Doing Business 2019 Russian Federation Economy Profile Russian Federation Page 1 Doing Business 2019 Russian Federation Economy Profile of Russian Federation Doing Business 2019 Indicators (in order of appearance in the document) Starting a business Procedures, time, cost and paid-in minimum capital to start a limited liability company Dealing with construction permits Procedures, time and cost to complete all formalities to build a warehouse and the quality control and safety mechanisms in the construction permitting system Getting electricity Procedures, time and cost to get connected to the electrical grid, and the reliability of the electricity supply and the transparency of tariffs Registering property Procedures, time and cost to transfer a property and the quality of the land administration system Getting credit Movable collateral laws and credit information systems Protecting minority investors Minority shareholders’ rights in related-party transactions and in corporate governance Paying taxes Payments, time, total tax and contribution rate for a firm to comply with all tax regulations as well as post-filing processes Trading across borders Time and cost to export the product of comparative advantage and import auto parts Enforcing contracts Time and cost to resolve a commercial dispute and the quality of judicial processes Resolving insolvency Time, cost, outcome and recovery rate for a commercial insolvency and the strength of the legal framework for insolvency Labor market regulation Flexibility in employment regulation and aspects of job quality Page 2 Doing Business 2019 Russian Federation About Doing Business The Doing Business project provides objective measures of business regulations and their enforcement across 190 economies and selected cities at the subnational and regional level. The Doing Business project, launched in 2002, looks at domestic small and medium-size companies and measures the regulations applying to them through their life cycle. Doing Business captures several important dimensions of the regulatory environment as it applies to local firms. It provides quantitative indicators on regulation for starting a business, dealing with construction permits, getting electricity, registering property, getting credit, protecting minority investors, paying taxes, trading across borders, enforcing contracts and resolving insolvency. Doing Business also measures features of labor market regulation. Although Doing Business does not present rankings of economies on the labor market regulation indicators or include the topic in the aggregate ease of doing business score or ranking on the ease of doing business, it does present the data for these indicators. By gathering and analyzing comprehensive quantitative data to compare business regulation environments across economies and over time, Doing Business encourages economies to compete towards more efficient regulation; offers measurable benchmarks for reform; and serves as a resource for academics, journalists, private sector researchers and others interested in the business climate of each economy. In addition, Doing Business offers detailed subnational reports, which exhaustively cover business regulation and reform in different cities and regions within a nation. These reports provide data on the ease of doing business, rank each location, and recommend reforms to improve performance in each of the indicator areas. Selected cities can compare their business regulations with other cities in the economy or region and with the 190 economies that Doing Business has ranked. The first Doing Business report, published in 2003, covered 5 indicator sets and 133 economies. This year’s report covers 11 indicator sets and 190 economies. Most indicator sets refer to a case scenario in the largest business city of each economy, except for 11 economies that have a population of more than 100 million as of 2013 (Bangladesh, Brazil, China, India, Indonesia, Japan, Mexico, Nigeria, Pakistan, the Russian Federation and the United States) where Doing Business also collected data for the second largest business city. The data for these 11 economies are a population-weighted average for the 2 largest business cities. The project has benefited from feedback from governments, academics, practitioners and reviewers. The initial goal remains: to provide an objective basis for understanding and improving the regulatory environment for business around the world. More about Doing Business (PDF, 5MB) Page 3 Doing Business 2019 Russian Federation Ease of Doing Business in DB 2019 Rank Region Europe & Central Asia 190 1 Russian Federation Income Category Upper middle income 31 DB 2019 Ease of doing business score Population 144,495,044 0 100 City Covered Moscow, Saint Petersburg 77.37 DB 2019 Ease of Doing Business Score 0 100 77.37: Russian Federation (Rank: 31) 73.64: China (Rank: 46) 72.34: Regional Average (Europe & Central Asia) 72.09: Mexico (Rank: 54) 60.01: Brazil (Rank: 109) Note: The ease of doing business score captures the gap of each economy from the best regulatory performance observed on each of the indicators across all economies in the Doing Business sample since 2005. An