaging must be whole and sealed but it must be able to be opened by Customs officers.

Languages Permitted on Packaging and Labeling

Product labeling must obligatorily be in Russian. The other official languages of certain federal subjects or ethnic minorities are optional.

Unit of Measurement

Russia uses the metric system. See the "Russian Classification of Units of Measurement" Act

Mark of Origin "Made In"

Obligatory

Labeling Requirements

Generally the name of the product and the producer.

For foodstuffs, add the weight or volume, the ingredients, the nutritional values, storage conditions and expiry date, type of product, legal address of the producer (it is possible in Latin letters), food contents, instruction for semi finished goods or children foodstuffs, warning information about any restriction and side effect, terms and conditions of use.
For non-food products, the characteristics, instructions for use, country of origin and name of manufacturer, main characteristics for effective and safe use of product.

Labels shall be displayed in Russian language.

Specific Regulations

None

Distribution Network

E-commerce

Internet access

Russia with its 144.3 million inhabitants is the most populated country in Europe, ahead of Germany (81.4 million) and Turkey (80.8 million). The Internet penetration rate rose to 76.4% in 2017 (Internet World Stats), which is not far from the European average (80.2%). With its 109.5 million internet users, Russia is also by far the largest internet market in Europe (16.6% of total users in Europe). Smartphone penetration rate was reported at 54.7% in 2017 (Newzoo Global Mobile Market Report), which is slightly behind the global average (63% - Zenith Media estimates). Russia is one of the few countries in the world where Google is not the most popular search engine, as the locally-built Yandex.ru continues to benefit from huge popularity. The share of Yandex.ru was forecast at 54.01% while Google and Mail.ru had 42.72% and 2.17% respectively (Statcounter).

E-commerce market

E-commerce in Russia has been growing steadily in recent years, and recorded a 17% growth in 2017. However, it remains smaller than most online markets in western Europe, given that it is worth US$ 33.5 billion, as opposed to US$ 67.9 billion in Germany and US$ 93 billion in France (E-commerce Wiki). In terms of GDP, e-commerce was forecast to have reached 1.39% of total economic activity and 2.8% of retail sales in 2017. Russian e-commerce is expected to grow at a slower rate in the upcoming years, at around 10% on average, as the economy has only modestly recovered from recession. Growth is fuelled to a large extent by cross-border trade, which accounted for nearly one-third of the total e-commerce market and grew by 37% in 2017, while the domestic e-commerce market grew only 6%. Over 80 million Russians used smartphones in 2017, and this figure is expected to rise to over 93 million by 2021, which should boost Russian e-commerce. The share of mobile in retail e-commerce stood at 22% according to latest available data (Criteo), a figure comparable to that of the United States (25%). Chinese-owned Aliexpress is by far the most visited e-commerce site in Russia - with over 22 million accesses in 2017 - while the local Wildberries has the highest number of orders within the country, and was accessed almost 7 million times that year.

Social media

Unlike most European countries, local social media networks benefit from huge popularity in Russia. While YouTube is among the most popular social media networks (with over 39 million users), VKontakte, Moi Mir (provided by Mail.ru) and Odnoklassiki continue to dominate the market. Vkontakte is Russia’s largest social network, with 41.1 million Russians in 2017, and is particularly popular among those under 34 years old, as 80% of all users belong to that age group. Moi Mir, a social networking site that is an extension of the email provider Mail.ru, is quickly gaining popularity and had an average of 25 million monthly users in 2017. Odnoklassiki is the third most popular network in Russia, and had around 27 million users, with a big part of them aged between 25 and 34. Twitter is fairly popular, with about 7.7 million visitors a month. Facebook and Instagram are not as popular as in most western countries. Facebook had 21.7 million users in 2017, and Instagram accounted for 16 million users. Furthermore, blogging is quite popular in Russia with LiveJournal hosting a large population of internet users. However, this network had to modify its terms of use in April 2017, making the website subject to Russian law, which forbids blogs attracting more than 3000 visitors to publish "extremist materials". This decision caused a backlash among its users as it was considered to be an attempt to censor free speech. LiveJournal has lost several users in response to the censorship, but the platform still attracts about 15.2 million monthly users. LinkedIn has also been banned in the country since November 2016, as it was found in breach of a new data retention law which requires the user data of Russian citizens to be stored on servers based in Russia (an obligation with which LinkedIn refused to comply). Moreover, almost 70% of all social media visits come from mobile devices, and the most active social media users live in big cities. As of August 2018, the most popular social media platforms by market share in Russia were YouTube (22.87%), Facebook (20.99%), VKontakte (19.41%), Twitter (13.04%), Instagram (11.4%) and Pinterest (6.39%).

