Oryx Business Intelligence
Oryx Business Intelligence
Business Environment - Russia
Published: August 2013
Oryx Business Intelligence 2
Why Russia
• GDP growth of 3.4% in 2012
• FDI recorded at USD 51.4 billion in 2012, or a tota...
Oryx Business Intelligence 3
Investment Environment – Russian Federation
According to the Ernst & Young's European
Investm...
Oryx Business Intelligence 4
Economy Dynamics – Russian Federation
Retail Sector: Russia is the second largest
Retail mark...
Oryx Business Intelligence
0 10000 20000 30000 40000 50000
United Arab Emirates
United States
Saudi Arabia
Turkmenistan
Qa...
Oryx Business Intelligence 6
Investment Environment – Russian Federation
According to the HSBC Trade Forecast, Russian tra...
Oryx Business Intelligence 7
Why Russia
Russia’s RetailInvestment Environment
• The Russian jurisdiction recognizes genera...
Oryx Business Intelligence 8
Special Economic Zones and Incentives
Tax IncentivesSpecial Economic Zones
Major Benefits to ...
Oryx Business Intelligence 9
Fastest Growing Export Sectors – Russian Federation
Russia’s Fastest Growing Export Sectors 2...
Oryx Business Intelligence 10
Fastest Growing Import Sectors – Russian Deferation
Russia’s Fastest Growing Import Sectors ...
Oryx Business Intelligence 11
Logistics Network
Logistics JunctionLogistics Network
• Railway links between Russia and Lit...
Oryx Business Intelligence 12
Registering Business and Tax Environment
Tax EnvironmentTypes of Business Entities
Limited l...
Oryx Business Intelligence 13
Tax Rates – European Countries
Statutory Tax Rates And Standard VAT Rates, EU Countries And ...
Oryx Business Intelligence
Contact Details
www.oryx.lt/ www.oryx.eu
Contact Us
Ionna Trofimova
Email Ionna@oryxme.com / in...
Oryx Business Intelligence
Thank You
All rights reserved. © Oryx Business Intelligence
The content of this report may not ...
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Investment Profile: Russia

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Why to invest in Russia?
Economic, Investment and Business Outlook.
Published: August 2013
Publisher: Oryx Business Intelligence

Published in: Travel, Business
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Investment Profile: Russia

  1. 1. Oryx Business Intelligence Oryx Business Intelligence Business Environment - Russia Published: August 2013
  2. 2. Oryx Business Intelligence 2 Why Russia • GDP growth of 3.4% in 2012 • FDI recorded at USD 51.4 billion in 2012, or a total of USD 356.8 billon in years 2005-2012 • In accordance to the World Bank ranking Russia is ranked: • ‘High income level country’ • 8th largest economy in the world • 5th largest economy by purchasing power parity in the world • The Customs Union with Belarus, Kazakhstan and Russia • Advanced information technology and retail sectors • Extensive expertise in aviation, machinery, automotive, space and agriculture industries • Favorable environment and resource for the manufacturing and trade/ retail activity • Cheap supply of raw materials, abundant water resources • A presidential decree issued in May 2013 states that Russia must be in the top 20 in the Doing Business ranking by the year 2020 The Information Technology and Retail sectors are the fastest growing segments of the Russian economy Core AdvantagesThe Moscow City
  3. 3. Oryx Business Intelligence 3 Investment Environment – Russian Federation According to the Ernst & Young's European Investment Monitor 2012, Foreign Direct Investment (FDI) inflow in Russia is Positioned for growth 19 percent of international investors perceive Russia as one of the most attractive global regions in 2012, an increase of 8 percent in 2012 is the largest investor attractiveness to invest increase globally Investors already present in Russia continue to demonstrate their confidence in the Russian market. Nearly 80 percent of these investors plan to increase or maintain their operations in the country Foreign investment in the capital slumped 34 percent in 2012 Russian Investment Environment Global Investment Trend 2006-12 Source: Oryx Research, Ernst & Young EU Investment Monitor 2012
  4. 4. Oryx Business Intelligence 4 Economy Dynamics – Russian Federation Retail Sector: Russia is the second largest Retail market and the fastest growing market for luxury goods in Europe. Russia has around 16.5 million square meters of retail space. The Russian Retail sector is one of the most developing sectors in the economy with Russians spending around 60 per cent of pre-tax income on retail goods - the highest spent level in Europe. Manufacturing Sector: Russia has a developing Manufacturing sector which is the second largest sector in Russian economy. Manufacturing in Russia include aircraft, automotive, defense, electronics, railroad and space industries. GDP breakdown by Sector, 2012, % Russian Economy Source: Oryx Research, Ministry of Economic Development 0 5 10 15 Fishing Hotels and Restaurants Education Utilities Healthcare and social services Agriculture, Hunting and Forestry Finance PA and military security Construction Transport and Communication Natural Resource Extraction Real Estate Manufacturing Retail, Wholesale and Repair Services Infrastructure Sector: Russia is planning to invest around US$ 380 billion in infrastructure sector projects by 2020. The investment is projected to be formed from state budged and public-private partnerships. Russia has a developing transport network which includes more than 120.000 km of railway roads, 1 million km of roads and highways, 230.000 km of pipelines and 100.000 km of inland motorways. Russian transport network needs modernization, especially roads and highways.
