Accounting

The Russian accounting system is governed by the state, including the chart of accounts, accounting principles, and statement forms. Unlike the accounting principles used in Europe (IFRS) and the US (US GAAP), Russian accounting is based not on the business transaction, but on the documents confirming it (i.e., the legal form is more important than the economic content). At present, Russian Accounting Standards (RAS) converge towards IFRS.

Over 90% of Russian companies use 1C, a local ERP software, for accounting and tax compliance. 1C is the system that is the most adapted to Russian legislation and local business practice. It can be integrated with any other corporate ERP system.

The General Director is responsible for arranging the company's accounting. The maintenance of accounting is delegated either to the Chief Accountant or an outsourcing company.

Other kinds of reports may be mandatory, depending on the type of business and company assets.

Auditing of accounting statements is not mandatory for Russian companies, except:

• For companies with an annual turnover of more than 800 million rubles or assets exceeding 400 million rubles
• Companies whose securities are admitted for trading on the securities market
• Financial, credit and insurance companies
• Non−government pension funds and other funds, including non−profit and charitable funds

If mandatory audit is required, information on the auditor has to be included in the annual financial statements of the respective period.

Any company may request an independent audit by an auditing company at the company's own initiative. This is common for companies with several shareholders or by subsidiaries of foreign companies whose policy requires auditing.

The financial statements of most Russian companies are published in the public domain on the Internet.

Regarding cross−border transactions, all Russian companies are required to submit an annual notification to the tax authorities if the total annual turnover of such transactions exceeds 120 million rubles. The tax authorities may verify the pricing level of controlled transactions. To confirm the market level of the applied prices, companies must provide transfer pricing documentation.

When entering the Russian market, international companies should adapt their policies on intragroup operations to the requirements of Russian legislation.

• Industrial and production zones
• Technology and innovation zones
• Harbor zones
• Tourist and recreation zones

In addition to SEZs, there are also Territories of Advanced Development (TAD) — zones with favorable tax conditions and other privileges, created to attract investment to certain regions of Russia (Far East, Kuril Islands, some single−industry towns, etc.). The main difference from SEZs is the emphasis on the creation of urban infrastructure in SEZs instead of, for example, industrial infrastructure.

Also, in 2018, in response to international sanctions, special administrative districts (SARs), the so−called “internal offshores”, were created in Primorsky Krai

and Kaliningrad Oblast. Unlike SEZs and TADs, the conditions in SARs are designed primarily for international holding companies that derive their revenues from operations in Russia. International companies registered in an SAR have preferential tax treatment for profits paid abroad.

The Russian-Asian Union of Industrialists and Entrepreneurs (RAUIE) has been helping foreign companies to develop business with Russia since 2010. To start cooperation with Russia with the support of the RAUIE you can leave an application via the "ask a question" form on the website, or by email office@raspp.ru.

Our experts will help you develop your business with Russia not only in export but also in import, namely to find a direct manufacturer in Russia and conclude a deal with him on the supply of products to China or start your investment project in Russia for the production of agricultural or food products for export to China, including obtaining government incentives for the investor in Russia.

The article was prepared by experts from Bellerage, a member of the Russian-Asian Union of Industrialists and Entrepreneurs