Today Duma will consider a first reading of amendments to the legislation relating to status of foreign companies in Russia. First of all they apply to the foreign companies doing business in Russia. The amendments provide that Government of Russia shall be the authority responsible for accreditation of branches and representative offices of foreign companies in Russia. Ministry of finances and other federal authorities considered reasonable to give this function to the Federal tax Service which will accredit all branches and representative offices of foreign companies except for services and companies working in civil aviation and foreign credit institutions.
Accreditation of services and companies working in civil aviation shall be made by managing authority in air transport. Accreditation of foreign credit institutions shall be made by Central Bank of Russia.
Registration of foreign representative office in Russia is necessary for its empowerment by right of territorial structure for business development and international cooperation. In turn, with legal registration of foreign representative offices Russia provides supervision and control over activity of foreign legal entities on its territory. The document shall simplify the accreditation procedure and its availability for foreign companies. The idea of application in regions not only in Moscow seems to be very attractive. Nevertheless, according to Anna Makhnorylova, expert of law firm «PRIORITET», the bill raises questions.
«Think, for instance, of one-stop principle, — Anna says. The bill promises that within 20 business days the decision on accreditation/denial of accreditation will be taken necessarily and after that within 5 business days from accreditation respective documents shall be issued. The maximum term for taking a decision is 25 business days then. Still, it is not clear whether the tax registration is made simultaneously with registration procedure of subsequently. The last option will prolong the total period».
Today accreditation in State registration Chamber takes 18 business days and by paying additional fee this term may be shortened to 5 business days. Then apply to tax authority for registration of representative office which takes 5 business days. Total period for accreditation and tax registration will be 23 business days, accelerated procedure – 10 business days which less than provided by the bill. The expert thinks that the amount of state fees for accreditation of branches and representative offices should be considered together with the bill. Now Tax Code of Russia provides state fee for accreditation of the branch only which is 120 000 roubles. Will or will be not the amount of state fee changed is unclear.
Nevertheless it’s sensitive financial moment. Today in case of any notes to the documents the State Registration Chamber suspends the accreditation procedure and issues written recommendations to correct documents. The bill does not provide such option. Whether the documents do not comply with the requirements of the bill, the decision on denial will be taken. The practice of registration shows that the state fee is not returned in this case. Improperly filled form for accreditation of the branch (this application is free-form, the application for tax registration only is established) may cost 120 000 roubles for the company. This approach makes accreditation procedure more complicated and financially demotivates foreign investments inflow.
Today the authority performing accreditation of representative offices and branched of foreign companies in Russia depends on status of the parent company and performed by the State Registration Chamber (both for representative office and branch) or Trade Chamber of Russia (representative offices only). The terms and conditions provided for registration in the State Registration Chamber are similar to those provided by the bill. Moreover, apart from accreditation, the tax registration is provided, and the branches of the foreign commercial companies must apply for tax registration and provide another parcel of documents to the tax authority. «We think that registration procedure will be easier, not complicated. The transfer of accrediting functions to tax authorities should help to reduce paperwork and simplify the procedure necessary for doing business in Russia for foreign companies, lawyer says». Still, questions on keeping the accreditation procedure for foreign employees, simplified procedures for visas and invitation for them remain unclear. For the purpose of financial appeal of Russia for foreign investors this problem should be solved after the passage of a bill.