Doing Business in Russia remotely using modern technologies

Everyone who had an experience of doing business in Russia probably faced numerous difficulties involved starting from differences in mentality and ending with various bureaucratic and administrative barriers complicating the procedure.

There is no doubt that one of the difficulties is the necessity of almost continuous personal presence in Russia requiring considerable time costs and financial expenses. EMG lawyers tried to figure out if continuous presence of a foreign citizen doing business in Russia is really necessary or there are some technical solutions for doing it remotely and explain which difficulties may arise in this case.

Technically an access to the Internet is sufficient for registration of a legal entity in Russia. In this case there are two ways of registration of a legal entity, by either preparing a complete package of electronic documents with a digital signature (that is referred to below) to submit it to the tax authority, or by  completing and forwarding an application online via the “Program for preparation of documents for state registration”. In this latter case the shareholder will still have to appear personally in the tax authority for obtaining documents in order to confirm his identity.

Later, when it comes to practical aspects of doing business in Russia, the entrepreneur usually finds out that doing business independently in Russia is always associated with the necessity to sign legal documents (contracts, acceptance certificates, tax invoices, consignment notes), to control company’s settlements, to coordinate the employees and to report regularly to the tax inspectorate and non-budgetary funds. It seems that all these liabilities may require continuous personal presence in Russia that often frightens many foreign entrepreneurs. However, this problem may be solved by using modern technologies and doing part of business procedures electronically. For these purposes there is a Digital Signature (DS) which is a substitute for a handwritten signature. A digital signature can become an irreplaceable tool providing effective and secure documents workflow with external counterparties in case of doing business remotely.

When working with state information systems, the enhanced encrypted and certified digital signature is required both for signing electronic documents when interacting with the partners and for electronic documents exchange with state authorities. The enhanced encrypted and certified digital signature shall be confirmed by the certificate issued by the accredited certification authority and is always equal to the paper document bearing a handwritten signature.

So where is it possible to get the digital signature expanding business opportunities so much? One may either obtain it from an accredited certification authority in the Russian Federation or in a foreign jurisdiction, provided that the digital signature generated under the laws of that state has all attributes of an enhanced encrypted and certified digital signature.

It should be noted that a group of foreign citizens having the possibility to obtain the encrypted and certified digital signature is restricted by Russian legislation.  Thus, the digital signature may be obtained by foreign citizens registered with Pension Fund of the Russian Federation and having the Insurance Number of Individual Ledger Account [SNILS] (state pension insurance certificate) and registered with the tax authority and obtained TIN (taxpayer identification number). Meanwhile, only foreign citizens having residence permit or temporary residence in the Russian Federation and highly qualified specialists working in Russia may obtain the said SNILS and TIN.

Besides, a foreign citizen who has successfully registered his Russian company and acts as the General Director of it generates the digital signature on behalf of the legal entity. In this case there should be no difficulty for foreign citizens to generate the “director’s signature”.

One more difficulty a foreign citizen holding the digital signature may face is import of the digital signature to the Russian Federation and export thereof from Russia. The reason is that the digital signature means are classified as encryption (cryptographic) facilities which are restricted for import and export to/from the territory of Eurasian Economic Union. According to the legislation, “Placement of encryption (cryptographic) facilities under the customs procedures of release for internal consumption and export for own requirements without rights of their distribution and rendering encryption (cryptography) services to the third parties shall be performed with providing the customs authority of a member state  with the report (approval document) or notification information”.

Notification shall be provided to the Federal Security Service of the Russian Federation (FSS RF) by digital signature’s generators (certification authorities).  The register of notifications submitted to the FSS RF is posted on the website of Eurasian Economic Union (www.eaunion.org). The report (approval document) is also issued by FSS RF.

Our company’s many years of experience in legal and financial consulting of business make it clear that in spite of difficulties involved, doing business in Russia may be profitable and stable and that modern technologies such as the digital signature and Internet resources help both Russian and foreign citizens to undertake business activities in the Russian Federation. 

Head of the Legal Practice
Marketing Director
Senior Legal Counsel. Auditor

Venla 1, 2016 Finland