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Wednesday
Jan282015

Compliance Alert: New rules for Russia branches and rep offices

We recently issued a client alert on new rules Russia issued for branches and representative offices of foreign companies. We thought the client alert would be of interest to readers of the FCPA Blog as it creates significant new registration requirements for foreign businesses operating in Russia. 

Failure to comply with these requirements could have serious negative consequences for foreign businesses. Thus, the new requirements create a compliance risk to which businesses must be sensitive.

In the client alert, we discuss the fact that under the new rules, which came into force on January 1, 2015, all branches and representative offices of foreign companies must re-register with the Russian tax authorities by March 31, 2015 in order to comply with new rules.

The most important of these changes and practical steps which should be taken in connection with the new rules are:

Accreditation and establishment of a register of accredited branch and representative offices. The new rules envisage the creation of a register of accredited branch and representative offices (the “Register”). Information from the Register will be publicly available on the Internet and it would also be possible to obtain official extracts from the Register.

Tax authorities are now tasked with the accreditation and inclusion of branches and representative offices in the Register. Accreditation will be performed by Tax Inspectorate No. 47 in Moscow. Previously this was done by the Chamber of Commerce and Industry of the Russian Federation and the State Registration Chamber under the Ministry of Justice of the Russian Federation.

Branches and representative offices whose accreditation expires after 1 April 2015 should apply to the tax authorities for inclusion to the Register prior to 1 April 2015.

Branches and representative offices whose accreditation expires in January 2015 may apply to the tax authorities for new accreditation in February 2015.

Branches and representative offices whose accreditation expires from 1 February 2015 to 1 April 2015 must apply to the tax authorities for new accreditation not later than 30 days prior to the expiration of their current accreditation.

The accreditation of branches and representative offices that fail to apply for inclusion in the Register or fail to be accredited pursuant to the new rules shall be terminated on 1 April 2015.

Regulations of branches and representative offices. Article 22 of the Law “On Foreign Investments in the Russian Federation” establishes new rules with respect to regulations of branches and representative offices. In this regard all current regulations should be brought in compliance with the new legislation.

Personal accreditation and visa support. The Chamber of Commerce and Industry of Russian Federation will continue to provide personal accreditation and visa support to all foreign employees of branches and representative offices.

Before submitting documents to the tax authorities for accreditation and/or re-registration, approval must be obtained from the Chamber of Commerce and Industry for the number of foreign citizens to be potentially employed by the branch or representative office.

The client alert can be found here (pdf).

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Sergei Voitishkin is the managing partner of Baker & McKenzie’s CIS offices and head of the CIS corporate & M&A practice group. In recent years, he has served as lead lawyer on a number of high-profile mergers and acquisitions in Russia. In addition to mergers and acquisitions, his practice focuses on general corporate law matters. He can be contacted here.

Maxim Kalinin serves as managing partner of Baker & McKenzie’s St. Petersburg office and head of the mergers & acquisitions, corporate, real estate & construction and employment practice groups. He advises major Russian and foreign companies on the legal aspects of corporate issues, infrastructure projects, joint ventures, as well as mergers and acquisitions, among others. He can be contacted here.