Direct Selling

Evolution of the Sector

The World Federation of Direct Selling Associations, Russia 2016 direct retail sales amounted to USD 2,172 million, an 11.1% increase compared to 2015. The industry also has 5,148,803 independent representatives.

Euromonitor International argues that despite high penetration, there is still direct selling growth potential in Russia driven by weak consumer purchasing power; an increasing number of active representatives; growing interest in health, beauty, and personal care; and niche products. Beauty and personal care products are the most popular items in this sector.

Avon leads the direct selling industry in Rusia, although it lost market share to double-digit growth company  Faberlic OAO. The industry is regulated by the Russian Direct Selling Association, which in turn is affiliated to the World Federation of Direct Selling Associations and the European Direct Selling Association.

Commercial Intermediaries

Trading Companies

 

• Type of Organization

It is generally a question of import/export companies, specialized in one type of product.

These companies are useful for penetrating the retail market at a lower cost. In fact, without setting up on the spot it is difficult to access the market. This is mainly due to the relative underdevelopment of buying groups. In Russia, distributors work with products from different companies. Usually they not offer promoting services unless the supplier provides promoting material.

• Main Actors

The market is very segmented. We can name : Novoexport (cross category), Prommashimport(machine-tools), Prodintorg, Vneshintorg (foodstuffs), Rusimport (wine), Dina International (medicines), Elektromedoburovanie (medical equipment).

Wholesalers

 

• Type of Organization

The sector is made up of relatively small companies specialized in one type of product and larger companies offering especially logistic and storage services. Generally, wholesalers carry out import business.

• Main Actors

Metro, Stock-Planet (clothes), TC-Belcom (chemicals), Exima (food), Morozilnik (household appliances), Mebel-Russi (furniture)
The import/export companies mentioned above also act as wholesalers.

Useful Resources

REMExport.com
U.S Commercial Service - Guide to commerce

Using a Commercial Agent

The Advantages

Allows you to start up business locally at reduced cost and to extend your business later.
Allows you to widen your business to another geographical area if your company is already established in the country.

Where to Be Vigilant

Because of the size of the country, it is not usual to depend on only one agent, but rather on a distribution network.
Counterfeit invoices and other irregularities are sometimes reported. Generally speaking, finding a trustworthy partner is not easy and you need to keep up a certain level of supervision.
The notion of a commercial agent is not often found in Russian business culture.

Elements of Motivation

Exclusive rights, a fixed term contract, sales objectives.
You must ensure active follow-up. Your physical presence and the development of personal relations are often useful.

The Average Amount of Commission

Generally from 5 to 10%. More if the market is limited (equipment) and less if the volumes are large (raw materials).

Breach of Contract

The company has the right to terminate a contract at any moment. It will then have to compensate the agent for any losses.
If no term has been specified in the contract, the agent may terminate it by giving a month's notice.

Finding a Commercial Agent

Alibaba

Setting Up a Commercial Unit

The Advantages

Allows you to have direct contact with consumers and the control of the distribution chain.
Can be useful if a company wants to find growth opportunities or establish its presence in the medium or long term.

Where to Be Vigilant

Interpretation of the laws varies according to the region. It is advisable to call in a legal consultant when carrying out registration formalities.

Different Possible Forms of Settlement

 

• A Representative Office

A representative office must be approved and registered with the Ministry of Justice. It allows you to employ up to 5 foreigners and to send out business invitations.
Opening a representative office is a complex legal process that provides little opportunity. It is better to build a OOO (LLC) which is cheaper, simpler to implement and offers more possibilities.

