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10 Reasons for Doing Business in Russia
Russia took 28th place in the Doing Business 2020 rating. This rating is compiled annually by the World Bank and assesses the state of the business climate in 190 countries. Economies are ranked on their ease of doing business, from 1 to 190. A high ease of doing business ranking means that the regulatory environment is more conducive to the starting and operation of a local firm. The rating takes many factors into account: lending opportunities, peculiarities of taxation, rental of premises, obtaining a permit for construction, etc.
Russia's results are quite impressive: since 2011, the country has skyrocketed in the Doing Business ranking by 95 positions, moving up from 123rd place. No other economy in the world can boast of such dynamics. Among the advantages of entrepreneurship in Russia, international experts include the efforts of the authorities to reduce the costs of entrepreneurs, the relative availability of loans and the ease of registering a business with a minimum number of documents.
In this article, we describe the ten main reasons why you should start your business in the largest country of the world.
10 reasons why you should do business in Russia
The country has one of the lowest corporation tax rates on the European continent. This means it attracts other foreign investors that want to save money on taxes. Therefore, you will have access to more multinational companies and the business opportunities they provide. You could end up with international clients just by opening a business in Russia.
Russia also borders 16 countries across 11 time zones. This is worth noting because the country’s vast size gives you access to those countries. You could use Russia as your company headquarters in Europe. Then you can venture into the neighboring countries when it makes sense for you to do so.
Foreign entrepreneurs are guaranteed a national legal regime. A company in the Russian Federation can be 100% owned by a foreigner. This is not possible in other countries. Russian legislation allows you to open representative offices and branches for foreign companies. Representatives limit themselves to just advertising and marketing, while branches can also carry out full activities with the same benefits as Russian legal entities.
For foreigners opening small businesses, all the benefits of this status are available: soft loans, simplified accounting and reporting to tax authorities, and the opportunity to participate in support programs for small businesses. Small enterprises are considered to have up to 100 employees with revenues of up to 800 million rubles per year.
Russia is one of the countries with the easiest and fastest procedure to register a company in the form of individual entrepreneurs and LLCs
Russia is a huge market with a population of about 150 million people and 15 cities with a population of one million. For example, Moscow is one of the largest urban economies in the world.
The banking sector in Russia is reliable and offers a wide variety of financial institutions that work with foreign companies and non-resident individuals.
Russia has numerous Special Economic Zones and Free Trade Ports, and is constantly looking to invest on more, especially closer to the borders with China in both the Russian Far East and Siberia. Russian Special Economic Zones are growing industrial, technology, logistics and touristic territories with special benefits and incentives for investors. The zones are in different regions of Russia, the most famous of them being Kaliningrad.
Kaliningrad is a Russian enclave on the Baltic Sea coast surrounded by the European Union. It offers 0% profit tax for the first six years of operations, followed by a reduced rate of 10% for the next six. It also provides reduced social insurance, land and property taxes and zero import duties.
Russia is a member of the Eurasian Economic Union. That membership will open up doors for your business to parts of Asia. Since the Asian continent has fast-growing economies and huge populations, this access can help boost your business growth even more. The World Trade Organization (WTO) counts Russia as one of its members. That means you are less likely to experience trade barriers when doing business with other members of the WTO. You should consider investing in Russia if you are looking for a strategic location for your business. Bilateral trade with China is expected to hit US$200 billion by 2025.
In terms of capital and operating costs, it is more profitable to do business in Russia than in Europe. In Russia, the utility costs, rental costs, labor costs and taxes for businesses are significantly lower.
If you want to do business in Russia, you have come to the right place. We have an excellent business partner from Saint Petersburg who is an expert in banking, mutual funds, and wealth management. Contact us and get a consultation to start your operations in Russia.
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