Doing Business in Russia and CIS Countries: Soviet Union overview, CIS overview, Russia Overview, History of Russia, Russia Relations, Russia - SEA cooperation, Russia sectors, Tax overview, Company incorporation, LLC vs Representation

1. Doing Business in Russia & CIS Countries
Russian Asian Business Union

2. www.ruasean.com
Russian Asian Business Union
Russian Asian Business Union Pte Ltd is a joint Russian-Asian organization that is mainly
focused on the development and strengthening of Russian relations with Asian countries
(Singapore, Hong Kong, Malaysia, Thailand, Vietnam, Indonesia, China, India etc) in the field of
business, investment, trade and business travel.
RABU is ready to offer a full range of services for doing business in Russia which includes visa
support, registration and legal services, opening of representative offices, audit (Due Diligence)
Russian partners, organizing and co-ordinating events ensuring your business trip to Russia at
the highest level

3. www.ruasean.com
Speaker
● Russian Asian Business Union - CEO (2015-
● current time)
● Russian Singapore Business Union - CEO (2013 - current time)
● Russian Female Football League (Russia) - President, 2010-2018
● Russian Railways affiliated company (Russia) - Deputy of General
Director, 2009 - 2011
● Russian State Insurance Company (Rosgosstrakh) - Division
head of regional budgeting and media planning of (Russia), 2004 -
2009
● Moscow International Higher Business School “MIRBIS”,
Master of Business Administration (MBA), Investment and
innovations management
● Russian Academy of Public Service under the President of the
Russian Federation, Government and municipal management
● Institute of international trade & Law, Intellectual Property Law,
International Law
Tatiana Sheremetieva
BBC Channel
World News expert

4. www.ruasean.com
Azerbajan. It was formed on April 28, 1920.
The area of 86.6 thousand km2.
Armenia. It was formed on November 29, 1920.
The area of 29,8 thousand km2.
Belarus. It was founded on January 1, 1919.
The area of 207,6 thousand km2.
Georgia. It was founded on February 25, 1921.
The area of 69,7 thousand km2.
Kazahstan. As a part of RSFSR on August 26, 1920.
The area of 27,17 thousand km2.
Kyrgyxstan. It was founded on October 14, 1924.
The area of 198,5 thousand km2.
Latvia. It was founded on July 21, 1940.
The area of 63,7 thousand km2.
Lithuania. It was founded on July 21, 1940.
The area of 65,2 thousand km2.
Moldova. It was founded on October 12, 1924.
The area of 33,7 thousand km2.
The Soviet Union, officially the Union of Soviet
Socialist Republics was a socialist state in
Eurasia that existed from 1922 to 1991
Tajikistan. It was founded on October 14, 1924.
The area of 143,1 thousand km2.
Turkmenistan. It was founded on October 27, 1924.
The area of 488,1 thousand km2.
Uzbekistan. It was founded on October 27, 1924.
The area of 447,4 thousand km2.
Ukraine. It was founded on December 25, 1917.
The area of 533,3 thousand km2.
Estonia. It was founded on July 21, 1940.
The area of 45,1 thousand km2.
Situated on an area of 22,400,000 square kilometres, the Soviet Union was the
largest state in the world. The Soviet Union had the longest border in the
world (over 60,000 km) and bordered Norway, Finland, Poland,
Czechoslovakia, Hungary, Romania, Turkey, Iran, Afghanistan, China,
Mongolia, North Korea, Japan and the United States (1945 to 1991).
Soviet Union Overview

5. 8,7 4,9 3,9 3,1
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Overall there were more
than 200 languages and
dialects spoken (at least
18 with more than 1
million speakers); Slavic
group 75%, other
Indo-European 8%,
Altaic 12%, Uralian
3%, Caucasian 2%
Demographics of Soviet Union
293,047,571 million people (1991)

6. Demographics of Soviet Union
8,7 4,9 3,9 3,1
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The Soviet Union was one of the world's most ethnically diverse countries,
with more than 100 distinct national ethnicities living within its borders.