  5. 5. Oryx Business Intelligence 0 10000 20000 30000 40000 50000 United Arab Emirates United States Saudi Arabia Turkmenistan Qatar Iran Russia CU M in billion 5 Economy Dynamics – Russian Federation Real Estate Sector: Russian real estate sector is one of the fastest growing sectors in Russian economy. More than 37 million square meters of real estate was built in the first six months of 2013, representing a 7.6 per cent growth pattern. The most profitable and growing real estate is retail real estate, office buildings and residential properties. The most preferred regions for office real estate are Moscow and St. Petersburg. The most preferred cities for retail real estate and residential properties are cities with a population more than 1 million people. Top World Gas ReservesRussian Economy Source: Oryx Research Natural Resource Extraction: Russian natural resources are among the largest in the world which includes oil, natural gas, coal, iron ore, apatite, diamonds and other. Russia natural gas reserve is the biggest in the world, and remains one of the largest producers and exporters of oil and gold.
  6. 6. Oryx Business Intelligence 6 Investment Environment – Russian Federation According to the HSBC Trade Forecast, Russian trade is expected to perform better than the world average during the next 15 years. Russian trade is mainly driven by exports of oil and coal, and import of motor vehicles and technology equipment and gadgets. World Trade, Annual Growth Rates, Russia Vs. World, 2012-2026 (f) Source: Oryx Research, HSBC Trade Forecast
  7. 7. Oryx Business Intelligence 7 Why Russia Russia’s RetailInvestment Environment • The Russian jurisdiction recognizes generally accepted principles of the legal regulation of investments • Both local and foreign investors are subject to equal business conditions in relation to the Russian Law of Investment and other Laws • An investor is entitled to manage, use and dispose his/ her possessions on his/ her own discretion. An investor is entitled to transfer the profit owned by him/ her into foreign country without any restriction, except a tax payment as prescribed by the Russian legislation • Russia has 79 double-tax treaties providing a tax benefit for foreign investors in Russia Several Double Taxation Avoidance Agreements with Russia The government sets an objective improving Russia's investment climate as a matter of urgency A presidential decree issued in May 2013 states that Russia must be in the top 20 in the Doing Business ranking by 2020 Australia EU Kuwait South-Korea Brazil India Norway USA Canada Israel Qatar Venezuela China Japan Saudi Arabia Vietnam
  8. 8. Oryx Business Intelligence 8 Special Economic Zones and Incentives Tax IncentivesSpecial Economic Zones Major Benefits to Consider • Russia’s SEZs count 61 foreign companies in 2012, six US companies came on board the same year. General Motors invested US 180 million, 3M – US 30 million, and – US 75.4 million. • The tax incentives alone would have influenced the decision makers to operate in SEZ: 3M will pay 2 per cent for the first five years of profit-making operations, instead of the standard rate of 20 per cent. • Other privileges are provided to Alabuga: Given a minimum investment of US 3.8 million to operate in the zone, it will be exempted from the VAT and import duties on equipment, on which, Denmark's Rockwool, for instance, already saved US 12.6 million. Foreign Players in Russia’s SEZ Innovation zones: Dubna, Zelenograd, St. Petersburg and Tomsk SEZ Industrial zones: Alabuga, Lipetsk and Togliatti SEZ Tourist zones: Baikal Haven, Baikal Gates, Altai Valley and the Turquoise Katun SEZ Logistic zones: Ulyanovsk Vostochny and Sovetskaya Havan SEZ - Comfortable administrative procedures - Federal and regional government support - Tax benefits - Free customs zones - No connection fees - Logistics terminals - Customs terminals SEZ Russia Profit tax, % 2-15.5 20 Social security taxes, % 14-30 30 Property tax, % nil 2.2 Land purchase price, % 4-50 (cadastral price) 100 (market price)
  9. 9. Oryx Business Intelligence 9 Fastest Growing Export Sectors – Russian Federation Russia’s Fastest Growing Export Sectors 2012 - 2016f Source: Oryx Research, HSBC Trade Forecast
