Russian Federation

General Information Banking
Business Etiquette Tips Embassy Locations and Registration
Employment-Legal Requirements Entry and Exit Requirements
Intellectual Property Legal and Registration of a Business Entity
Safety and Crime Taxes

General Information

RussiaToday's Russia is vastly different from its predecessor, and it is a country of complex differences, still grappling with the change from communism to that of a democratic union with a free market.  The largest country in the world, consisting of 11 time zones, Russia continues to rebound from the 1991 collapse of the Soviet Union. The country's main economic power lies in its key natural resources, oil and gas. Moscow is recognized as an important economic and business center, and it has become a magnet for foreign investment. Overall investors find that the economy offers positive returns in many areas, including exports. The country also possesses excellent tourist facilities, museums, and cultural sites within the larger cities and the capital, Moscow, but individuals traveling to Russia should be aware that there are very strict visa requirements regarding both entry and exit.  Additionally, there are still grave concerns regarding human rights violations in the areas of Chechnya, North Caucasus, Ingushetiya, and Dagestan. 

Major Cities Capital:  Moscow
Major cities: St. Petersburg, Novosibirsk, Nizhniy Novgorod.
Official Currency
Russian ruble (RUB).
Time Zone UTC+3 (8 hours ahead of Washington, D.C. during Standard Time).  Note: Russia is divided into 11 time zones. Daylight Saving Time: +1hr, begins last Sunday in March; ends last Sunday in October.
Language Official language is Russian with more than 140 other languages and dialects. Note: Russian is also one of the six official languages of the United Nations.

 

Legal System and Government

Type of Legal System

The Russian legal system is based on civil law system. There is  judicial review of legislative acts. It has not accepted compulsory International Court of Justice (ICJ) jurisdiction.

Form of Government

Federation

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Banking

Available Banking Services

ATMs
Online banking
Credit cards
Banking in English
Investment products
Loans
Overdraft protection

Bank Holidays

New Year's Day
Orthodox Christmas Day
Bank Holiday 
Orthodox New Year 
Defence of the Motherland 
Women's Day 
Labor Day and May Day 
Victory Day 
Victory Day and Working Day 
Working Day 
Day of Unity 

U.S. and Other Major Banks in Country

(Note: Addresses and contact information subject to change.)

Citi Russia
CIS 8-10 Gasheka Street
Moscow, Russia 125047
Phone: +7 495 725 10 00
Web: www.citibank.ru

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Business Etiquette Tips

Business Attire

Dress tends to be very formal and conservative for both men and women and includes full business suits or conservative dresses.

Business Negotiations

Be prepared to deal with red tape and allot extra time for the decision-making process. Russians tend to be more transactional, but the initial meeting is used to establish rapport and determine whether or not your company is one they want to do business with. Expect the negotiation process to take longer than anticipated and avoid high-pressure sales tactics or letting your counterparts know you are under any time constraints as it may be used against you. Russians are master negotiators, and they do not necessarily believe in compromise.

Public and Social Behavior

Men shake hands, and women may kiss one another on the cheek. It is best not to use a person's first name until invited to do so. Table manners are the same as in the United States, and promptness is appreciated if invited to dinner.

Scheduling Appointments

Appointments should be made as far in advance as possible and reconfirmed several times prior to the actual date and time. Punctuality is a must.

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Embassy Locations and Registration

Americans living or traveling in Russia are encouraged to register with the nearest U.S. embassy or consulate through the State Department's travel registration Web Site so that they can obtain updated information on travel and security within Russia. Americans without Internet access may register directly with the nearest U.S. embassy or consulate. By registering, American citizens make it easier for the embassy or consulate to contact them in case of emergency.

(Note: Addresses and contact information subject to change.)

U.S. Embassy in Russia
at Bolshoy Devyatinskiy Pereulok
Number 8, 121099
Moscow
Phone: 7 (095) 728-5000
Fax:  7 (095) 728-5090
Web:  http://moscow.usembassy.gov/

Embassy of the Russian Federation
Consular Section
2641 Tunlaw Road, N.W.
Washington, D.C. 20007
Phone: 202-939-8907
Web: http://www.russianembassy.org

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Employment-Legal Requirements 

A typical work week is 40 hours for a full-time adult employee with no handicap. An employee may work up to a maximum of four overtime hours a day, two days maximum in any one week, and no more than a maximum of 120 hours of overtime in any 12-month period.  All overtime beyond two hours is paid at double wages (up to two hours is paid at time and a half). Please note that restrictions do apply for employees under 18, night work, pregnant employees, and other categories as defined. 