economy’s ease of doing business score is reflected on a scale from 0 to 100, where 0 represents the lowest and 100 represents the best performance. The ease of doing business ranking ranges from 1 to 190. Rankings on Doing Business topics - Russian Federation 1 12 12 22 18 28 32 48 57 53 55 55 82 Rank 99 109 136 163 190 Starting Dealing Getting Registering Getting Protecting Paying Trading Enforcing Resolving a with Electricity Property Credit Minority Taxes across Contracts Insolvency Business Construction Investors Borders Permits Ease of Doing Business Score on Doing Business topics - Russian Federation 100 94.00 93.04 88.74 80.00 79.77 80 74.61 71.06 72.18 61.67 58.61 Score 60 40 20 0 Starting Dealing Getting Registering Getting Protecting Paying Trading Enforcing Resolving a with Electricity Property Credit Minority Taxes across Contracts Insolvency Business Construction Investors Borders Permits Page 4 Doing Business 2019 Russian Federation Starting a Business This topic measures the number of procedures, time, cost and paid-in minimum capital requirement for a small- to medium-sized limited liability company to start up and formally operate in each economy’s largest business city. To make the data comparable across 190 economies, Doing Business uses a standardized business that is 100% domestically owned, has start-up capital equivalent to 10 times the income per capita, engages in general industrial or commercial activities and employs between 10 and 50 people one month after the commencement of operations, all of whom are domestic nationals. Starting a Business considers two types of local limited liability companies that are identical in all aspects, except that one company is owned by 5 married women and the other by 5 married men. The ranking of economies on the ease of starting a business is determined by sorting their scores for starting a business. These scores are the simple average of the scores for each of the component indicators. The most recent round of data collection for the project was completed in May 2018. See the methodology for more information. What the indicators measure Case study assumptions Procedures to legally start and formally operate To make the data comparable across economies, several assumptions about the a company (number) business and the procedures are used. It is assumed that any required information is readily available and that the entrepreneur will pay no bribes. • Preregistration (for example, name verification or reservation, notarization) The business: • Registration in the economy’s largest business - Is a limited liability company (or its legal equivalent). If there is more than one type city of limited liability company in the economy, the most common among domestic firms • Postregistration (for example, social security is chosen. Information on the most common form is obtained from incorporation registration, company seal) lawyers or the statistical office. - Operates in the economy’s largest business city. For 11 economies the data are • Obtaining approval from spouse to start a business or to leave the home to register the also collected for the second largest business city. company - The entire office space is approximately 929 square meters (10,000 square feet). - Is 100% domestically owned and has five owners, none of whom is a legal entity; • Obtaining any gender specific document for has a start-up capital of 10 times income per capita and has a turnover of at least company registration and operation or national 100 times income per capita. identification card - Performs general industrial or commercial activities, such as the production or sale of goods or services to the public. The business does not perform foreign trade Time required to complete each procedure activities and does not handle products subject to a special tax regime, for example, (calendar days) liquor or tobacco. It does not use heavily polluting production processes. • Does not include time spent gathering - Leases the commercial plant or offices and is not a proprietor of real estate and the information amount of the annual lease for the office space is equivalent to the income per capita. • Each procedure starts on a separate day (2 procedures cannot start on the same day) - Does not qualify for investment incentives or any special benefits. - Has at least 10 and up to 50 employees one month after the commencement of • Procedures fully completed online are recorded operations, all of whom are domestic nationals. as ½ day - Has a company deed that is 10 pages long. • Procedure is considered completed once final document is received The owners: • No prior contact with officials - Have reached the legal age of majority. If there is no legal age of majority, they are assumed to be 30 years old. Cost required to complete each procedure (% of - Are sane, competent, in good health and have no criminal record. income per capita) - Are married and the marriage is monogamous and registered with the authorities. - Where the answer differs according to the legal system applicable to the woman or • Official costs only, no bribes man in question (as may be the case in economies where there is legal plurality), the • No professional fees unless services required by answer used will be the one that applies to the majority of the population. law or commonly used in practice Paid-in minimum capital (% of income per capita) • Funds deposited in a bank or with third party before registration or up to 3 months after incorporation Page 5 Doing Business 2019 Russian Federation Starting a Business - Moscow Standardized Company Legal form Limited Liability Company (OOO) Paid-in minimum capital requirement RUB 0 City Covered Moscow Indicator Moscow Europe & OECD high Best Regulatory Central Asia income Performance Procedure – Men (number) 4 5.2 4.9 1 (New Zealand) Time – Men (days) 11 12.9 9.3 0.5 (New Zealand) Cost – Men (% of income per capita) 1.1 4.6 3.1 0.0 (Slovenia) Procedure – Women (number) 4 5.2 4.9 1 (New Zealand) Time – Women (days) 11 12.9 9.3 0.5 (New Zealand) Cost – Women (% of income per capita) 1.1 4.6 3.1 0.0 (Slovenia) Paid-in min. capital (% of income per capita) 0.0 2.3 8.6 0.0 (117 Economies) Figure – Starting a Business in Moscow and comparator economies – Ranking and Score DB 2019 Starting a Business Score 0 100 93.57: Saint Petersburg 93.52: China (Rank: 28) 92.82: Moscow 85.94: Mexico (Rank: 94) 80.23: Brazil (Rank: 140) Note: The ranking of economies on the ease of starting a business is determined by sorting their scores for starting a business. These scores are the simple average of the scores for each of the component indicators. Page 6 Doing Business 2019 Russian Federation Figure – Starting a Business in Moscow – Procedure, Time and Cost Time (days) Cost (% of income per capita) 0.7 10 0.6 Cost (% of income per capita) 8 0.5 Time (days) 0.4 6 0.3 4 0.2 2 0.1 0 0 1 2 3 4 Procedures (number) * This symbol is shown beside procedure numbers that take place simultaneously with the previous procedure. Note: Online procedures account for 0.5 days in the total time calculation. For economies that have a different procedure list for men and women, the graph shows the time for women. For more information on methodology, see the Doing Business website (http://doingbusiness.org/en/methodology ). For details on the procedures reflected here, see the summary below. Page 7 Doing Business 2019 Russian Federation Details – Starting a Business in Moscow – Procedure, Time and Cost No. Procedures Time to Complete Associated Costs 1 Notarize company registration application 1 day RUB 200 per Agency : Notary Public signature (stamp Each founder must fill out and sign a standard registration application, which must be duty) + RUB 1,000 notarized. There is a stamp duty of RUB200 per signature. In addition to the stamp duty, (fee for technical notaries charge the fees for technical work in amount of RUB 1,000 (in case of certifying work) signature of individual) or RUB 1,500 (in case of certifying signature of a company representative) per document. Starting from May 5, 2014 this procedure became optional. If the founder is able to attend the Tax Service office and file all the documents in person, the application does not have to be notarized and the tax officer can certify the founder’s signature instead. However, this is possible only in case when all the founders are able to visit the Tax Service in person, otherwise the application must be notarized. 2 Pay registration fee and register with the unified register at the Federal Tax 7 days RUB 4,000 Service on the local level, obtain state registration number and identification number of taxpayer (INN) Agency : Federal Tax Service Either the company or the notary on behalf of the company must submit the following documents for registration: • Resolution of the founders on the establishment of the company (Minutes of the general meeting of founders); • Charter (2 originals required, one is stamped by the Federal Tax Services and returned to applicants after the registration); • Notarized Registration Application; • Receipt of payment of the state registration fee; • Document Certifying the Physical Address of the New Company (this could be a lease agreement or a letter by the property owner of the leased property, certified with signature and building company’s stamp. If the leasing office space is from an individual owner this document would need notarization.) It is also required to file a notarized power of attorney, if the documents are filed by any person other than founder. The tax authorities sometimes implement a number of additional requirements, and failure to comply may lead to the rejection of the application. At the time of application, the applicant receives a confirmation slip, which specifies the date that the registration will be complete and ready for pick up. Starting from December 29, 2015 the registration term is 3 working days, not including the day of submission of documents and the day of issuance of the registration certificate. The registration fee is RUB 4,000, which can be done through a terminal machine at the offices of the Federal Tax Service, a wire transfer or any other means which would allow the founders to provide an evidence of payment to the Federal Tax Service. After submitting the application for registration, it is possible to check the readiness of the