Changes to Procedures When Opening Representative Offices in Russia

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  • Faster application process introduced
  • New procedures from August 24, 2021 

Russia has amended its Federal Law “On Foreign Investments in the Russian Federation”, with changes coming into force on August 24 this year.

According to the amendments, the accreditation period for a branch or a representative office of a foreign legal entity is reduced from 25 to 15 working days, except for representative offices dealing with civil aviation (for them it remains unchanged).

A new procedure for suspending accreditation, making changes and closing of a branch or representative office has also been established. The decision to suspend is taken by the authorized federal executive body if:

  • The branch/representative office does not submit the documents required for the accreditation (or its termination), does not introduce timely changes to the register,
  • The submitted documents do not meet the requirements for their preparation.

Suspension may be introduced until its causes are eliminated, but for no more than 15 working days.

In addition, the list of grounds for denial of accreditation, amendments and closure of a branch/ representative office are expanding. Among the new grounds for denial are the following:

  • Failure to eliminate in time the violations specified in the decision on suspension.
  • Administrative punishment in the form of disqualification of the head of a branch/representative office.
  • Tax debts of more than 3,000 rubles.

These changes are aimed at speeding up the accreditation procedure for branches/representative offices. The purpose of the new accreditation suspension procedure is to prevent denial and to provide the branch/representative office with additional time to eliminate violations.

Considering that the state fee for accreditation is 120,000 rubles (non-refundable, if denied), and given that previously the authorized body decided to deny at the slightest discrepancy in the information in the documents on formal grounds, these changes have been much anticipated.

The accreditation period is a critical factor for investors in the process of establishing a branch/representative office in Russia, and therefore, the provision of additional time to eliminate violations only increases it. For 15 days provided for the elimination, it is not always possible to obtain additional documents that require notarization and legalization (apostille). Therefore, it is very important to prepare the initial package of documents as accurately and correctly as possible.

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Russia Briefing is written by Dezan Shira & Associates. The firm has 28 offices throughout Eurasia, including China, Russia, India, and the ASEAN nations, assisting foreign investors into the Eurasian region. Please contact Maria Kotova at russia@dezshira.com for Russian investment advisory or assistance with market intelligence, legal, tax and compliance issues throughout Asia.

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