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Business in Russia

There are a number of misconceptions about Russia as a business destination. Some people believe that conducting business in Russia is an all too easy process and that all it takes are some good connections or simply meeting with the right people. On the other hand, others believe that in Russia, it is almost impossible to do business and that companies are not governed by the basic principles of economics. it is essential to understand that they do not represent the business climate, market opportunities or entry strategies required to make it in Russia. 1.

Types of Business Entities There are several options available to foreigners who want to start a business in Russia. These include… Register with state authorities as an individual entrepreneur Can be a suitable option for those providing consultations or similar types of service. Once registered as an individual entrepreneur, you become a Russian tax resident and must submit a Russian Personal Income Tax Declaration. As of 2006, personal income tax rate is 13% for residents and 30% for non-residents. Use a Representative Office (RO) or Branch to establish a presence in Russia.

Representative offices and branch offices are not regarded as legal entities. They only act on

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regulations of the legal entity that created them. A representative office only represents the interests of the foreign legal entity while a branch is established to carry on the Russian business activities of the foreign legal entity in its own name. Finally, foreigners may create a Russian legal entity in the form of a Limited Liability Company (LLC), a public or a private Joint Stock Company (JSC), or a Partnership. The LLC and JSC can be founded by an individual or by a legal entity (either foreign or Russian).

Creating a legal entity provides greater protection than registering as an individual entrepreneur (sole proprietor) since assets and liabilities of the LLC and JSC are legally isolated from those of the founder. 4. Russian Business Culture Russian business culture is quite distinct from that in western nations. This is due largely to a history of collectivism, which has shaped a nation where co-operation and collaboration are standard practice in businesses, and where fierce competition, even amongst rival companies, is not as prevalent.

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