Your guide to doing business in Russia
Russia is moving from a globally-isolated, centrally-planned economy towards a more market-based and globally-integrated economy, but stalling as a partially reformed, statist economy with a high concentration of wealth in officials' hands, Russia is one of the world's leading producers of oil and natural gas and is also a top exporter of metals such as steel and primary aluminium.
Russia's manufacturing sector is generally uncompetitive on world markets and is geared toward domestic consumption. Russia's reliance on commodity exports makes it vulnerable to boom and bust cycles that follow the volatile swings in global prices.
Russia is a fast growing major export market with favourable cross-sector opportunities, some unique in scale. The government's economy modernisation and infrastructure development agenda, underpinned by 140 million consumer's appetite for quality services and goods, produces a need for international expertise and products.
Establishing a LLC (Limited Liability Company) is a relatively simple and inexpensive procedure in Russia. That is why the LLC is considered the most common form of legal entities in RF.
It normally takes between 4-6 weeks to set up a Legal Entity in Russia.
To recruit from overseas, Russian employers must be registered with the Ministry of Ethnic and Migration Policy and FMS in order to invite foreign employees.
Once the legal entity has been established and in order to process payroll, the following registrations to the tax and/or social security authorities are required:
It is mandatory to have an In-Country Bank account to set up a payroll in Russia.
Salary payments, transfer of taxes and contributions are made in the currency of the Russian Federation (in roubles).
As per the different payment options in this country for being able to make payments to the employee and/or authorities, payment order is the most popular (both for employees and authorities). In some cases employees can get salaries in cash.
Banking hours varies from 9am - 6pm on weekdays and from 9am - 3pm on Saturdays and Sunday is the weekly holiday.
The standard working week in Russia is 40 hours, typically from 9:00 am to 6:00pm Monday to Friday. Most of the offices are closed on the weekends.
Full name: Federation of Russia
Major Languages: Russian
Currency: Russian ruble (RUB)
Main Industries: Oil & Natural Gas
Internet Domain: .Ru
International Dialling Code: +7
Good Morning Dobroe utro
Good Evening Dobry vecher
Do You Speak English? Vy govorite po Angliysky ?
Good Bye Do svidaniya
Thank You Spasibo So long Poka
Dates are usually written in the day, month and year sequence, dd.mm.yyyy - for example, 1 July 2014 or 1/7/14.
Numbers are written with a period to denote thousands and a comma to denote fractions.
The rate of income Tax in Russia ranges from 0% to 35%. The Russian income Tax is a progressive Tax, which means that the average Tax rate (i.e., the ratio of Tax and Taxable income) increases in ratio with increasing taxable income.
The Tax Year runs from 1st of January – 31th of December.
Social Security contributions are payable in respect of individuals engaged under employment or civil contracts, to the following four funds: -
The basic rate (nalogovaya stavka / налоговая ставка) for personal income tax is 13 % for residents and 30% for non-residents. There are exceptions from these flat rates.
An employer as a tax agent shall calculate the personal income tax, withhold it from the employee and transfer to the budget. Following the results of the tax period, certificates according to Form 2 - NDFL are to be provided to the tax authorities.
Taxes are deducted from the employee’s salary and remitted to the authorities on a monthly basis. Personal Income Tax is paid on the date of the salary transferring to the employees.
The Tax Rates for Personal Income Tax are the following:
An individual who is a Non-Resident of the Russian Federation may be exempt from taxation by the Russian Tax Authorities, provided that he/she introduces (forwards) to the Russian Tax Authorities an official confirmation that he/she is a resident of the state that has double taxation treaty with the RF.
It is also important to note that if the organization pays for the lease of apartments for its foreign employee, the latter shall pay personal income tax at the rate of 13% or 30% depending on the period of time the employee resides on the territory of the Russian Federation.
Personal Income Tax is paid on the date of salary transferring to the employees.
Illegal non - withholding and (or) non - transferring (incomplete withholding and (or) transferring) of tax amounts within the time limits set by the Tax Code shall entail a penalty of 20% of the amount subject to withholding and (or) transferring. Not meeting the deadline set by the legislation will attract a penalty. This amount is an accrual for every calendar day the payment is overdue in the amount equal to one three-hundredth of the refinancing rate.
The social security system in Russia is the responsibility of the state and the main government agency dealing with it is the Ministry of Labour and Social Protection (Ministerstvo truda i socialnoy zashite / Министерство труда и социальной защите).
Only Russian citizens are eligible for all types of governmental support. The exception is emergency healthcare, which is accessible to everyone in the country on humanitarian grounds.
Social Security rates are 30% deducted as an employer cost.
There are no employee deductions for Social Security in Russia.
Social Security payments cover the following:
An employer is obliged to accrue insurance contributions for payments for the benefit of an employee and transfer them to the budget.
Following the results of the reporting period, reports according to Form RSV-1, 4-FSS are to be submitted. Insurance contributions shall be transferred no later than the 15th day of the following month. Insurance contributions for injuries shall be transferred on the date of salary transferring.
Non-payment or incomplete payment of insurance contributions shall attract a penalty of 20% of the unpaid amount of the insurance contributions. If the non-payment is intended the penalty is 40%.
Late payment of tax will attract a penalty for every calendar day overdue, in the amount equal to one three-hundredth of the refinancing rate.
The responsibility to pay insurance contributions falls entirely on the employer, regardless of an individual's Tax status. Although this responsibility increases beyond Russian employers to include foreign companies, there is no mechanism for foreign companies to pay insurance contributions in the absence of a Russian representative office or branch. Failure to pay insurance contributions may result in penalties.
The obligation to pay and provide reporting is governed by regional legislation.
Quarterly / Monthly Reports:
Form P-4 "Information About the Number and Wages of Employees"
Form P-4 (PTW) "Information About Part - Time Work and Movement of Employees"