Скачать или смотреть Doing business in Russia

According to the World Bank Group’s Doing Business-2019 rating, Russia ranks in 31st place, having climbed up 89 positions from 120th place in seven years’ time. This is the best 2012-2019 performance among all surveyed countries. Russia managed to enter the Top 100 on all 10 topics of Doing Business-2019 rating. This illustrates that Russia is strongly committed to enhancing the business environment.Russia has a stable legislation aimed at protection of ownership and capital, investors and investments. The recent legislative and regulatory efforts are meant to improve stability and predictability, making the investment climate milder and the business environment more attractive for all players.

Despite the government's attempts to make life easier for start-up entrepreneurs and numerous assistance programs (subsidies), doing business in Russia is a job for strong people. There are several characteristic features that distinguish Russian business from entrepreneurship in other countries of the world:

Business problems in Russia

1. The minimum percentage of venture specialization. In many countries of the world (in Germany, Japan, France, the United States and a number of others), small business is the basis for the development of new technologies and the formation of innovative activities. As for the Russian Federation, here the main emphasis is on two areas - commerce and trade, while the innovation sphere remains no more than 6-7%. For comparison, in the above countries, this figure reaches 25-30%.

2. Low level of legitimacy. The peculiarity of business in Russia is its withdrawal into the “shadow economy”. High taxes and low profits are forcing companies to go out of the sight of the tax authorities with the sole purpose of surviving. For most enterprises, “gray schemes” are commonplace, which often leads to an acute shortage of money in the country's treasury. At the same time, today more and more companies are working "in the shadows" in order to increase their profits or hide from competition.

3. Acute financing deficit. Russian businesses (especially newly formed enterprises) suffer from a lack of capital. Almost all profits go into circulation, which makes it impossible to develop, pay salaries to employees, and allocate funds for solving other business issues. The only way out in this case is a loan. But for novice businessmen, the rates are very high, or loans are not issued at all.

4. Instability. An acute financing deficit leads to the emergence of the next problem - business instability. Lack of funds, competition, external negative factors (inflation, problems in the economy, etc.) further complicate the task of a beginner. According to statistics, almost 25% of entrepreneurs go to full bankruptcy or completely wind up their activities.

But there are also positive features of small business in Russia. These include:

1. Flexibility. Small businesses react much faster to problems in the economy and find ways to survive. In the most difficult period for Russia in 1992-94, it was small business that pulled the economy on its "shoulders".

2. Profitability. Starting with a small company is much easier than starting a large one. At first, you can do without buying large premises, transport, personnel, and so on.

3. Narrow specialization. Small business in Russia is characterized by a narrow specialization, which makes it possible to best meet consumer demand and create a product (service) of the highest quality. At the same time, it is always possible to find an individual approach to the client.

4. Regional specificity. Thanks to the development of business in the regions, there is a chance to improve the local infrastructure, reduce the cost of transport and transportation of goods between the regions of the country. In addition, the GDP of each individual region is growing and the outflow of people heading to the “center” to earn money is decreasing.

My name is Sergey Konon, I am a certified tax lawyer, a member of the chamber of tax consultants of Russia and a partner of Vita Liberta Limited, a Russian consulting company in the field of corporate and tax law.

Get in touch with us: [email protected]

Our website: www.vliberta.com
Our Instagram: www.instagram.com/vitaliberta_russia/
Our telegram channel: t.me/vitalibertalimited
What's up: +79269205551

Disclaimer: This video is not the equivalent of professional legal advice. Konon Sergey is not liable for any actions taken by anybody. For any professional advice regarding particular case, please contact our office (What's up): +79269205551