Accreditation fees for representative office are as follow:
Accreditation with Russian Chamber of Commerce an Industry: RR 3,000 plus USD 1,500 for a year, USD 2,500 for two years or USD 3,500 for three years.
Accreditation with the State Registration Chamber: RR 35,000 for a year, RR 65,000 for two years and RR 85,000 for three years. For more information, please visit the State Registration chamber website.

• A Branch Office

A branch office is not considered to be totally independent. It cannot conduct commercial business, but it can negotiate, prospect, supervise the distribution network and give the parent company commercial support.

It is advisable to register with the Ministry in charge. All branches must register with the State Registration Chamber. The registration fees are as follow: RR 135,000 for one year, RR 140,000 for two, RR 155,000 for three and RR195, 000 for five years. After accreditation, branches must register with local Chamber of Commerce.

• A Company

A company must register with the Chamber of Commerce and Industry and with the . That takes considerably more time.
It can be a joint-venture or a subsidiary belonging 100% to a foreign company.

Franchising

Evolution of the Sector

Franchising as a business model only came to Russia once formal franchise legislation was adopted in 1994. As of today, in Russia there are about 1450 franchise brands and more than 50,000 franchisees. The turnover of the franchise market in Russia occupies a significant share in the country’s GDP, the estimated market volume is $350-500 million. Retail trade constitutes 57% of all active franchisers, followed by services at 25%, and fast food at 16%. According to data from the Russian Franchising Association, 65% of all franchise concepts are established domestically, and 35% are foreign of which 12% are American.

Franchising is regulated in Chapter 54 of the Civil Code. Although Russian law allows parties to an international franchise agreement to choose another national law as the law governing the franchise agreement, certain provisions of the Civil Code are considered mandatory by Russian courts, such as the obligation to register the trademark license with Rospatent and the franchisor's liability to the franchisee's customers for defective products and services.

For a franchising agreement to be valid, it has to be executed in written form. The grant of the right to use the intellectual property under a franchise agreement shall be registered with the Federal Service for Intellectual Property, Patents and Trademarks (Rospatent). Absent such registration, the intellectual property rights are considered not granted by a franchisor to a franchisee. Prior to the execution of a franchise agreement, any trademarks to be licensed must already be registered with Rospatent or the World International Property Organization (WIPO), with Russia designated as a designated country.

Some Big Franchises

Baskin-Robbins, ice creams

Finding Assistance

Export Trading Companies

Portal for Russian foreign trade

Recommended Resource

Russia Trade Portal

Industry represents 32.2% of the GDP and 26.6% of all employment. However, this trend is declining.

Traditionally the most developed sectors are heavy industry (metallurgy and chemicals) as well as the automobile industry and aeronautics.

Type of Manufacturers

Original Equipment Manufacturers

They are especially developed in the sectors of the automobile industry, IT and industrial plant (in particular machines for extracting raw materials) in the form of joint-ventures.
These are generally capital-intensive sectors with a non-negligible technological component, for which domestic demand is strong.

Original Design Manufacturers

ODMs are less widespread.
They are concentrated in the electronics and microelectronics sectors, where salaries are relatively low in relation to the level of qualification.
They are mostly Russian companies.

Subcontractors

This activity is often linked to the country's natural resources: metal parts, plastics and resins but also electronic components. It is particularly concentrated in the technological fields of excellence which are aeronautics, aerospace and nuclear energy.
For further information, consult a website listing sub-contractors.

Useful Resources

A.T. Kearney - Global Management Consultants

Russian multisector Business directories

All.biz - Russia - Directory of companies in Russia

Colist - Russian business directory

Expat.com - Russian business directory

InfoDriveIndia - Importers and exporters directories.

Russia Business Database - Russian business directory

Russian Yellow Pages - Russia's business directory

Russian Marketplaces

Sample of marketplaces incorporated in Russia (A to Z)

Upcoming Trade shows in Russia

Other Useful Resources

Trade Agencies and Their Representations Abroad

Russian Chamber of Commerce and Industry
Commercial Services Guide for Russia
Trade representations are located in Embassies.
To obtain the contact details of the Embassy in your country, click on the map.