documents online, including the results of the decision taken (decision about registration,decision about suspension, refusal of registration). In recent times, there have been more cases of suspension of registration in order to verify the information disclosed in the Unified State Register of Legal Entities (EGRUL). On the day of pick up, the applicant will receive a package of documents, including Abstract of the state registration, abstract of tax registration with a Tax Identification Number (TIN), one of the original company charters (that the applicant submitted) stamped by the government, and proof of business entry in the unified State Register of Legal Entities. Since January 1, 2017, Certificates of state registration of legal entities, which were stamped on the special blanks of the Russian Federal Tax Service, have been cancelled, and the Lists of the record in the Unified State Register of Legal Entities are issued instead. The registration documents can be sent by mail, if an applicant indicated in the application form that he wants the documents to be delivered by mail. Upon the completion of the company's registration, the Registration Authority shall send the information about the new company to the Federal State Statistics Service and the social funds (Pension Fund and Social Insurance Fund) for the purposes of the company's registration with these authorities. The procedure can also be done online https://service.nalog.ru/gosreg/#ul - with electronic signature. However, obtaining online signature is costly and time consuming. In practice, most businesses do not utilize the online services. The online service has been available since 2012. Page 8 Doing Business 2019 Russian Federation 3 Make a company seal 1 day RUB 500 Agency : Seal-making service On 6 April 2015, the President of the Russian Federation signed Federal Law #82 that eliminates requirement for a company seal. However, in practice, majority of the businesses still obtain a company seal as part of the process of starting a business. Often there are several companies with similar names (there is no official name check when the company is registered), so using the seal with the company’s address and other credentials ensures the correct identification of the company. If the new company decides to have a seal it must insert the respective provision to its Articles of Association. A basic company seal typically costs RUB 500. More sophisticated seals can cost RUB 1,000-1,500. 4 Open the company bank account 2 days free if done at the Agency : Bank bank; RUB 200 According to the Central Bank of Russian Federation instruction No. 153-I from May 30, (signatures and bank 2014, the following documents are required in order to open a business bank account: card) + RUR 1,000 • A list from Unified State Register of Legal Entities; (notary fees) • Founding documents of the legal entity; approximately if done • Certificate of tax registration; with the notary • The license (permit) issued for a legal entity if such licenses (permits) are directly related to the capacity of the legal entity; • Bank signature card; • Documents confirming authorities of the persons defined in bank signature card; • Documents confirming authorities of the sole executive body of the legal entity. The signature of the entrepreneur must be certified and registered by a bank. There is a special form (provided by the government) that must be completed for this procedure. Entrepreneurs have two options. They can either (a) have the signature form notarized and then it can be brought to the bank when opening the bank account, or (b) they can certify the signature of the entrepreneur at the bank, when opening a bank account. According to the Federal law No. 52-FZ on Introduction of Amendments to Parts One and Two of the Tax Code of the Russian Federation and Certain Legislative Acts of the Russian Federation, as of May 1, 2014 a company is not obliged to inform the Federal Tax Service on opening, closing or changing details of the company's bank account. Takes place simultaneously with previous procedure. Page 9 Doing Business 2019 Russian Federation Starting a Business - Saint Petersburg Standardized Company Legal form Limited Liability Company (OOO) Paid-in minimum capital requirement RUB 0 City Covered Saint Petersburg Indicator Saint Europe & OECD high Best Regulatory Petersburg Central Asia income Performance Procedure – Men (number) 4 5.2 4.9 1 (New Zealand) Time – Men (days) 8 12.9 9.3 0.5 (New Zealand) Cost – Men (% of income per capita) 1.1 4.6 3.1 0.0 (Slovenia) Procedure – Women (number) 4 5.2 4.9 1 (New Zealand) Time – Women (days) 8 12.9 9.3 0.5 (New Zealand) Cost – Women (% of income per capita) 1.1 4.6 3.1 0.0 (Slovenia) Paid-in min. capital (% of income per capita) 0.0 2.3 8.6 0.0 (117 Economies) Figure – Starting a Business in Saint Petersburg and comparator economies – Ranking and Score DB 2019 Starting a Business Score 0 100 93.57: Saint Petersburg 93.52: China (Rank: 28) 92.82: Moscow 85.94: Mexico (Rank: 94) 80.23: Brazil (Rank: 140) Note: The ranking of economies on the ease of starting a business is determined by sorting their scores for starting a business. These scores