  10. 10. Oryx Business Intelligence 10 Fastest Growing Import Sectors – Russian Deferation Russia’s Fastest Growing Import Sectors 2012 - 2016f Source: Oryx Research, HSBC Trade Forecast
  11. 11. Oryx Business Intelligence 11 Logistics Network Logistics JunctionLogistics Network • Railway links between Russia and Lithuania, Finland, Ukraine, Belarus, Georgia, Azerbaijan, Kazakhstan, Mongolia, China, North-Korea and Poland • High-speed railway, currently being expanded • Widespread sea network. Direct link to the Black Sea, the Sea of Azov, the Baltic Sea, the Barents Sea, the White Sea, the Sea of Japan and the Caspian Sea • Developed logistics network: rail, sea and sky • Rail junction between Europe and Asia • The shortest way from Europe to Asia Train Network • The world’s second largest railway network • Trans-Siberian Railway - the largest railway line in the world • Trans-Eurasia logistics – Russian and German joint venture is operating freight trains between Germany and China via Russia
  12. 12. Oryx Business Intelligence 12 Registering Business and Tax Environment Tax EnvironmentTypes of Business Entities Limited liability company • Minimal capital – 10,000 RUB (USD 310) • Min number of founders – 1 • The shareholders are liable to the amount of their individual capital contribution Joint-stock companies • Minimal capital – 10,000 RUB (USD 310) • Min number of founders – 1 Branch - is a subdivision of a foreign legal entity that can conduct commercial activity. Accreditation fees: USD 4,100. Accreditation bodies charge a processing fee of between USD 500 and USD 2,000 (from one to five years of accreditation). Representative office - is a subdivision of a foreign legal entity that represents company. Commercial activity is not allowed. Accreditation fees: 1 year – USD 1,000 2 years – USD 2,000 3 years – USD 2,500 The standard corporate income tax – 20% • Reduced to 15.5% in some regions Standard value added tax (VAT) – 18% The general personal income tax – 13% for residents – 30% for non-residents Basic social security rate for employers – 30% (salary is under USD 17,579) – plus 10% of amount exceeding USD 17,579 15% is applied for dividends paid to non- resident company 20% on interest 20% on royalties Withholding Tax Rate
  13. 13. Oryx Business Intelligence 13 Tax Rates – European Countries Statutory Tax Rates And Standard VAT Rates, EU Countries And Russia, 2012, % Dividends paid 15% Interest paid 20% Withholding Tax Rates To Non-Resident Entity No Country Corporate Income Tax VAT Personal Income Tax 1 France 36.1 19.6 46.8 2 Malta 35.0 18.0 35.0 3 Belgium 34.0 21.0 53.7 4 Portugal 31.5 23.0 49.0 5 Italy 31.4 21.0 47.3 6 Greece 30.0 23.0 49.0 7 Spain 30.0 18.0 52.0 8 Germany 29.8 19.0 47.5 9 Luxembourg 28.8 15.0 42.1 10 Norway 28.0 25.0 40.0 11 Sweden 26.3 25.0 56.6 12 Denmark 25.0 25.0 55.4 13 Netherlands 25.0 19.0 52.0 14 Austria 25.0 20.0 50.0 15 Finland 24.5 23.0 49.0 16 United Kingdom 24.0 20.0 50.0 17 Estonia 21.0 20.0 21.0 18 Hungary 20.6 27.0 20.3 19 Slovenia 20.0 20.0 41.0 20 Iceland 20.0 25.5 31.8 21 Russia 20.0 18.0 13.0 22 Czech Republic 19.0 20.0 15.0 23 Poland 19.0 23.0 32.0 24 Slovakia 19.0 20.0 19.0 25 Romania 16.0 24.0 16.0 26 Latvia 15.0 22.0 25.0 27 Lithuania 15.0 21.0 15.0 28 Ireland 12.5 23.0 41.0 29 Bulgaria 10.0 20.0 10.0 30 Cyprus 10.0 17.0 38.5
  14. 14. Oryx Business Intelligence Contact Details www.oryx.lt/ www.oryx.eu Contact Us Ionna Trofimova Email Ionna@oryxme.com / info@oryxme.com Tel +792 (68) 512186 Vadim Berets Email Vadim.berets@oryxme.com / info@oryxme.com Tel +792 (50) 771801
  15. 15. Oryx Business Intelligence Thank You All rights reserved. © Oryx Business Intelligence The content of this report may not be redistributed without the written consent of Oryx Business Intelligence (Oryx BI). This document is for information purposes only. Information and opinions contained herein are derived from sources believed to be reliable. The information provided within this report is accurate and reliable to the best of Oryx BI knowledge; however, Oryx BI accepts no liability of any nature for any loss whatsoever or howsoever caused arising from the use of this document or arising in connection therein.

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