7. www.ruasean.com
Commonwealth of Independent States:
:Member states
1.Belarus;
2.Russia;
3.Azerbaijan;
4.Armenia;
5.Kazakhstan;
6.Kyrgyzstan;
7.Moldova;
8.Tajikistan;
9.Uzbekistan
- State locations

8. www.ruasean.com
GDP of CIS countries

9. www.ruasean.com
Russia
overview

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Russia:
Population – 146,8 million;
Federal subjects – 85;
Time zones – 11;
GDP – 1,3 tn. US $;
Inflation – 4,3%;
Natural wealth.

11. The beauty of Russia
8,7 4,9 3,9 3,1
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12. Top 10 important dates in the history of Russia
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September 8, 1380-the
battle of Kulikovo
November 24, 1480-the
Fall of the Tatar-
Mongolian yoke
October 26, 1612-
Liberation of the
Kremlin from invaders
27 Jun 1709 – battle of
Poltava
August 26, 1812-
Borodino battle
February 19, 1861-abolition
of Russian serfdom
February 27, 1917-
February revolution
May 9, 1945-Signing of
the act of unconditional
surrender of Germany
August 26, 1812-
Borodino battle
December 8, 1991-
Signing of the agreement
on creation of the CIS

13. Russia is a democratic Federal law state with a Republican form of government.
Until 1991, the Russian Soviet Federal socialist Republic (RSFSR) was part of the USSR as one of the
Union republics. In the Soviet period, the political system of the USSR and the RSFSR was essentially
totalitarian (until 1956) and authoritarian, since according to article 6 of the Constitution of the USSR
and the RSFSR, the Communist party of the Soviet Union was the governing and guiding force of
Soviet society, the core of its political system, state and public organizations.
With the collapse of the Soviet Union and the CPSU in 1991, a new period begins in the development
of Russia's political system: the institution of the presidency is established, the Parliament is elected,
political parties and other institutions of civil society are emerging.
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The political system of Russia

14. 18,6 8,7 4,9 3,9 3,1
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State Debt. % GDP
Gold and exchange currency reserves
of the Russian Federation have
increased more than 30 times. $ Bn.
The capitalization of the Russian stock
market has grown almost 15 times. $ Bn.
2013 2014 2015 2016 2017
1.79% 0.74% -2.83% -0.23% 1.8%
GDP growth rate
Russia's economic opportunities
Economic growth is projected to rebound to
around 1½ % in 2017 and 2018.

15. Russia is the sixth largest economy in terms of GDP.
GDP at purchasing power parity, $ trillion
8,7 4,9 3,9 3,1
2012 $4 Tn.
According to forecasts, by 2019
the Russian economy will grow
to $ 4 trillion.
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9,5
23.2
19,4
5,4
4,1
3,9
China
United States
India
Japan
Germany
Russia

16. 7th largest domestic market.
The 2-nd GDP per capita
among the
BRIC countries.
10 24810 308
1850
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18508833

17. Crisis of Russian Economy
bn. US$
real GDP
nominal
GDP

18. Every threat is opportunity
Weak ruble
• Good for export
Sanctions
• Good for Asia –
Russia relations
Volatility in
stock market
• Good for risky
investors
Emerging
market
• Future
development
prospects
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19. World economic forecast till 2050
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Emerging markets (E7) could grow around twice as fast as
advanced economies (G7) on average
As a result, six of the seven largest economies in the world are
projected to be emerging economies in 2050 led by China
(1st), India (2nd) and Indonesia (4th)

20. One Belt One Road Initiative
2013 – strategy was
launched to develop
infrastructure and
strengthen ties;
recreate overland ("one
belt") and sea routes ("one
road") between China and
Europe
2015 - Russia and China
signed an agreement
aimed at combination of
integration efforts of both
the Eurasian Economic
Union and the BeltRoad
project.
the Northern Sea Route,
the Trans-Siberian
Railway, the Baikal-Amur
Mainline
the large-scale projects
would intensify trade,
enhance modernization of
industry, create new jobs
and prompt the
development of regions in
China and Russia
The Russian Direct
Investment Fund (RDIF)
and the China
Development Bank (CDB)
agreed to establish a joint
68-bn-yuan (some $10 bn)
investment fund
Rosneft and China CEFC
Energy Company Limited
signed a strategic
cooperation agreement
access to natural
resources and huge
consumer market
• job creation;
• “Made in Russia” Brand;
• Chinese trade with the
OBOR countries could
reach $ 2.5 trillion by
2025.
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21. www.ruasean.com