All employees are to be provided with a written employee contract that spells out in detail expected hours of work, remuneration, responsibilities, benefits, necessary qualifications, probationary time frames, confidentiality expectations, and other essential or additional concerns. If a probationary period is not included in the labor contract it is determined that one is not required. Typical probationary periods are for three months, though for top executives it can be as long as six months. Employee contracts that exceed five years are classified as indefinite. Upon signing the contract a certificate of acceptance of an employee should be issued by the employer. It is very important to maintain accurate copies of all agreements and follow the labor laws as closely as possible to avoid fines and legal culpability.

Special permission from the local department of the Ministry of Internal Affairs is required prior to hiring foreign employees. Additionally, each employee must have a work permit from the Migration Authorities before they are permitted to work in the Russian Federation.

Terminating Employees

Terminating employees without just cause or as a result of mutual agreement can be a lengthy and expensive procedure requiring substantial documentation to verify the employer's basis for dismissal. But where just cause is given and proven no severance or notice is necessary. In situations where group layoffs are necessary, employers are required to provide a minimum two-month notice and payment of two to three months of severance. There are many rules and regulations to observe prior to dismissing an employee, and legal advice should be obtained prior to doing so. If an employee seeks to terminate a labor contract, a minimum two-week notice must be provided in writing to the employer. 

Legally Mandated Benefits and Leave

Annual Leave 28 days (upon completion of 6 months)
Maternity Leave 140 days (70 before birth, 70 following birth)
Multiple or difficult births incur longer time periods
Sick Leave Up to 10 months (upon medical proof)


For certain employee categories, variable working hours may be established. In this case such employees are entitled to at least three extra days of vacation.  In general, employees are entitled to paid Russian national holidays and annual leave of not less than 28 calendar days. Employees are able to use their annual leave after six months of work.

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Entry and Exit Requirements

The information obtained below can be found in more detail on the U.S. Department of  State's Travel Web site.  It is important to note that Russia adheres very strictly to immigration and visa rules, which have been known to change frequently. It is essential that travelers maintain up-to-date visa and travel documents to avoid being stranded, arrested, fined, and/or deported. The Russian visa system includes a number of provisions that may be unfamiliar to Americans, including:

Sponsorship

Under Russian law, every foreign traveler must have a Russian-based sponsor, which could be a hotel, tour company, relative, employer, university, and so forth. 

Entry Visas

To enter Russia for any purpose a U.S. citizen must possess a valid U.S. passport and a bona fide visa issued by a Russian embassy or consulate. Travelers must apply for their visas well in advance of travel. 

Limitations on Length of Stay

The Russian government recently made significant changes to its rules regarding the length of stay permitted to foreign visitors. 

Exit Visas

A valid visa is necessary to depart Russia. Travelers with expired visas may have difficulty checking into a hotel, hostel, or other lodging establishment. There are no adequate public shelters or safe havens in Russia, and neither the U.S. embassy nor the Consulates General have means to accommodate such stranded travelers.

Migration Cards

All foreigners entering Russia must fill out a two-part migration card upon arrival. Foreign visitors to Russia are normally required to present their migration cards in order to register at hotels.

Visa Registration

Travelers who spend more than three days in Russia must register their visa and migration card through their sponsor. Travelers staying in a hotel must register their visa and migration card with their hotel within one day. 

Transit Visas

All travelers going through Russia or even changing planes in Russia must have a Russian transit visa. Russian authorities may refuse to allow a U.S. citizen who does not have a transit visa to continue with his or her travel, obliging the person to immediately return to the point of embarkation at the traveler's own expense.

Restricted Areas

U.S. citizens should be aware that there are several closed cities and regions in Russia. Travelers who attempt to enter these areas without prior authorization are subject to arrest, fines, and/or deportation.

Russian police officers have the authority to stop people and request their identity and travel documents at any time, and without cause. Due to the possibility of random document checks by police, travelers should carry their original passports, migration cards, and visas with them at all times.

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Intellectual Property 

Russia has made significant improvements in protecting Intellectual Property Rights (IPR), but many serious violations and concerns remain. A specialized higher patent chamber has been established at Rospatent, which has brought expertise and efficiency to the resolution of patent and trademark disputes. U.S. firms are advised to register all intellectual property (copyrights, patents, trademarks, etc.) with the Russian Federal Service for Intellectual Property, Patents and Trademarks (Rospatent).

Nature of Rights, Terms, and Enforcement


Copyrights

Copyrights are protected for the lifetime of the author plus 70 years after his/her death. Infringement of copyright entails civil, criminal, and/or administrative liability.

