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Company Formation in Russia

Survey of Company Formation in Russia and the Tax Basis

Company Formation in Russia

Eder Herbert, the majority owner of SLC consultancy group

INFORMATION ON BUSINESS REALIZATION/COMMERCIAL DEVELOPMENT/AND MARKET RESEARCH

The Russian market offers great challenges, but also it conceals high risks. The commitment in Russia should be well thought and the experiences with other east markets are helpful. The specifics of Russian economical structure – a mass of relations, shadow economy and competition struggle with any way and means - as well as the political and legal measures (customs duty, certification and other out-of-tariff regulations/provisions, tax and legal restrictions) often make the business realization expensive and in complex, they can be prohibitive for single shipments. To achieve the permanent success, the intensive market research and care of business contacts is important.

 

„Business by Russianwise“

The Russian economy and society disposes of range of specific matters, which should be taken into consideration in the business relations.

Maybe the most essential features are therewith: great meaning of shadow economy, trust in personal and informal relations, marked hierarchical thought and special specific position of bureaucracy. According to ratings, more than 30 per cent of Russian economy moves in the black and grey sphere, and therefore the Russian businessmen have the tendency, in business with foreigners, to conclude the contracts through third persons (companies), and thus to evade the legal claims and problems.

The Russian companies are multiple connected in networks enabling the solution of problems and the enforcement of claims through using the informal contacts to the government structures. Therefore and because the judicial enforcement of claims are very difficult, the written contracts do not attach any final obligation to, and also detailed contractual measures are often ineligible. Like an Austrian company, despite this a man should insist on relevant (reasonable) written contracts.

The co-operation with Russian bureaucracy often establishes with difficulties. Great space for decisions and realization, informal networks and low salary of low-tier officers support the problem situations, which could leas to non-orthodox procedures. Besides this, many of contradictions in regulations and very formalistic interpretation of provisions can obstruct the quick official execution of a matter.

Great stress is given to the hierarchy and status in Russian companies. This applies also to the negotiations (seating), considering the handing-over the presents and the working lunches, or dinners. For success in negotiations, good personal relations and handshake play a great role. Neither the strategic bargaining of Russian businessmen should not be underestimated, and therefore the strategic advantages are possible to be realized (applied) on account of apparently good personal relations.


The Austrian companies should try to secure their position in contracts (e.g. with the advance payment), in co-operation with Russian representatives to perform the inspection and surveillance over important processes, as well as over the certification of products and registration of trade-mark and for all that to take into account the Russian habits, however won’t let them being involved straight inside.

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