22. www.ruasean.com
Current international projects in Russia
▪ Today Russia is the world leader in the number of power units being built abroad. Currently, the
foreign portfolio of orders of Rosatom state Corporation is 33 nuclear power units, 7 more units are
being built in Russia.
▪ The global market for space services now amounts to more than $ 300 billion a year. Unfortunately,
the share of Russian cosmonautics in this market is insignificant, but Russia ranks first in the world in
the launch services sector, carrying out the most launches of launch vehicles (LV)
▪ Scientists from dozens of countries, including Russia,have been working together for several decades
in various scientific fields related to the Arctic

23. 205 projects FDI in
2016
7th place among
European countries
the growth rate
was accounted for
2% in 2016
(201 projects in
2015)
number of workers
created places in FDI
projects
was 6%,
reaching 15 064.
At the end of 2016, the investment flow to Russia totaled $ 1.14 bn.
The inflow of funds to the RF stock funds in the 4th quarter of 2016 amounted to $ 1.61 bn.
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Source: Bloomberg

24. Russian regions Rating of investment attractiveness
Moscow АА+
Saint Petersburg АА+
Krasnodar region АА+
Samara Region АА
Tyumen region АА
Kaluga region АА
Sverdlovsk region А+
Kaliningrad region А+
Tomsk Region А+
Voronezh region А+
Republic of Tatarstan А
Leningrad region А
Belgorod region А+
Moscow region А
Sakhalin region А
Khabarovsk region А

25. Foreign direct investment in Russia
Carefully
Shares of credit institutions
Telecom and financial organizations
Mining companies
Retail
High benefit
Securities of Sberbank, LUKoil, Norilsk
Nickel, MegaFon, Yandex and Aeroflot
Investments in ruble assets
Medicine
Agriculture
Recreation and entertainment industry
(theme parks)
Industry
Transport and Logistics
The sphere of mining and processing
of minerals
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26. Russia West Relation
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Relations between the West and Russia
have become increasingly hostile, yet
Russia remains an important part of most
Western multinationals’ emerging markets
portfolios. These companies are not
immune from geopolitical tensions, which
can impact their businesses in both direct
and indirect ways, and must reevaluate
their strategies in order to stay profitable
and to mitigate harm to their business.

27. Russia West Relation
www.ruasean.com
1. Companies should pinpoint exactly what elements of their operations are most
vulnerable to abrupt changes in foreign policy relations. Then, firms need to think
through the types of political and macroeconomic events (e.g. further sanctions,
oil price drop, protests, etc.) that could influence the economy (e.g. ruble
volatility) and policy (e.g. import bans), and also affect their operations, local
partners, and customers.
2. Firms should strengthen their government affairs teams to stay ahead of any
regulatory changes. Put efforts to lobby the government on policy decisions
affecting their sector and customers.
3. Companies should consider localizing more of their operations. The more local
you are, the better your chances at obtaining government tenders and the more
leverage you have to push back against potentially harmful government regulation.

28. Russia East Relation
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Russia has made an Eastern Turn
● Cooperation is planned to be developed Russian-Chinese joint
projects in the following areas: fuel and energy complex, transport
and transport engineering,interbank and investment
cooperation,infrastructure development and production of building
materials,expansion of the institutional framework of cooperation.
● In 2018 Russia and Indonesia signed a contract for the supply of 11
SU-35 multipurpose fighter jets.
● Rosatom ranks 1st in the world in terms of the largest portfolio of
foreign NPP construction projects — 34 power units in 12 countries.
The main customers of Rosatom of new nuclear power plants in
recent years were India, China, Turkey, Bangladesh, Iran. "Rosatom"
implements the project of construction of nuclear power plants in
Finland and in Hungary and Belarus.

