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Tax concessions and guarantees for investors in the RF
Question: - What concessions/privileges/exemptions are available for foreign investors in Russia and what government guarantees support these? (M. Krycek, Czech Republic)
Answer: Main guarantees of foreign investors’ rights with regard to investment and profit and other income received from such investment, as well as the conditions for foreign investors’ business operations in Russia are regulated by the Federal Law № 160-FZ "On Foreign Investment in the Russian Federation", dated 09 July 1999 . In accordance with the provisions of this Law: - legal treatment of foreign investors’ business operations and the use of profit gained from investment must not be less favourable than the legal treatment of business operations and the use of profit gained from investment which are accorded to the Russian investors. At the same time the Federal Law "On Procedures for Foreign Investments in the Business Entities of Strategic Importance for the Russian National Defence and State Security" dated 29 April 2008 № 57-FZ, the Law of the RF dated № 2124-1 "On Mass Media" 27 December 1991, and other legal acts and regulations set forth certain restrictions and exceptions with regard to foreign investment;
- foreign investors operating in the territory of the Russian Federation are given full and unconditional protection of their rights and interests as guaranteed by the provisions of the Federal Laws and other legal acts of the Russian Federation, as well as by the international treaties to which the RF is a party;
- foreign investors have rights to recover damages suffered as a result of illegal actions (or inaction) of state authorities, local administrations, or officials of these authorities in accordance with the laws of the Russian Federation;
- foreign investors have rights to make investments on the territory of the Russian Federation in any format which is not prohibited by the laws of the Russian Federation;
- a foreign investor may transfer his rights (assign claims) and liabilities (transfer a debt), under a contract, and shall be obliged to transfer his rights (assign claims) and liabilities (transfer a debt) to a third party in accordance with the Civil Code of the Russian Federation;
- the property of a foreign investor or a business entity receiving foreign investment cannot be seized or be subject to nationalization, or requisition, except in the cases and for the reasons determined by a federal law or an international treaty of the Russian Federation. In case of requisition, the foreign investor or the business entity receiving foreign investment shall be reimbursed the value of the property being requisitioned. When the circumstances in connection with which the requisition was made cease to exist, the foreign investor or the business entity receiving foreign investment have the right to sue for the return of the property in question, but shall be obliged to return the amount of reimbursement previously received less the amount of loss caused by the reduction of property value. In case of nationalization the foreign investor or the business entity with foreign investment shall be reimbursed for the value of the property being nationalized and other losses;
- a foreign investors’ dispute arising from or in connection with the investment and business operations in the territory of the Russian Federation shall be resolved in accordance with the international treaties of the Russian Federation and the Federal Laws in court, or arbitration tribunal, or in an international court of arbitration (court of mediation).
Under the Constitution of the Russian Federation the generally recognised principles and provisions of the international law, as well as international treaties of the Russian Federation form an integral part of its legal system. If the rules established by an international treaty of the Russian Federation differ from those stipulated by the Federal law, then the rules of the international treaty shall prevail. The Russian Federation is a party to many multilateral and bilateral treaties and agreements, for instance the Russian Federation has ratified the Convention for the Protection of Human Rights and Fundamental Freedoms (the Federal Law № 54-FZ "On the Ratification of the Convention for the Protection of Human Rights and Fundamental Freedoms and the Protocols thereto" dated 30 March 1998). The answers to your questions were provided by the RusBusinessNews legal department jointly with Maxim Stepanov, the Director General of the consulting company OOO Nalogi i Pravo (Taxes and Law) (e-mail: m_stepanov@rusnalog.ru ).
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