Doing Business in Russia Research Proposal Example | Topics and Well Written Essays - 3000 words

Doing Business in Russia - Research Proposal Example Soviet-era management practices, a decaying infrastructure, and inefficient supply systems hinder efficient utilization of those resources. For nearly sixty years, the Russian economy and that of the rest of the Soviet Union operated on the basis of central planning meaning state control over virtually all means of production and over investment, production, and consumption decisions throughout the economy. Economic policy was made according to directives from the Communist Party, which controlled all aspects of economic activity. The central planning system left a number of legacies with which the Russian economy must deal in its transition to a market economy. The constant changes in the business environment can make business activities hard to plan for managers. Taxes in Russia are high but some reforms are implemented in order to reduce the amount of taxes paid by companies. During recent years, the government has put emphasis on reducing regulation and lowering taxes. Depending on the company’s location, the tax can vary. The thorough tax code has recently been implemented including a new VAT law and a new profits tax law. The VAT is quite similar to the EU model; however, input VAT is only recoverable when paid whereas output VAT can be accrued on a cash or accrual basis. The government actions regarding the VAT are mixed. On one hand, the Russian government decided not to apply VAT on certain actions (i.e. inter-company loans or derivatives transactions), but on the other hand, some other fields that were not concerned by VAT are now subject to it (i.e. transfer of patents, trademarks, copyrights). The new Profits tax law is lowering the tax rate to a maximum of 24 % and reduced the number of non-deductible expenses.