29. Russia - SEA cooperation
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30. Russia - SEA cooperation
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31. Russia
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32. Tax overview
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Tax rate The rate of corporation tax in Russia is 20% and will in general be applicable to
companies trading in Russia, either as local companies or as branches/PE's.
Withholding tax Dividends and profit repatriations
Dividends paid to non-resident companies are subject to a 15% final withholding tax on their gross amount,
unless a treaty provides otherwise. Russia does not impose branch remittance tax. Accordingly, net profits can
be distributed abroad from the PE without any limitations or taxation.
Interest and royalty payments
Interest and royalty paid to a foreign company from a Russian local company or a Russian permanent
establishment of a foreign company is subject to a final withholding tax at the rate of 20% on the gross amount,
unless a treaty provides otherwise.
VAT VAT at a rate of 18% is levied on services which occur, or are deemed to occur, within Russia. "Russia" for
VAT purposes includes the territory of the Russian Federation and the Russian continental shelf.
A reverse charge mechanism applies for collecting VAT on services which are deemed to be provided in the
territory of the Russian Federation, and supplied by non-resident persons with no presence in Russia, to entities
subject to Russian taxation. The reverse charge mechanism imposes a VAT liability on the Russian recipient of
the supply.

33. Tax overview
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Stamp Duty There are no significant Russian stamp duties.
Customs duties General procedure
The Russian Federation imposes customs duties on goods imported into its territory
or other territories under its jurisdiction (including its continental shelf). The applicable duties depend on the
selected customs procedure. Under the general procedure, the so-called "internal consumption procedure",
custom duties are payable in full. As such, importation of a drilling unit under this procedure will trigger a levy
of 17% (16% from 1 September 2016) of the units marked value as determined by the arm's length principle.
Furthermore, the importation will trigger customs VAT at a rate of 18%.
.
Transfer pricing Any transactions between a local company or a PE of a foreign company and entities
which are "related" for transfer pricing purposes are subject to Russian transfer
pricing considerations. There is no threshold for the transactions with related parties which are foreign
companies. Also, Russian tax legislation contains thin capitalization rules with 3-1 ratio.

34. Tax overview. Employment taxes
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Personal income tax ("PIT") is levied on resident and non-resident individuals. Individuals are considered to be resident if they
spend more than 183 days in Russia during 12 consecutive months. Residents are subject to income tax on their
worldwide income and non-residents on their Russian sourced income only. The general tax rate of PIT is 13% as of 2016.
A 30% rate applies to non-residents on all types of Russian-sourced income. Status of the individual for the final tax
calculation shall be defined on December 31. As a rule, PIT shall be withheld by employers. Russia does not impose payroll
tax. Social contributions are the sole responsibility of the employer. Employer contributions cover obligatory pension, medical
and social insurance.
Social contributions must be accrued on remuneration provided to individuals in the context of employment relations and civil
or legal agreements for the performance of work or rendering of services, and copyright agreements.
In general, the tax base includes all remunerations and most benefits provided to the employees. As of 2016, social
contributions are imposed at the following rates (except for those who are entitled to the beneficial social security regimes):
Individual cumulative year-to-date
income subject to social
contributions
RUB
Social
Insurance
Fund (SIF)
%
Pension
Fund
(PF)
%
Medical
Insurance
Fund
%
Total
%
Up to 796 000 (PF) / 718 000 (SIF) 22 2,9 5,1 30
Over 796 000 (PF) / 718 000 (SIF) 10 0 0 10

35. Tax overview. Exchange control or similar restrictions
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Legal entities established in accordance with the laws of
foreign states, but which are operated out of the Russian
Federation (including their branches, permanent
establishments and other detached or independent
structural subdivisions situated on the territory of the
Russian Federation) are considered as non-residents for
the currency exchange regulation and control purposes.
The currency operations between residents of Russia
and non-residents may be carried out without
restrictions. However, there are requirements on
repatriation of income for residents and requirements to
prepare special documents for payments between
residents and non-residents. However, these
requirements should not imply any risk of lock-in of
funds in the Russian Federation.

