This law regulates conditions for entrepreneurial activity of foreign investors and establishes the national regime with certain expectations for their activity. The law provides stability of conditions for activity of an investor who carries out the higher-priority investment project, major guarantees for provision of investors’ rights for investments and investment profits and revenues, as well as provides protection of rights and interests of activity of foreign investors on the territory of Russia.
The law allows provision of additional benefits to foreign investors on the part of subjects of the Russian Federation and local self-governing authorities within competence provided by the Law. Decisions on provision of the aforesaid benefits are taken by the corresponding bodies of the legislative authority in regions of the Russian Federation.
Together with the law “On Foreign investments in the Russian Federation”, the process of foreign investment is regulated by a complex of laws, decrees and regulations both on the federal and regional (Moscow) level.
In particular one can cancel the following regulations that play a significant role in expanding investment possibilities provided for foreign investors:
“On banks and bank activity”, the federal law from December 2, 1990 N 395-I (with changes and additions);
“On agreements on products division”, the federal law from December 30, 1995 N 225-FZ (with changes and additions);
“On the State Registration of Property Rights and Deals with Them”, the federal law from August 8, 2001 N 122-FZ (with changes and additions);
“On Investment Activity in the Russian Federation Carried On In Form of Capital Investments”, the federal law from February 25, 1999 N 39-FZ (with changes and additions);
“On the State Registration of Juridical Persons and Individual Entrepreneurs”, the federal law from December 30, 1995 N 129-FZ (with changes and additions);
“On the Central Bank of the Russian Federation (Bank of Russia)”, the federal law from July 10, 2002 N 86-FZ (with changes and additions);
“On the legal status of foreigners in the Russian Federation”, the federal law from July 25, 2002 N 115-FZ (with changes and additions);
“On concession agreements”, the federal law from July 21, 2005 N 115-FZ (with changes and additions);
“On special economic zones in the Russian Federation”, the federal law from July 22, 2005 N 116-FZ (with changes and additions);
“On protection of competition”, the federal law from July 26, 2006 N135-FZ(with changes and additions);
“On Development Bank”, the federal law from May 17, 2007 N 82-FZ;
“On Benefits on the Import Customs Duty and Value Added Tax Payment in Respect of the Goods Imported by Foreign Investors as Contribution to the Charter (joint-stock) Capital of Companies with Foreign Investments”, the Government decree of the Russian Federation from July 23, 1996 N 883.
To preserve the fast pace of economic growth, expansion of the raised foreign investments and development of their structure, public authorities of the Russian Federation continues activity aimed at improvement of the investment climate in the country.
The fourth part of the Civil Code of the Russian Federation was accepted, which will allow to significantly increase protection of rights for intellectual property. The concept of the Ecological Code is being developed.
Changes have been recently made in different current regulations; new laws have been accepted aimed at improvement of the entrepreneurial climate and encouragement of the investment activity.
The federal law from April 29, 2008 N 57-FZ “On the procedure for making of foreign investments to economical societies having strategic importance for secure of country defense and state security” shall be particularly mentioned.
Control over foreign investments in economic societies having strategic importance for secure of country defense and state security will be performed by the Government Commission mainly aimed at:
preliminary agreement of bargains entailing establishment of control of a foreign investor or a group of persons where a foreign investor belongs over economic societies having strategic importance;
agreement of establishing control of a foreign investor (or a group of persons) over the aforesaid economic societies.
It is planned to accept laws “On organized markets and exchange trade” and “On formation, inventory and public cadastre keeping of real estate”.
An administrative reform is under way in order to provide a clear split of functions, assignments and financing between structures of government administration and eliminate excessive interference of the state with economy.
There was active work on debureaucratization of economy and elimination of administrative barriers complicating activity of foreign investors and entrepreneurs on the whole.
The procedure of registration and tax registration of legal entities on the basis of one stop shopping principle was simplified.
Amendments were made to the Federal law from August 8, 2001 N 128-FZ “On licensing of certain activities” (with changes and additions). They provide the curtailment of the number of the licensed activities.
The concept of the state policy in raising direct foreign investments is being developed. Its establishment in the corresponding public mid-term target program is provided.
Significant possibilities for investment are given by pension and insurance reforms. The government of the Russian Federation has already approved bills that greatly increase efficiency and openness of the insurance system of the country. In particular the Strategy of insurance development in the Russian Federation for 2008-2012 was approved. Its realization will allow to concentrate free financial resources for long-term investments in the Russian economy.
Special attention is given to the development of financial infrastructure. One of the most important objectives in the given field is to increase confidence to the banking system.
The realization of the large-scale banking reform has begun, and its main objective is to enhance capitalization and reliability of the banking system. All Russian banks submit accounts to the Central Bank in accordance with international standards of financial records. Apart from Russia, similar requirements are carried out only by Australia, the United Kingdom and New Zealand.
The adoption of the law “On consolidated financial statements” is expected, which provides mandatory application of international financial reporting standard (IFRS) by joint-stock companies that went through access procedures of their shares for trading on the stock exchange.
The federal legislation regulates the activity of foreign investors on the whole territory of the Russian Federation.