29.01.2016 — Russian Government Announces Support for Industrial Development

The Russian Government has issued two Resolutions aimed at increasing the competitive strength of Russian companies. The Resolutions were approved for the purpose of developing production co-operation and the creation of new jobs.

The Resolution dated January 20, 2016 No. 15 regulates the provision of subsidies to federal subjects of Russia for the purposes of construction and development of industrial parks’ infrastructure. The federal subject that has made a relevant application and meets the selection criteria will be able to receive funds in order to develop the infrastructure of industrial parks.

The Resolution dated January 28, 2016 No. 41 regulates the provision of subsidies for the realisation of joint projects by industrial clusters’ members. The provided subsidies can cover up to 50% of the costs incurred through production development, purchase of equipment, product certification, personnel training, purchase of software etc.

Let us recall, industrial parks are special platforms aimed for creation and development of industrial production. An industrial cluster is generally comprised of several companies whose manufacturing procedures are interconnected. Hence, to become a resident of an industrial park or a participant of an industrial cluster it is required to enter into agreement with the provider of the infrastructure.

28.01.2016 — Transparency International Releases Corruption Perception Ranking: Russia Less Corrupt in 2015

Russia has improved its global position with regards to corruption perception according to the Transparency Internationals annual ranking for 2015. Russia has moved to the 119th place from the 136th over the course of the last 12 months.

The corruption perception index is based on such criteria as freedom of the press, access to information on the state budget, incorruptibility of state authorities, independence of the judicial system, involvement of the state in conflicts and wars, unreliable state institutions etc.

The change in Russia’s ranking may indicate that the corruption-related situation is gradually improving, and Russia is becoming less corrupt, despite recent corruption accusations.

Denmark is at the top of the list scoring 91 points out of a possible 100, while North Korea and Somalia have remained at the bottom of the list with unchanged scores of 8.

27.01.2016 — Fixing Salaries in Foreign Currency Violates Labour Legislation, Rostrud Says

According to the Russian Labour code, it is unlawful for an employer to pay out the salary to employees in foreign currency. The Federal Labor and Employment Service (Rostrud) has clarified that it is also unlawful to fix the salary in foreign currency in employment contracts and may cause administrative fines.

Rostrud yet again has published its Letter dated November 20, 2015 No. 2631-6-1, which says that it is unlawful not only to pay out the salary in foreign currency, but also to fix the salary in foreign currency in employment contracts. The said letter is in line with previous letters issued by Rostrud in 2006 No. 1688-6-1, 2008 No. 5919-TZ and 2009 No. 1145-TZ and N 1810-6-1.

According to Rostrud, fixing the salary in foreign currency may entail an imposition of administrative fines under Art 5.27(1) of the Russian Administrative Code. Thus, the company may face a fine of up to RUB 50.000, and the company’s official - a fine of up to RUB 5.000.

Notably, the letters of Rostrud are not binding. Previous letters, which have similar findings, have been ignored by some employers. The issuance of yet another letter may be an indicative of the change of policy with this respect. Thus, there is a risk that Rostrud may take a more active approach and initiate inspections aimed at ensuring full compliance with Russian labour legislation.

26.01.2016 — Russian State Duma Approves New De-offshorisation Bills

The Russian State Duma has approved two bills aimed at returning offshore capital to Russia. The bills introduce measures that deprive companies more than 50% of which are owned by entities registered in offshore jurisdictions of state support, i.e. they will not be eligible for state budget subsidies and government guarantees.

The proposed measures may become effective after the 2017 federal state budget will have been drawn up. The bill is still being amended, and its scope may be extended, so as to cover companies that are owned by entities registered in offshore jurisdictions (such as the BVI, Liechtenstein etc.) not only directly, but also indirectly. The proposal has been criticised by the business community, mostly due to the fact that many Russian companies will have to re-structure their corporate groups, in order to ensure their eligibility for state budget support.

The approved bills seem to contravene the previously declared de-offshorisation policy, which generally allows ownership of Russian companies via entities registered in offshore jurisdictions, however requires disclosure of such corporate structures. The declared amnesty of offshore capital provides for the possibility to file a special declaration with the tax authority. Individuals that have filed the said declaration shall be exempt from criminal, administrative and tax liability.

25.01.2016 — Preparatory Construction Works Without Construction Permit?

The Ministry of Construction is seeking to garner public opinion on the recently proposed amendments to the Russian Town-planning Code, which have been approved by the Russian Government. The amendments are aimed at reducing administrative barriers associated with construction.

According to the bill, construction companies will be able to perform certain types of construction works prior to receiving a construction permit. The exact list of such works will be set forth by a Governmental Resolution. Notably, the legislation that is currently in force prohibits companies from carrying out construction works before a construction permit is issued, as it generally takes up to 12 months to obtain the said permit.

The proposed amendments are deemed to create sufficient advantages for construction companies. Thus, companies are expected to be able to start construction works 6 months earlier, as developers will be able to start setting-out works, fencing and other preparatory works immediately after notifying local authorities, prior to design review and construction permit issuance.

At the same time, failure to notify the authorities of the preparatory construction works creates risks of administrative liability, as the Amendments establish a new finable Administrative Offence for violating the procedure of carrying out preparatory works.