36. Company incorporation
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Full scale legal support of LLC/ Representative Office incorporation procedure in Russia
A company which is generating sufficient turnover on the Russian market may consider establishing a local office. Local presence
is a crucial prerequisite to increase sales on the Russian market. This local office can import goods and stock goods, offer after-
sales services to its Russian customers and undertake sales and marketing activities.
Reliable assistance during the process of registration the company is an important factor which contributes the success of the
project. We always try to provide our clients the best way to solve their issues in a more efficient and thus less costly way.
Services LLC RepOffice
Preparing standard drafts of documents necessary registration in Russian and
English languages
Legal support of opening a bank account
Drafting standard employment agreement with a General director (in case it is a
Russian citizen)
Direct participation in procedure of registration, including submission of the
necessary documents to the authorized state authorities and receipt of documents
confirming registration
Personal accreditation of no more than 5 foreign employees of the representative
office in the authorized authorities (is required along with work permits)
Cost USD 7500 USD 9200

37. LLC vs Representation
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LLC Representation
Legal status An independent legal entity.
LLC is allowed to settle transactions, to exercise property rights and duties to present
its interests in court and authorities.
Legal entity’s set — apart subdivision
Acts in the name of its head office. All the
rights and obligations arising from the
contracts are acquired for the head
company, not PE.
Functions Carrying out all kinds of activities subject to its Articles of Association and applicable
legislation.
Representation and protection of the
interests of the head company or carrying
out all or part of the functions of the head
company.
Managing
bodies
• Managing director(s)
As a general rule is governed by 1 director though 2 directors may be appointed.
• General meeting of the founders Advisory body, empowered to decide directives of
company management, assign managing director, amend statutory documents and etc.
• The board of directors (supervisory board)
Supervises the day-to-day working process, regulated by the managing directors.
• Revision commission (voluntary)
Has the right to make financial and economic enquires, concerning the company
activities.
Head of the Representation acting on a
basis of the
General Power of Attorney.

38. LLC vs Representation. Procedure of establishment
LLC Representation
Terms of
registration/accreditati
on by state authorities
3 working days up to 5 weeks
Registration/accreditat
ion fee
A registration fee of Russian Rubles ("RUB") 4,000 will be
imposed. Within 4 months after the registration, the share
capital (minimum RUB 10,000) has to be paid. Notarial and
translation fees depend on the of volume of the company`s
constituent documents.
A registration fee of RUB 125,000 rubles will be
imposed. In addition, there is a fee of RUB 15,000
if at least one foreign employee is engaged. Notarial
and translation fees depend on the of volume of the
company`s constituent documents.
Registering/accreditin
g body
Federal Tax Service Federal Tax Service;
2. Industrial Business and Trade Association is
doing the personal accreditation of the foreign stuff
of the RO.
Extra-budgetary funds
registration
Registration with the following extra-budgetary funds is required:
1. Pension Fund;
2. Social Insurance Fund
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39. LLC vs Representation. Legal status of foreign employees
LLC Representation
Documents, required for
recruiting
foreign employees (as a
general rule)
1. A permit to engage and use foreign labour.
2. An invitation for the foreigner for entering RF.
3. Work permit for a foreigner.
4. Tax authority notification.
The number of foreign
employees in
the organization
The proof of reasonability of each employment must be provided to the migration authorities.
Might be limited by the migration authorities. The number of foreign stuff shall not generally
exceed
5 persons and may be only increased under
substantial grounds.
Liability LLC is liable for its own transactions and debts.
The founders are liable for the LLC’s obligations
within
their participatory interest.
The head company is liable for the obligations of
the
representation.
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40. LLC vs Representation
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As an independent legal entity LLC has a wide range of functions stated in the Articles of
Association. LLC is vested with separate credentials and separate property. Generally LLC
discretionally chooses the company’s policy, hires personnel, settles transactions and
represents interests in court and authorities.
On the contrary, the Representation is limited by the head company’s will in sphere of
negotiating and owning its own property.
LLC management structure is more complex than Representation`s.
The LLC establishment costs less than the representation accreditation, takes less time,
which appears to be more convenient in case you want to start the business sooner.

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Singapore: +65 8123 5527
Malaysia: +60 11 2835 1220
Thailand: +65 812 35527
Russia : +7495 3748657
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