Confirmation of the Status of a Small or Medium-Sized Enterprise for Organizations with Foreign Investments

The legal entities incorporated in the territory of the Russian Federation, referred to the category of small or medium-sized enterprises are entitled to apply the preferences provided for by the Russian laws and obtain certain types of the government support.

Such measures include without limitation:

  • option of application of:
    • special “concessional” tax treatment,
    • simplified rules for maintenance of accounting and tax records, cash operations;
    • simplified procedure for preparation of statistical reporting;
  • separate peculiarities (advantages) of participation as suppliers in the procurements of public authorities and some partially government-owned organizations;
  • additional guarantees in government control, for example:
    • moratorium on scheduled inspections,
    • reduced terms for supervisory measures;
  • in the stated cases, opportunity to obtain budgetary subsidies and investments, government and municipal guarantees on liabilities;
  • opportunity to obtain free information, consulting, training (for the company’s employees) and other types of support.

Some of these and other measures provided for by the laws are available for the small businesses only, and some — also for the medium-size enterprises.

The category of small and medium businesses may include also joint stock companies (AO) or limited liability companies (OOO) with foreign investments, registered in accordance with the laws of the Russian Federation.

In this case, if the aggregate equity share in the authorized capital of AO or OOO of foreign investors and Russian investors not being the subjects of small and medium businesses exceeds 49%, the AO or OOO may obtain the status of a small or medium-size enterprise, only provided that their foreign shareholders (members) meet the following conditions:

  • income of such a foreign legal entity received from business for the previous calendar year does not exceed the ruble equivalent of 2 billion rubles (approximately, 28.8 million US dollars or 25.2 million euros),
  • average staff number of employees of the foreign legal entity for the previous calendar year is not more than 250 persons;
  • the country of permanent location of the foreign member (shareholder) of the OOO or AO is not an offshore zone.

If the aggregate equity share in the authorized capital of the AO or OOO of foreign investors and Russian investors not being the subjects of small and medium businesses DOES NOT exceed 49% (as well as in some other cases), no requirements are set for the foreign investor.

Also, for obtaining of a small or medium business status, the Russian enterprise itself (AO or OOO) shall meet certain criteria (amount of revenue and number of employees).

Status of a small or medium-size enterprise shall be confirmed by making the respective entry on the Russian legal entity to the special Unified Register of Small and Medium Businesses maintained by the Russian Federal Tax Service (FNS).

Inclusion into the specified Register or exclusion of the information on a Russian organization with a share of foreign investments in the authorized capital exceeding 49% from it shall be carried out on the basis of the list of such organizations meeting the requirements set, submitted to FNS. The list shall be submitted once a year based on the data for the previous calendar year:

  • for AO — by the holders of Shareholders Registers in these AO (by July 05 of the current year);
  • for OOO — by the Russian audit organizations (within July 01 to 05 of the current year). The List shall be prepared by the audit organizations based on the results of comparison of the data of the statements submitted by the foreign investors to the tax authority of their country with the above conditions established for the foreign investors.

ICLC offers services related to inclusion of organizations with foreign investments in the Unified Register of Small and Medium Businesses:

  • confirmation of conformity of a foreign legal entity being a member of an OOO to the criteria established by the laws of the Russian Federation for obtaining of a small or medium business status;
  • submission of information on the Russian organization with foreign investments to FNS of Russia, for the purpose of inclusion thereof to the Unified Register;
  • oral and / or written consultations on this matter.
Anna V. Gulyaeva
Deputy Director for Audit
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