27.05.2016 — Russian Companies Prepare to Cuts in Wages and Layoffs, RSPP Says

According to the results of the May survey of the Russian Union of Industrialists and Entrepreneurs (RSPP), 34.8% of companies plan to reduce staff salaries, and 21.7% will reduce personnel. The main problems are, as they used to be, shortage of liquid funds, payment default by the counterparty, currency instability and depreciation in the ruble exchange rate, and reduced demand for products.

The survey identified that 85.5% of companies need to reduce costs in general. However, layoffs and cuts will not be enough. Some companies plan to raise the final price of products, 2/3 of companies will reduce consumption by cutting the budget for additional services, such as consulting.

26.05.2016 — Statistics Prove, Only Few Creditors Manage to Return Money in Bancrupty Proceedings in Russia

Currently, central way to return own means is initiation of bankruptcy procedure with regard to the debtors. Meanwhile, according to the Unified Federal Register of Bankruptcy Information (EFRSB) creditors following the results of such procedure receive a little more than 4,7% of debt. The statistics of the Supreme Court are also unsatisfactory: more than half of the bankruptcy cases in 2015 were dismissed due to the debtors’ lack of any marketable assets, and creditors of 70% of debtors did not receive a penny at any stage of insolvency proceeding.

From October 1, 2015 insolvency proceedings can be initiated against Russian natural persons. From this date on till March 2016 about 5000 citizens had been declared bankrupt, and about 1800 bankrupt natural persons are allowed to restructure their debts. However the restructuring plan, which is required for that purpose, was only approved in 42 cases.

25.05.2016 — Federal Tax Service Regulates Verification Procedure of EGRYUL Data

FTS order No. MMB-7-14/72@ will come into force on June 5, 2016 defining the grounds, conditions and procedures for verification of data that is to be entered or already existing in the Unified State Register of Legal Entities (EGRYUL). Non-compliance with these rules can lead to refusal in registration of the new legal person, and also have a tremendous impact on the image of the legal person, its founders and directors if the data already included in the register is misleading.

Thus, upon official inquiries, written explanations of the persons entering information in EGRYUL, etc. inspections can be conducted if for example the registered legal address belongs to more than 5 companies, or if the entry includes data on reorganization of the legal person with the further termination of activity concerning while tax audit is carried out.

Please note that inspections can be cancelled if the person, who submitted the data or is a concerned party, withdraws this information through a form, which is attached to the order.

24.05.2016 — Real Estate Market Witnesses Decline in Buying Activity

The Rating Agency of Building Complex (R.A.B.C.) prepared a new report on the construction industry in 2015. According to the report, almost all the key indicators of construction companies decreased by an average of 20-25%. On average in Russia, according to Rosstat, the volume of construction works decreased by 7% and the number of commissioned housing objects - by 16%.

The financial crisis has led to a significant outflow of investments from the construction industry. The owners of construction companies have ceased to invest in fixed assets affecting the quality and timing of construction. This and the rise of the Real Estate prices repel potential buyers, who amid general decline in incomes of citizens and businesses are quite slow to spend their savings. Moreover, significant change in mortgage loans interest rates which have always been catalysts for sales in the Real Estate market also had impact on purchasing ability.

23.05.2016 — Federal Minimum Monthly Wage to Be Increased to 7.500 RUR (Approximately 100 EUR)

The State Duma has passed in the third hearing a bill according to which starting from July 1 the federal minimum monthly wage (MROT) will be raised by 20% from 6.204 RUR monthly (approximately 80 EUR) up to 7.500 RUR (approximately 100 EUR). Nevertheless, the minimum wage is almost 1.5 times smaller than the minimum price of living. However, as a result of these changes, the financial situation of almost 1 million people will be improved.

Private businessmen, including those paying higher salaries, will be affected as well – the amount of social welfare paid to pension, medical insurance funds monthly for each employee is directly determined by the minimum wage figures (for instance, the amount generally paid to the state pension fund is 26% of the minimum monthly wage). This measure will apply to sole entrepreneurs only after 2016, however those with the low income will be affected the most, as they will not be able to fully count these payments towards their taxes under the simplified tax system. As a result, experts fear that some small businesses will close or join the underground economy.