How to invest and set up business in Russia

How to invest and set up business in Russia Presented by June 16, 2015

Speakers and Agenda Alexandra Kostina (RUFIL CONSULTING) Marketing manager Current business and investment climate in Russia Sergey Kerosinskiy (Muenchen Legal) Specialist in M & A, competition law & investments in Russia. How to invest and set up business in Russia & Case Study Juri Semiletopulo (Muenchen Legal) Specialist in corporate law and business law in Russia. 2

Current business and investment climate in Russia Alexandra Kostina Marketing Manager June 16, 2015

Content I. How does investment and business climate look like now? II. Why to invest now? 4

I. How does investment and business climate look like now? 5

I. How does investment and business climate look like? 6

I. How does investment and business climate look like? Figure 1: GDP growth, 2013-2014, % Figure 2: Composition of GDP growth, % 7

To put it mildly Russia diverged considerably from other high-income and diverging economies First quarter of 2014 GDP growth sank to 0.9 % from 2.0 % in 2013 Investment growth was negative in 2014 and consumption grew more slowly As a result: capital outflows, reserve losses, abrupt depreciation and rising spreads on CDS for many oilexporting countries 8

I. How does investment and business climate look like? Table 1: Contribution to growth components, p.p. Fixed investment contracted by 2.5 % - no public investment projects, but NOW: PE s number is growing Low domestic demand + higher borrowing costs = fail 9

I. How does investment and business climate look like? Figure 3: Oil prices and the ruble exchange rate, 2014 Extreme volatility of ruble Switch of CBR to a free-float system Pressure on ruble rose as oil prices slid dramatically NOW: 55.91 RUB/USD, oil - 65.21 USD 10

II. Why to invest now? 11

II. Why to invest now? Figure 4: Employment and economic activity, million workers Total employment was high throughout 2014 and 2015 Despite the slowing economy economy, employment and activity level remained near their maximum WHY? 12

II. Why to invest now? Despite the slowing economy, employment and activity levels remained near their maximum historical levels, and unemployment was at a record low 13

II. Why to invest now? Coordinated measures were implemented to stabilize the exchange rate: Ministry of Finance sold foreign exchange in the amount of 1.5 billion U.S. dollars The CBR introduced 28- and 365-day foreign currency loans to the 11 banks with capital of over 100 million rubles Five major state-owned exporters were to cut their net foreign assets The State Duma approved a bill allowing the government to invest up to 10 % of the National Wealth Fund in subordinate deposits 14

II. Why to invest now? Government anti-crisis plan: Timeframe: 2015-2016 Take steps to advance structural changes Provide support to systematic entities Provide support to the labor market Help vulnerable household to adjust to the increasing prices 15

II. Why to invest now? 16

TAXES IN DIFFERENT COUNTRIES IN 2013, AS % OF GDP Russia has a liberal and favorable tax regime : Lowest corporate income tax 20% Personal income tax of 13%, regardless of income size Opportunity to have a one-time write-off of 30% of depreciation costs for tax purposes Zero profit tax for educational and health care institutions No capital gain tax in case of long-term direct investments Low social contributions (payroll tax) 30% 17

II. Why to invest now? Example: Consumption goods prices have fallen down Salaries are lower 18

Thank you for your attention! In investing, what is comfortable is rarely profitable 19

Contact Alexandra Kostina Marketing Manager Tel: + 7 (495) 221 26 65 E-Mail: kostina@rufil-consulting.com Ul. Bolshaya Dmitrovka, 23/1 Moscow, Russia 20