Russia beckons

By John Bonar

Europe is in turmoil as draconian cutbacks to slash public debt are threatening to raise taxes and cut incomes and benefits across Europe. The Eurozone is still battling to stabilize the Euro despite a new euro440 billion ($525 billion) bailout fund. Germany, Greece, Spain, France, Italy, Portugal and the UK are all facing years if not decades of austerity.

Russia meanwhile is rolling out the red carpet for entrepreneurs.

The country is already rated overall Number 1 for expats, out of 26 countries surveyed in an HSBC Bank International Expat Explorer Survey 2009 but now President Dmitry Medvedev, following in the tradition of Czar Peter I, is opening up the vast country to the world as he seeks to spur modernization and broaden the country’s economy away from dependence on oil and gas exports.

Consider the business benefits:

Russian Corporation tax is payable at a flat 20% of profits.

Personal income tax for resident foreigners is a flat 13%.

The Unified Social Tax on employees is 26%.

The pain, until now, has been the cumbersome bureaucratic process of obtaining visas and work permits.

From July 1, according to the head of Federal Migration Service (FMS) Konstantin Romodanovsky qualified foreign experts could come to Russia by-passing complicated immigration procedures.

These "brain importers" will receive a three-year permit of residency at the port of entry, said Romodanovsky. Generally, a visitor to Russia may get only one-year permit and working visa. The Russian visas have to be issued in the home country and residence permits are generally processed in a time-consuming process within Russia. The new rules reduce restrictions on mobility around the country for the qualifying foreigners.

The main qualification appears to be salary – 2 mn rubles a year or about US$ 63,000. Salary as taxed in Russia includes benefits such as flights home and rented accommodation.

In theory, this allows a foreigner to establish a limited liability company in Russia and enter an employment contract with his own company with a salary and benefits package exceeding $63,000 a year and instantly get a three year residency and work permit.

That package is what any senior experienced expatriate would expect in return for living in a country where five-month winter temperatures in Moscow rarely exceed -10 Celcius and can reach -50 C in some parts of Siberia; where routine demand to inspect documents on the street by uniformed militia and the legendary venality of the country’s traffic police adds to the hazards and frustrations of daily life.

Almost half of expats in Russia (43%) earn in excess of $200,000 per year, according to an HSBC survey in 2009.

On the plus side, even in regional cities, you will find 24/7 supermarkets, bars and restaurants and kiosks for essentials from coffee and cigarettes to beer. The passion and willingness to engage in debate; the absurdly low prices for admission to world class ballet and opera and the constant stream of A class international entertainment acts all make Russia, especially Moscow and St. Petersburg 21st Century capital cities.

The authorities are particularly keen on attracting scientists and from 2012 ‘creative’ entrepreneurs. And if you can get your project located, as an ‘early adopter’ into the new Skolkova innovation hub in the Moscow region, then you will be assured of active government support.