What Russia Offers Expats in 2020: Low Taxes & Good Living For Those With Asian Experience

Posted by Written by

Op/Ed by Chris Devonshire-Ellis 

Russia Offers Early Bird Opportunities To Expatriates Willing To Seek An Asian Career 

With Western sanctions having been in place upon Russia for several years now, the country hardly seems an ideal choice of destination for expats seeking upward career paths. Yet with now an increasingly successful 27 years in China behind me, I can speak with some authority when it comes to discussing expat life overseas. I am reminded of what I was told when I decided to resign my job with a Legal Publishers in Hong Kong (still then very much British territory) and relocate to Shenzhen, in mainland China, back in 1992. “Don’t go Chris” my then boss told me “China is dirty, communist, nothing works, they’ll rip you off and they are pariahs in the West.”

It was all in fact true – but none of it fatal to either myself or the prospects of a future career. The sanctions imposed on China at that time were in response to the incidents at Tiananmen Square in 1989, when hundreds, if not thousands of civilians were killed or wounded by the Chinese military as a people’s revolution threatened to get out of control. It is worth remembering that those same sanctions are still in place.

While the adjectives ‘dirty’ and ‘communist’ don’t generally apply to contemporary Russia, the career move I was making at that time in China certainly felt unusual – mainly because no-one else wanted to go. But I saw opportunity. Russia today, like China then, was demonized in the media. I saw banners unfolded in London proclaiming then Chinese President Zhang Zemin a ‘Baby Killer’ after (untrue) stories emerged in Western media about forced abortions and the one child policy in Tibet. In fact the one child policy wasn’t imposed on Tibet although it had been in other regions of China. Likewise I recall more recently a three page article in the Washington Post by a US senator, complete with photos of empty supermarket shelves stating that US sanctions against Russia were likely to force President Putin from office as “the average Russians have no food in their supermarkets” – the same day I had been shopping in such a place and saw the shelves stacked full of produce. There are a couple of lessons to be drawn from such experiences – don’t believe everything you read, and that even if it is a bit tough, such lurid headlines keep competing potential expats away. That equates to a faster career track than may be possible back in the West.

So what is life like as an expat in Russia? Well, the individual income taxes are low – 13% for resident expatriates.  We can compare that with other countries as follows:

Country Individual Income Tax Rates
Russia 13%
China 25-45%
Hong Kong 17%
Singapore 20-22%
United Kingdom 20-45%
Germany 20-45%
Finland 51.6%
Poland 18-32%
United States 32-37%
*Note lower rates can apply, however we have listed appropriate salary bands only

A major part of any expatriates cost is the accommodation expense. While many international companies will absorb this cost, not all will. If changing on Russia for accommodation costs, close to the city centre, furnished, we can look at comparisons below:

Cost Of Living – Two Bed Furnished City Centre
City Average Monthly Rent (US$)
Moscow 1,800
Shanghai 2,500
Hong Kong 12,500
Singapore 4,500
London 7,500
Hamburg 3,500
Helsinki 2,500
Warsawa 1,500
Chicago 3,000

A by-product of the sanctions has been a weaker ruble against the US dollar – thereby reducing living costs in Russia quite considerably. If looking to rent it would be wise to link to the inflation rate (currently 4.6%) than the exchange rate, as longer term the rubles performance looks to be on the upturn.

In terms of general lifestyle, Russian cuisine is generally excellent, with a wide variety of traditional foods on offer in addition to cuisines from the Soviet era, Georgian, Uzbek and Azerbaijani restaurants especially. Unlike the EU or the US, Russia is still served in local markets by Babushka’s essentially providing home made delicacies, so foodstuffs that are no longer available in EU are available in Russia – and all the better for it. That means plenty of fresh baked breads, jams and honey, while dishes such as brawn, aspics and traditional sausages and other meat dishes now not found in the EU are obtainable here. The same goes for fish – Russia has the Arctic and Pacific Oceans to sustain it, while the country is criss-crossed by a multitude of rivers and lakes. The general impact is one of sustained farm to table – without the interference of meddling Eurocrats who wish to impose self-serving standards on products. In fact a good thing for the UK in the event of Brexit should be a re-establishment of the traditional British cuisines that have disappeared the past 30 years. The acclaimed British Chef Fergus Henderson’s Nose to Tail philosophy applies very well to Russia.