 

 

Main Useful Means of Transport

Even if the trains need modernising, the rail network is the most used means of goods transport. In 2019, Russia's transport volume in the rail freight sector amounted to approximately 2.6 trillion ton-kilometers.

There are no motorways and the infrastructure is inadequate for goods transport (19% of all goods traffic). Nevertheless, projects are underway to open up the country towards the West. Trucking in Russia is a US$4.78 billion industry. In 2019, Russia's transport volume in the road freight sector amounted to approximately 264 billion ton-kilometers.

Russia has 41 large ports of which only 11 are equipped with infrastructures for import-export; the biggest one is in St Petersburg (42 million tons). The country is open to the sea on three sides: the Baltic sea, the Black sea and the Pacific Ocean. According to data of the Russian Association of Commercial Seaports, first semester of 2018 container cargo volume was 2.95 million TEU, up 11.5 percent from the same period in 2017. At Far East seaports, the growth rate increased 13.5 percent from the same period last year.

By Sea

Ports

St Petersburg
Novorossiisk

Transport Professionals

River Sea (Rostov-on-the-Don)

By Air

Airports

Sheremetyevo (Moscow)
Pulkovo (St Petersburg)
Koltsovo (Yekaterinburg)
Novosibirsk International Airport
Vnukovo (Moscow)

Transport Professionals

AirBridge Cargo
Aeroflot-Cargo
Avia Services

Government Transport Organisations

Federal Air Transport Agency (Rosaviatsia)

By Road

Transport Professionals

International road transporters association

By Rail

Transport Professionals

Russian Railways

Open Joint Stock Company (OAO)

Number of partners: 1 partner or more
Capital (max/min): RUB 100,000
Shareholders and liability: Liability is limited to the amount of capital invested.

Closed Joint Stock Company (ZAO)

Number of partners: From 1 to 50 participants maximum.
Capital (max/min): RUB 10,000
Shareholders and liability: Liability is limited to the amount of capital invested.

Limited Liability Company (OOO)

Number of partners: From 1 to 50 participants maximum.
Capital (max/min): RUB 10,000
Shareholders and liability: Liability is limited to the amount of capital invested.

Limited Partnership

Number of partners: No minimum.
Capital (max/min): No minimum capital required.
Shareholders and liability: General partners have unlimited liability; sleeping partners have limited liability.

General (full) Partnership

Number of partners: No minimum.
Capital (max/min): No minimum capital required.
Shareholders and liability: Liability is unlimited.

Business Setup Procedures

The Competent Organisation

The local tax office.

For Further Information

World Bank Group, Doing Business, provides information on procedures in order start a business in Russia.

Financial Information Directories

Dun & Bradstreet - Worldwide directory with financial information on businesses

Rustocks - Information in the Russian stock-market and domestic companies

Recovery Procedures

Principle

Russian law provides for 4 types of procedure in case of insolvency: observation, rehabilitation under the authority of a receiver, appointment of an outside manager then compulsory liquidation. At each step, an amicable agreement may be reached.

Cases are judged by arbitration tribunals. After the verdict, the creditor must wait a month before being able to recover his debts. At the end, he can demand the execution of the sentence and appeal to a bailiff. If the bailiff cannot manage to get all the debt together within 30 days, the creditor can ask the Arbitration Tribunal to start an insolvency procedure.

Many informal methods are also used (negotiations, visits, appeals to private companies or corporative associations), but they often have no result.

Minimum Debt-to-Capital Ratio Triggering Liquidation

None

Bankruptcy Laws

Consult the analysis on the Insolvency Law (Bankruptcy) dated 26 October 2002 by Standard&Poor's.

Reorganization and Rehabilitation Laws

The Insolvency Law (Bankrupcy) also covers these procedures.