are the simple average of the scores for each of the component indicators. Page 10 Doing Business 2019 Russian Federation Figure – Starting a Business in Saint Petersburg – Procedure, Time and Cost Time (days) Cost (% of income per capita) 8 0.7 7 0.6 Cost (% of income per capita) 6 0.5 Time (days) 5 0.4 4 0.3 3 0.2 2 1 0.1 0 0 1 2 3 4 Procedures (number) * This symbol is shown beside procedure numbers that take place simultaneously with the previous procedure. Note: Online procedures account for 0.5 days in the total time calculation. For economies that have a different procedure list for men and women, the graph shows the time for women. For more information on methodology, see the Doing Business website (http://doingbusiness.org/en/methodology ). For details on the procedures reflected here, see the summary below. Page 11 Doing Business 2019 Russian Federation Details – Starting a Business in Saint Petersburg – Procedure, Time and Cost No. Procedures Time to Complete Associated Costs 1 Notarize company registration application 1 day RUB 200 per Agency : Notary Public signature (stamp Each founder must fill out and sign a standard registration application, which must be duty) + RUB 700 (fee notarized. There is a stamp duty of RUB200 per signature. In addition to the stamp duty, for technical work) a notary will charge the fee for technical work related to certifying the signatures in amount of RUB700. Starting from May 5, 2014 this procedure became optional. If the founder is able to attend the Unified State Register and file all the documents in person, the application does not have to be notarized and the registration officer can certify the founder’s signature instead. However, this is possible only in case when all the founders are able to visit the Unified State Register in person, otherwise the application must be notarized. 2 Pay the Registration Fee and Registration with the Unified State Register 5 days RUB 4,000 Agency : Federal Tax Service Either the company or the notary on behalf of the company must submit the following documents for registration: • Resolution of the founders on the establishment of the company (Minutes of the general meeting of founders); • Charter (2 originals required, one is stamped by the Federal Tax Services and returned to applicants after the registration); • Notarized Registration Application; • Receipt of payment of the state registration fee; • Document Certifying the Physical Address of the New Company (this could be a lease agreement or a letter by the property owner of the leased property, certified with signature and building company’s stamp. If the leasing office space is from an individual owner this document would need notarization.) It is also required to file a notarized power of attorney, if the documents are filed by any person other than founder. The tax authorities sometimes implement a number of additional requirements, and failure to comply may lead to the rejection of the application. At the time of application, the applicant receives a confirmation slip, which specifies the date that the registration will be complete and ready for pick up. Starting from December 29, 2015 the registration term is 3 working days, not including the day of submission of documents and the day of issuance of the registration certificate. The registration fee is RUB 4,000, which can be done through a terminal machine at the offices of the Federal Tax Service, a wire transfer or any other means which would allow the founders to provide an evidence of payment to the Federal Tax Service. After submitting the application for registration, it is possible to check the readiness of the documents online, including the results of the decision taken (decision about registration,decision about suspension, refusal of registration). In recent times, there have been more cases of suspension of registration in order to verify the information disclosed in the Unified State Register of Legal Entities (EGRUL). On the day of pick up, the applicant will receive a package of documents, including Abstract of the state registration, abstract of tax registration with a Tax Identification Number (TIN), one of the original company charters (that the applicant submitted) stamped by the government, and proof of business entry in the unified State Register of Legal Entities. Since January 1, 2017, Certificates of state registration of legal entities, which were stamped on the special blanks of the Russian Federal Tax Service, have been cancelled, and the Lists of the record in the Unified State Register of Legal Entities are issued instead. The registration documents can be sent by mail, if an applicant indicated in the application form that he wants the documents to be delivered by mail. Upon the completion of the company's registration, the Registration Authority shall send the information about the new company to the Federal State Statistics Service and the social funds (Pension Fund and Social Insurance Fund) for the purposes of the company's registration with these authorities. The procedure can also be done online https://service.nalog.ru/gosreg/#ul - with electronic signature. However, obtaining online signature is costly