Patents

The maximum duration of patent protection for an invention is 20 years from the date of the application, subject to payment of annuities. The term of a patent for pharmaceutical, pesticide, or agrochemical inventions may be extended up to an additional five years. Patent infringement entails civil, administrative, and/or criminal liability.

Industrial Design Patents

An industrial design is an artistic and design solution that determines the external appearance of a product of industrial or handicraft origin. Patent protection is granted for 10 years if the industrial design is new and original. This protection may be extended for additional five years.

Trademarks

The trademark and service mark protection is granted for a period of 10 years from the filing date of the application, and it may be renewed during the last year of its validity for subsequent 10-year periods. A trademark or service mark's protection may be terminated due to nonuse during any uninterrupted three-year period counted from the registration date.

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Legal and Registration of a Business Entity

Russian legal structure is based upon statutory law versus the common law more familiar to American and European businesses.  The more likely forms of business organization for a university would be as a limited liability company, general/limited partnership, branch or representative office.  It is important to note that branch and representative offices are not considered legal entities, and they require accreditation by the State Registration Chamber. Approved legal advice must be sought prior to any major decisions or commitments being made on behalf of the university. 

Registration Formalities (Including Timing)


The World Bank lists eight steps and an approximate timeframe of three weeks to establish a business presence in Moscow. The recommended steps are listed here in abbreviated format. More detail and fees can be obtained from the World Bank's Web site. 

Briefly, the steps are:

  1. Notarize the signature made in the registration application.
  2. Deposit capital in the bank and get proof thereof.
  3. Pay registration fee.
  4. Register with the unified register at the Federal Tax Service on the local level, to obtain the single number of state registration and the number of tax registration (identification number of taxpayer,INN).
  5. Notarize bank signature card.
  6. Make a seal in a private company in order to open a bank account.
  7. Open the company bank account.
  8. Inform Federal Tax Service of the company bank account number.

(Source:  The World Bank, Doing Business - Russian Federation)

Below is an additional listing of resources that may be helpful in establishing a presence in Russia.

Ministry for Economic Development of the Russian Federation
http://www.economy.gov.ru
Ministry of Finance of the Russian Federation
http://www.minfin.ru/en/
Ministry of the Interior of Russian Federation
http://eng.mvdrf.ru/struct/
Russian Chamber of Commerce and Industry
http://www.tpprf.ru/en/
Small Business in Russia
http://business-in-russia.com/content/document_r_ ACCC3727-6A82-4A10-A39B-58FD8F0ACE59.html 
State Registration Chamber  (within) the Ministry of Justice of the Russian Federation
http://www.palata.ru/  or http://www.palata.ru/en/news/

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Safety and Crime

The U.S. Department of State warns U.S. citizens against travel to Chechnya and all areas that border it: North Ossetia, Ingushetia, Dagestan, Stavropol, Karachayevo-Cherkessiya, and Kabardino-Balkariya. The government's ability to assist Americans who travel to the northern Caucasus is extremely limited. Travelers have also disappeared in Chechnya and remain missing. There is no guarantee of safety, and American citizens in the area have been advised to depart immediately.  In particular, members of certain ethnic groups have experienced more harassment than others. These include Americans members of African, South Asian, or East Asian descent, or those thought to be from the Caucasus region or Middle East. 

Visitors should also be alert to their surroundings and take the same precautions against assault, robbery, or pickpockets that they would take in any large U.S. city.  Some of the most vulnerable areas include underground walkways and the subway, overnight trains, train stations, airports, markets, tourist attractions, and restaurants

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Taxes

In 2001 Russia moved to one of the lowest flat individual income tax rates in the world for residents.  Deductions are allowed for home purchase or construction and the government excludes earnings on the sale of real property held for more than 5 years from tax considerations. The implementation of the flat tax eliminated all tax treaties and considerations for expatriates. The fiscal year in Russia is same as the calendar year.

Individual and Employee Taxation

Determining Tax Residence

Personal income tax (PIT) is the tax levied on physical persons. Whether a particular individual is liable or not depends on that person's residence and type of income. A tax resident is any individual who stays in the Russian Federation for more than 183 days in a calendar year.  Residents are taxed on their worldwide income.

Nonresident Employees

An increased rate applies to all types of income received by nontax residents of the Russian Federation. Nonresidents are taxed only on Russian-sourced income.

Corporate and Employer Tax Obligations

Major resources for the Pension Fund are generated from the unified social tax paid by employers. The unified social tax is paid into the Pension Fund at fixed rates paid from payroll taxes.

For more specific information on individual and corporate tax rates and obligations, as well as the current pension contribution and VAT rates, please visit http://www.worldwide-tax.com/russia/russia_tax.asp.

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Online Resources Used for This Template

 

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