Legal frame:

The Legal framework is very well set in favour of people. Development of Russia is being
helped by the Russian government. Russia is being helping various sectors for its
development. The business regulations are governed and protected by the Federal Anti
Monopoly services (FAS) – this is a government regulator for the market competition policy
in Russia. Improvements are made like anti corruption, protection for intellectual property,
and the public private projects are encouraged by simplifying the laws. Its main function is to
prevent inequitable trade practices. FAS has a control over the prices. They fix the prices,
control the over pricing and any violation if any. If at all there is any violation then they will
charged a fine of 0.15%. There is civil law which protects inventions, industrial design and
other utility models. Official registrations are to be made for the patents and trademarks.
There are land codes which protect some of the private property like land , building and
premises. There is a lot of land area which is owned by the private since it is controlled by the
federal , regional, and local authorities.

The introduction to the one-window system which is made simpler for the real estate to
register. The time of the registration will take a minimum of 20-30 days. These are mainly for
the acquisitions, lease and others. For the acquisition of the asset a prior approval is
necessary, if the value of the asset crosses 20% of the book value. The financial trading in
Russia are governed by the law imposed for securities. Russian depository receipt (RDR)
aims at the certifying rights to hold a particular amount of shares or bonds of Russia or
foreign issuer. The business entities are governed by the civil code of Russia. This governs
the business entity like the partnership firms, join stock company, co-operatives etc. the
labour issues are covered under the labour code of Russia. A contract is to be signed by
every employees before getting into the work. This contract mentions the working hours is 40
for a week and the over and above is considered to be the overtime as per labour code.
Termination or dismissal of an employee is possible only on specific grounds of labour code.
The employee is entitled to receive a minimum wage of $147 approx which is 4330 RUB.
Employees are protected for a cohesive social tax, pension insurance and accident insurance.
The rates for the accident insurance depends on the amount of risk attached to the
professional work. There is a specified format for maintaining accounts and audit which is
being regulated by the Russian Accounting Standards (RAS). The federal law includes the
rights and responsibilities of auditors in Russia. 33 Russian standards on auditing were
approved by the government. The law on strategic industries regulates the terms and
conditions for foreign investments and has certain restrictions on other few areas.

(Doing business in Russia, 2009)

TAXATION
Foreign legal entity includes representatives office, construction sites and other places needs
to be registered with the tax authority of Russia 30 days prior. FLE’s are taxable as profit tax
if they create a permanent business establishment otherwise they are exempt. Maximum
profit tax rate is 20% (comprising); federal budget get 2% and 18% payable to the regional
budget. Taxation for dividends; there would be a 9% deducted at source from one Russian to
another Russian company but in case of dividends paid by Russian company to foreign
company then 15 % - at source. (Doing business in Russia, 2009)

The Effects of Globalization:

There were a lot of expectations from the people since her independence. Financial assistance
was received worth millions of dollars , but everyone’s dismay Russia did not live up to the
hype created. The forecast made and the growth happened was not according to the forecast
and this ensured the fall of the communism and breakup of Soviet union. One way of
improvement of Russia is through diversification. Specialisation in various fields will help
the country in a greater extent. Russia has to improve its neighbour relations. There is
instability in terms of globalisation. Division of labour and specialisation is not accepted by
all the sectors. From a point there are some sectors that are being worried that it is a source of
cheap labour but they also have belief that small units have a higher profitability and growth.
There is a negative impact of globalization.
Russia’s Accession to the WTO:

Russia is in a phase of negotiation with the WTO members on the conditions for accession,
although the process is moving forward differences over issues remain. This has made for the
Russian accession to the WTO uncertain. On November 19, 2006, a bilateral agreement on
Russia’s accession to the WTO was signed by U.S. and Russian officials. In 1991 the Soviet
Union had collapsed opening Russia retain the observer status which led it to apply to accede
for GATT. Initially in 1993, GATT formed a working party on Russia’s accession, but it was
in 1995 that the given application was transformed to be legible to be a member of the WTO.
(www.nationalaglawcenter.org)

Russia had applied for the attainment of the GATT- General Agreement on Trade and Tariffs
in the year 1993. The request was taken over in 1995 by the WTO- World Trade Organisation
which was a successor of GATT.

President Putin made it a top priority to enter the WTO as it could help overcome the political
hurdles as well as help in the restructuring of the economy. It has benefited him to gain
economic reform legislation through the Russian parliament.

While setting the terms and conditions for Russia’s accession to the WTO the working party
(WP) members analysed that they conformed to WTO’s rules in terms of Russia’s foreign
trade and investment regimes and policies. Russia has made momentous stride in that intent
look. It eliminated two important pillars of Soviet central planning in November 1991, the
state monopoly on foreign trade and the ban on foreign investment in the Russian economy.

WTO members followed a Harmonized Tariff System that the Russian government adopted it
maintains a system of two-column tariff rates — MFN and non-MFN tariff rates. At the same
time Russia and EU had an agreement on dual energy pricing; it was a part of EU’s bilateral
agreement on Russia’s accession to the WTO. This helped Russia increase their domestic
energy prices. During the Uruguay Round of General Agreement on Trade in Services
(GATS), fiscal forces were included in the WTO rules on trade in services. (www.wto.org)
In 2009, Russian officials proposed to restart talks as a three – nation bloc, the three nations
being Russia and neighbouring Kazakhstan and Belarus. They have been planning a custom
union to operate trades in a harmonized tariffs and rules system. This step had to be initiated
as Russia has been negotiating with the WTO for rights to join for past 16 years.
(online.wsj.com/article)

Conclusion:

Russia is a growing economy. They depended only on the oil prices. There were innovations
made and also has a stable growth. The bulwark of economic development in Russia is
through export of primary commodities & raw materials. There is a lot of attraction towards
the foreign investments from various factors. The inflation rate is less. The fall of
unemployment rate.