The procedure for obtaining Russian citizenship for foreign businessmen will be simplified

By the Federal Law as of 01.05.2016 №124-FZ “On introducing amendments to articles 14 and 30 of the Federal Law “On citizenship of the Russian Federation” the amendments concerning simplified procedure of citizenship obtaining were being made. Under this procedure the permanent residence of citizen in Russia over a distance of more than five years is not needed.

According to amendments to the law, the individual entrepreneurs and investors operating in Russia for more than three years are falling into the category of citizens aspiring to the simplified procedure for obtaining Russian citizenship.

At the same time it is essential for individual entrepreneurs to pay taxes and charges, insurance deductions to the Pension Fund of the RF amounting to no less than 1 million RUB in each calendar year.

The essential condition for investors is participation in the authorized (contributed) capital of the Russian legal entity of no less than 10% and within the period of no less than three years running. The authorized capital of such legal entity is to total no less than 100 million RUB and the amount of taxes and charges as well as insurance deductions to the Pension Fund of the RF is to be no less than 6 million RUB in each calendar year.

This Federal Law will come into force on the expiry of ninety days after the day of its official publication. 

According to experts, such innovations can exert a certain influence on attraction of foreign investment to Russia considering its tax system as one of the most liberal in the world. 

The relevancy of the taken measures and efficiency of activity of enterprises with foreign participation may be estimated after getting acquainted with corresponding data of the Federal State Statistics Service (Rosstat) (Figure 1).

Figure 1. Number of enterprises (including micro-enterprises); Turnover (revenue without VAT, excise and similar statutory charges); Average number of employees.

Number of enterprises Turnover Average number of employees

The data analysis shows that enterprises with foreign participation in the period from 2011 to 2014 increased the revenue by 28% while the number of such enterprises decreased by 2% and average number of their employees increased by 1%.

New transportation routes connecting Europe and Asia

In recent years the idea of the “Silk Road” has become more essential as a result of economic life center dislocation to Asia. Today this idea shapes up as a “New Silk Road” conception, advanced by the PRC Chairman as early as in 2013 under the slogan “One belt – one road”.  Therefore among the key topics discussed during the Astana economic forum held in Kazakhstan on May 25th -26th, 2016 there was not only establishment of economic affairs along the “Silk Road” but also construction of well-balanced economies in the Central Asian countries, developing on the basis of knowledge, innovations, creations of free-trade zones.     

The global strategy, including the projects “Economic belt of the Silk Road” and “Sea Silk Road of the XXI century”, intends the implementation of the scale plan of transportation infrastructure construction: rail and auto roads, pipelines, port terminals on the way from the China Western boundaries across Central Asia countries and Iran to Europe. Implementation of the project is to generate intensification of economic development of the Eurasia territories, as well as South and South-Eastern Asia, Middle East and Africa and correspondingly growth of winning trade relationships. 

In 2015 China suggested to create a joint China-Mongolia-Russia economic corridor. The main point of the corridor is to connect the Chinese idea of the Silk Road economic belt “One belt – one road” construction, Mongolian idea “Steppe road” and Russian idea of transeurasian corridor creation. In whole the conception is to include land part, comprising three rail road corridors, and the sea route. In the future the rail road corridors will be accompanied with the auto ones. It is possible that the arctic route will be introduced as well.

It is no wonder that the competition for the choice of the particular routes escalates around the abovementioned scale projects, despite unconfirmed payback of cargo transportation from China to Europe. Kazakhstan centers on construction of the gas pipeline Beinei-Bozoi-Shymkent, transit road Western Europe – Western China. Tadjikistan suggests alternative routes: supply of gas to China from Turkmenia and construction of the road from Iran to PRC. Singapore is interested in the development of sea transportations and integration of the Silk Road countries in financial sector. Estonia and Latvia got in line to offer services of cargo transshipment. Russia successfully reconstructs the Trans-Siberian Railway, which gives an opportunity to increase the freight traffic across the country, and creates transportation corridors “Primorye-1” and “Primorye-2”.

For the purposes of implementation of the “New Silk Road” conception the specific steps are taken:

  • leaders of Russia and China signed the joint statement on cooperation of countries within EEU and transeurasian trade and infrastructure projects of economic belt “Silk Road”;  
  • China created the investment fund Silk Road Company and Asian bank of infrastructure investments, where Russia has become a regular foundation-member;
  • the longest in the world freight railway route Harbin-Hamburg brought into operation across Russia;
  • on February 5th, 2016 the first container train from China arrived to Kaluga region carrying the parts for LLC Samsung Electronics Rus Kaluga;
  • in the same month a new railway route between Harbin and Yekaterinburg was opened.

Participation of Russia in the “New Silk Road” project allows the increase of the freight transit growth across the country. It will contribute to the increase of transportation infrastructure investments’ payback, development of regions located in Asian part of Russia, strengthening of the position as a large transit country, a sort of “connecting bridge” between East and West.