For Further Statistics

World Bank
Federal education portal (in Russian)

For Further Information About the Labour Market

Russian Union of Industrialists and Businessmen

Opening Hours

 

• Legal Weekly Duration

40 hours a week

• Maximum Duration

54 hours a week (not more than 4 hours overtime over 2 consecutive days).
Overtime may not be more than 120 hours a year.

• Night Hours

From 10pm to 6am.
For night work, the legal duration of working time is reduced by 1 hour.

Working Rest Day

Work is usually not allowed over week-ends or on public holidays.
In a certain number of cases, it is nevertheless permitted with the written agreement of the employee.

Paid Annual Vacation

28 days per year

Retirement Age

Retirement is possible from age 55 for women and age 60 for men (after they have provided a 5 year contribution to the private sector and 15 to the public sector).

Child Labour and Minimum Age For Employment

Employing people under 15 is prohibited.
People under 18 can only be employed for a limited list of jobs. In addition, it is forbidden to make them work at night, at the week-end or make them do overtime.

Informal Labour Market

Between 10 and 15% of the working population. This rate is tending to drop due to economic growth and the reduction in taxes.
A large number have formal employment but carry out some form of trade.

Pay

Minimum Wage

Since 1 June 2022, the monthly minimum wage is set to 15,279 RUB (USD 243).

Average Wage

In 2021, the average nominal salary was measured at approximately RUB 56,500 per month (Statista).

Other Forms of Pay

• Pay For Overtime

+50% for the first 2 hours, then +100%

• Pay For Rest Days Worked

+100%

• Pay For Night Hours

No legal provision.

• Pay For Overtime at Night

As for overtime.

Social Security Costs

The Areas Covered

Retirement, health insurance and disability benefit, family allowances.

Contributions

Contributions Paid By the Employer: Insurance contributions are levied on companies, individual entrepreneurs and self-employed individuals. The threshold is subject to annual revision by the Russian government. The rate is 30% withholding tax, broken down into: 22% up to the threshold (RUB 1,565,000), and 10% excess of the threshold to the State Pension Fund, 2.9% (up to RUB 1,032,000) to Social Insurance Fund, 5.1% to the Federal Medical Insurance Fund. For foreign employees, a withholding tax of 1.8% is payable to the Social Insurance Fund.
Contributions Paid By the Employee: No mandatory contributions are payable by employees.

Competent Organization

Federal Tax Service
Social Security Fund

Recruitment

Method of Recruitment

The most common method of recruitment is still by word of mouth.
There are many Internet sites for advertisements, and this is an efficient way of recruiting.
Moreover, more and more companies are resorting to recruitment agencies. An interview takes place before hiring.

Recruitment Agencies

Regional or national head-hunters who generally contact candidates directly.  The market is in full expansion.There are more than a hundred agencies in Moscow, most of them Russian, but the large international agencies are also present such as Adecco, Alexander Hughes, Arthur Hunt, and Brainpower.
Click here to see a list of recruitment agencies.

Recruitment Websites

Tip Top Job International
The Moscow Times Career Centre
Expat.ru

The Contract

Dispute Settlement

Social Partners

Employer Associations

KSORR - Coordinating Council of Employers'Unions of Russia
RSPP - Russian Union of Industrialists and Entrepreneurs

Social Dialogue and Involvement of Social Partners

The scope of the unions is seriously limited by government policy and the position of strength of the Federation of Russian independent unions (FSIR), which is close to the government and prevents other unions from developing freely.
In addition, the new law on NGOs also applies to unions and limits their activity considerably.

Unionisation Rate

46% according to the FSIR (of which 95% are members of this). Membership levels are dropping.

Labour Unions

Federation of Russian Independent Unions

FDI STOCKS BY COUNTRY AND INDUSTRY

Source: Central Bank of Russia, Latest data available.

