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Course contents: (Back to Russia)
- Introduction
- Investment Opportunities. The NADI.
- foreign direct investment in Russia. Origins and destinations of foreign
investment inflows.
- FDI legislation and business climate in Russia. Foreign Direct
Investment policy.
- Taxation in Russia.
- Establishing a business in Russia: How to set up and register a company
in Russia, company formations.
- Russian Investment Funds
Learning Unit Summary
Foreign investment is the second major element of Russia's reform
strategy to
strengthen international economic links. Russia's overall investment climate has
not been robust because of high inflation, a plunging GDP, an unstable exchange
rate, an uncertain legal and political environment, and the capricious enactment
and implementation of tax and regulatory regimes. Nevertheless, experts predict
that improvement in those conditions will bring a strong increase in foreign
activity.
At the end of 2007, Russia’s cumulative volume of foreign direct investment (FDI)
amounted to US$103 billion. Last year Russia received US$27.8 billion in FDI,
twice that of the previous year. In just a few years, Russia has become one of
the largest recipients of FDI.
Foreign investment goes predominantly into the commodity extraction sector.
Between 2004 and 2007, FDI in the resource based sector was US$26.4 billion, or
40% of the aggregate inflow in the same period.
The majority of FDI (60–70%) comes from just two countries — the Netherlands and
Cyprus — suggesting this represents, to a certain extent, a repatriation of
Russian capital parked abroad along with real FDI. It is, however, a sign of
confidence in the Russian economy.
The National Agency for Direct Investment (NADI) was founded in 2001 to
promote and facilitate investment in Russia, providing a one-stop shop for
business development and investment services to both Russian & international
firms & organizations. The legal framework for FDI Russia is still being
developed, and not necessarily towards restrictive practices
In July 2007, the Russian government submitted to the Duma — the Russian
Parliament — the draft law “On the Rules of Foreign Investments in Enterprises
Having Strategic Importance for the National Security of the Russian
Federation”. This legislation has been in preparation since the summer of 2005.
It comprises the “Law on Strategic Enterprises” and also the “Amendments to the
Law on Subsoil” (the latter first submitted to the Duma in 2005, and still
awaiting a “first reading” there).
The form of legal presence in Russia influences all aspects of activity
including possibility for making deals and tax consequences of the deals,
financial and tax accounting and reporting, possibilities under
customs,
currency control legislation, ability to employ foreign nationals, repatriation
of income, application of international treaties and many others. Therefore,
particular attention must be paid to Russian business modeling to be made PRIOR
setting up legal presence in Russia.
There are several forms for a foreign investor to start business in the Russian
Federation. Foreign investor may set up (or register) a Russian legal entity in
the form of limited liability company, joint-stock company (which can be private
or public) or partnership. The other way is to register a representative or
branch office of a foreign company in Russia.
Available Languages :
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