In terms of alcohol, Russia has been going through a micro-brewery renaissance and can offer an array of Europe and local beers. It is the wine industry that is the surprise, Russian wines even catching the attention of the Financial Time’s Jancis Robinson Russia’s wine-making industry is essentially divided into two – wineyards around the River Don area, and the Krasnodar region further south, on the shores of the Black Sea. Look out for hearty and fruity Cabernet Sauvignons and well as the big local varietels such as Krasnotop.

The expatriate scene is also vibrant – most countries have Chambers of Commerce or similar organisations in the country, and there is rather more a sense of comraderie among foreign expats in Russia than in other countries, where competition for jobs and business can be more intense. Russia has excellent restaurants, and a thriving, if not legendary, intellectual scene based around the arts. Restaurants and bars are everywhere to be seen, with the Russian-Japanese-Hong Kong investment group The Ginza Project involved in a lot of funky eateries and bars for socializing. Most properties carry wifi, and many cities are about to be 5G.

Want A Free Subscription To Russia Briefing? Click here

So far, and its all good. So what are the drawbacks? Being based in Russia will necessitate learning a degree of Russian just to get by. Language is based on the ancient Cyrillic system, so has a different alphabet from the Romanized system used in the West. About 85% of it is familiar to Romanized letters so although it looks difficult, a few lessons in and it will get a lot easier. Many of the words are derived from Greek or Latin, so will be familiar. For example, the road sign word for “STOP” is “CTOP”. It is certainly a lot easier than learning Chinese!

Other than that the major drawback is the traffic, and this is especially true in Moscow. However this is offset by an excellent public transport system – and especially the Metro.

Why Russia Needs Foreign Experts in 2020
With sanctions in place from the EU, three things have occurred. First, products that Russia used to buy direct from European suppliers are increasingly being made in Russia instead, especially in consumables. That creates a need for European expertise to develop products further and make them, over time, more uniquely Russian. Secondly, as the EU and US sanctions are unlikely to go away any time soon (Sanctions against China in relation to the Tiananmen Square issue are still in place, some 30 years later) Russia is also looking to the East for new markets. Russia is now replacing products – everything from cheese and wine to autos and washing machines from EU manufactured to Asia manufactured. Expats with Asia experience can find themselves in demand if they can bring the right skill sets and knowledge to the table. Third, Russian businesses are looking overseas and again, especially in Asia for new opportunities to sell their products. We can see how Russian Overseas Direct Investment has increased dramatically since mid-2018:

russian-odi

This has been derived due to an increased engagement by Russia with Asia, and in Russia, as part of the Eurasian Economic Union (EAEU) , signing off Free Trade Agreements with a number of Asian countries. These include Vietnam, whose FTA with the EAEU has seen billions of dollars worth of Russian capital pour into the country, China, whose FTA was signed off last year but is still awaiting product tariff agreements, and more recently Singapore. The China agreement, especially when agreement is reached on product tariffs, is likely to be a game changer in global supply chains. If you an expat in China, familiar with the language and specific industries, then a career in Russia may well prove a good move.

Other ASEAN countries are also proving popular, with Indonesia the recipient of large investments made by Russian Truck manufacturer GAZ, as well as being interested in an FTA with the EAEU, a route that Cambodia, Thailand and Malaysia are all looking to follow. I discussed this in the Business Opportunities For Russian Companies In ASEAN.

So what boxes does Russia tick for an Expat with Asian experience?
Low Taxes
Affordable Rental
Good Food & Wine
Well Developed Social Scene
Smaller Expat Competition
Pent Up Consumer Demand
Expansion Into Foreign Markets

Related Reading

 

About Us

Russia Briefing is written by Dezan Shira & Associates. The firm assists foreign investors into Russia and can help individuals and businesses looking to relocate into the country as well as provide assistance for Russian businesses looking to invest in Asia. For assistance please email russia@dezshira.com or visit us at www.dezshira.com

Leave a Reply

Your email address will not be published. Required fields are marked *