Strong Points

Many investors see Russia as still under-exploited. The key advantages for FDI in Russia include:

• A strong economic base, based in particular on abundant natural resources (oil, gas and metals)
• Large domestic market size
• Accessible labour cost attractive to foreign investors
• Skilled workforce trained in export functions and relatively open internationally (due to its geographical and cultural proximity to Western Europe and Asia)
• Low public debt
• Comfortable foreign exchange reserves
• Current account surplus

Weak Points

Russia has an investment climate that is complicated to control and generally unstable. The major disadvantages for FDI in Russia include:

• Deteriorated economic and investment climate due to severe economic sanctions imposed at an unprecedented scale by the EU, US and other Western countries following Russia's military invasion of Ukraine in February 2022
• The Russian economy remains extremely dependent on the prices of hydrocarbons (39% of GDP) and raw materials as well as on imports of capital goods and foreign technology
• Low business confidence in the country's legal system
• Institutional and governance weaknesses (insolvency treatment, property rights, corruption)
• Many sectors considered strategic are closed to foreign investments
• Declining demographics
• High level of social security contributions (30% of salaries)

Government Measures to Motivate or Restrict FDI

The Ministry of Economic Development (MED) is responsible for overseeing investment policy in Russia.  The Russian Direct Investment Fund (RDIF) was established to facilitate FDI in Russia.

The establishment of investment assistance in Russia is still in its infancy. The government prefers to improve the general investment climate by tax reductions and economic reforms. Majority foreign ownership is subject to authorisation in many sectors, particularly those linked to raw materials, heavy industry and aerospace.
Among the effective incentives are:

• Regional incentives which are granted at regional and local levels, and are concerned with the taxes paid to the respective budgets (exemption from property, land and transport taxes, exemption from customs duties and import VAT, corporate profits tax).
• Special economic zones which provide for special tax regimes (exemption from property and land tax, exemption from customs duties and VAT, reduced corporate profits tax)
• Incentives regarding certain activities, for example IT business, different types of research and technologies works, and so on.

For more information, please visit the website Invest in Russia.

Bilateral Investment Conventions Signed By Russia

Russia has 63 bilateral investment treaties (BITs) in force. To see the complete list of the countries, go to the Investment Policy Hub (UNCTAD).

International Controversies Registered By UNCTAD

The ISDS Navigator contains information about known international arbitration cases initiated by investors against States pursuant to international investment agreements. Russian Federation is involved in 25 cases as Home State of claimant and in 26 cases as Respondent State.

Organizations Offering Their Assistance in Case of Disagreement

ICSID, International Center for Settlement of Investment Disputes
ICCWBO, International Court of arbitration, International Chamber of Commerce

Member of the Multilateral Investment Guarantee Agency

Russian Federation is a signatory to the MIGA Convention.

Rules For Eating Out

Most restaurants serve meals all day long and in the evening until about 23.00 hours.
A tip corresponding to between 5 and 10% of the order is often expected.

Food Specialties

Russian cusine is known for its hearty meals, but it is also inspired by lighter French tastes.

Some well known dishes:
Borscht: a beet and cabbage soup famous for its dark red colour, often served with Russian sour cream (smetana) and a slice of dark rye bread
Blini: similar to a savoury crepe; made with buckweat and served with smoked salmon, mushroom or Russian sour cream
Olivier Salad: a light, crisp dish made with cucumber, pickles, potatoes, peas and mayonnaise
Pelmeni: Russian dumplings filled with herbs, lamb, pork or beef
Pirozhki: mini-pies that are pan-fried or oven baked
Shashlik: meat served in kebab-style, usually found in market stalls and shaved right off the grill
Beluga Caviar: comes from the Caspian sea and has always been considered to be the luxury food par excellence

Drinks

Le Kvas (or kvass) is a drink much enjoyed in Russia, it is also called 'khlebnoe pivo' (bread beer). Mildly alcoholic and sparkling, kvas is made by fermenting bread in water.
Vodka or 'little water' (diminutive of voda, water) is the traditional Russian drink. It is often drunk with canapés called 'zakouski'.
Russians also drink large quantities of beer ('pivo') and tea ('tchai'), which often replaces water.

Dietary Restrictions

Table Manners

Table manners are continental.

Means of Transport Recommended in Town

Find an Itinerary

Expatica

Taxi services

Taxi in Moscow

Transportation From Airport to City Centre:

Means of Transport Recommended in the Rest of the Country

Train reservation services

Russian railways

Major airlines

You Can Consult The EU Air Safety List. Look Also at the rating of the United States Federal Aviation Administration (FAA).

Travelling By Yourself

Car rental agencies

Sixt
Europcar

Real-time traffic conditions

Real-time traffic conditions. The color of the traffic light tells how bad traffic jams are (from green to red)

Telephone Codes

To Make a Call From Russia, Dial 810
To Make a Call to in Russia, Dial +7

Mobile Telephone Standards

The international standard MTS leads the market. Beeline, MegaFon and Rostelecom also exist.

National Mobile Phone Operators

MTS, Beeline (Vimpelcom), Megafon, Skylink.

Availability of Internet

Internet Suffix

.ru

National Internet Access Providers

Stream.ru, Russia-On-Line and MTU-Intel.

Different Forms of Tourism

Historical

Old cities have been historically influenced by European tastes, especially those inside the Golden Ring. The Golden Ring is a route through several cities and smaller towns to the North-East of Moscow. It is the best way to explore Russia's history and architecture.

In Moscow, the Red Square and the Kremlin are the two best examples of historic sites to vist in the city. St. Petersburg is best known for its beautiful and historic sites. For example, the Winter Palace has a rich history as a home to the Royal family until 1917 and is arguably the most oppulent palace in Russia. The Ploshchad Lenina (Lenin Square) is dedicated to Vladimir Lenin, the father of the Russian revolution, and decorated with a light and music fountain and a statue.

Cultural

As the capital, Moscow has many cultural sites. The State Tretyakov Gallery hosts a large collection of Russian art, some of which dates back to the nineth century. The Museum of Applied and Folk Art samples traditional Russian ceramics, furniture, china and textiles. Even the Moscow Metro is a site to behold, it's colloquially known as the Underground Palace.

St. Petersburg is the old imperial capital, and the second largest city in Russia. As such, it has a rich abundance of classical Museums and art galleries. For example, Hermitage is one of the largest museums in the world and was founded by Catherine the Great in 1764. In central St. Petersburg you can find plenty of palaces and theatres hosting ballet and opera.

Nature

Russia is full of natural sites to visit: the Volga, Caucasus and the Urals, the forests of Karelia and Siberia, Lake Baïkal and the Kamchatka peninsula. Krasnoyarsk is a very popular place to visit because of the outdoor scenery available like the Stolby National Park and Enisey River.

Religious

There are numerous active monasteries across the country, with some of the most beautiful within the Golden Circle. You should make a note of the monasteries of Suzdal and Sergueiev Possad near Moscow, and the Alexander Nevsky Monastery in St. Petersburg.

Thermal

Thermal tourism is concentrated mainly in the North Caucasus, around cities such as Mineralny Vody, Kislovodsk, Zheleznovodsk or Essentuki.
However, most establishments are Soviet sanatoriums with Spartan comfort.

Beach

In summer, people bathe in many lakes and rivers, especially on the island of Serebrianny Bor in Moscow. Russia has an abundance of lake and seaside beaches.
In the Ural mountains lies Lake Turgoyak, which is known for its clear waters.The Russian city of Samara is located on the banks of the Volga. Here, you can find plenty of sunbathers and beachside cafes.
There are several resorts on the Black Sea starting with Anapa (sand beach) and Sotchi (pebble beach).

Winter Sports

Cross-country skiing and skating are practised practically everywhere in the country. Downhill skiing is becoming a very popular activity. There are popular ski resorts in the Caucasus, and also in the Urals and the Kouzbass. Of course, the most famous place to ski is in Sochi, home of the 2014 Winter Olympics.

Outdoor Activities

Fishing, hiking/rambling and white-water sports.

Shopping

Luxury shopping is generally concentrated in the GOUM or TSOUM in Moscow and in the Gostiny Dvor (in Russian) in St. Petersburg.
The market in Izmailovsky park is renowned for souvenirs, furs, crafts and other Soviet antiques.

Tourism Organisations

Russian Tourism Board

Cultural Organizations

Russian Cultural Heritage Network (RCHN)

Hotel reservation websites

Information and destination guide (in English)