and time consuming. In practice, most businesses do not utilize the online services. The online service has been available since 2012. Page 12 Doing Business 2019 Russian Federation 3 Make a seal in a private company 1 day RUB 350 Agency : Seal maker On 6 April 2015, the President of the Russian Federation signed Federal Law #82 that eliminates requirement for a company seal. However, in practice, majority of the businesses still obtain a company seal as part of the process of starting a business. Often there are several companies with similar names (there is no official name check when the company is registered), so using the seal with the company’s address and other credentials ensures the correct identification of the company. If the new company decides to have a seal it must insert the respective provision to its Articles of Association. The cost of acquiring a company seal at the average market price is RUB 350. 4 Open a company bank account 1 day RUB 500 Agency : Commercial Bank Fees may vary depending on the bank. According to the Federal law No. 52-FZ on Introduction of Amendments to Parts One and Two of the Tax Code of the Russian Federation and Certain Legislative Acts of the Russian Federation, as of May 1, 2014 a company is not obliged to inform the Federal Tax Service on opening, closing or changing details of the company's bank account. This is done automatically by the bank. Takes place simultaneously with previous procedure. Page 13 Doing Business 2019 Russian Federation Dealing with Construction Permits This topic tracks the procedures, time and cost to build a warehouse—including obtaining necessary the licenses and permits, submitting all required notifications, requesting and receiving all necessary inspections and obtaining utility connections. In addition, the Dealing with Construction Permits indicator measures the building quality control index, evaluating the quality of building regulations, the strength of quality control and safety mechanisms, liability and insurance regimes, and professional certification requirements. The most recent round of data collection was completed in May 2018. See the methodology for more information What the indicators measure Case study assumptions Procedures to legally build a warehouse To make the data comparable across economies, several assumptions about the (number) construction company, the warehouse project and the utility connections are used. • Submitting all relevant documents and obtaining The construction company (BuildCo): all necessary clearances, licenses, permits and certificates - Is a limited liability company (or its legal equivalent) and operates in the economy’s largest business city. For 11 economies the data are also collected for the second • Submitting all required notifications and receiving largest business city. all necessary inspections - Is 100% domestically and privately owned; has five owners, none of whom is a • Obtaining utility connections for water and legal entity. Has a licensed architect and a licensed engineer, both registered with sewerage the local association of architects or engineers. BuildCo is not assumed to have any other employees who are technical or licensed experts, such as geological or • Registering and selling the warehouse after its completion topographical experts. - Owns the land on which the warehouse will be built and will sell the warehouse Time required to complete each procedure upon its completion. (calendar days) The warehouse: • Does not include time spent gathering information - Will be used for general storage activities, such as storage of books or stationery. - Will have two stories, both above ground, with a total constructed area of • Each procedure starts on a separate day— approximately 1,300.6 square meters (14,000 square feet). Each floor will be 3 though procedures that can be fully completed meters (9 feet, 10 inches) high and will be located on a land plot of approximately online are an exception to this rule 929 square meters (10,000 square feet) that is 100% owned by BuildCo, and the • Procedure is considered completed once final warehouse is valued at 50 times income per capita. document is received - Will have complete architectural and technical plans prepared by a licensed architect. If preparation of the plans requires such steps as obtaining further • No prior contact with officials documentation or getting prior approvals from external agencies, these are counted Cost required to complete each procedure (% of as procedures. income per capita) - Will take 30 weeks to construct (excluding all delays due to administrative and regulatory requirements). • Official costs only, no bribes The water and sewerage connections: Building quality control index (0-15) - Will be 150 meters (492 feet) from the existing water source and sewer tap. If there • Quality of building regulations (0-2) is no water delivery infrastructure in the economy, a borehole will be dug. If there is • Quality control before construction (0-1) no sewerage infrastructure, a septic tank in the smallest size available will be installed or built. • Quality control during construction (0-3) - Will have an average water use of 662 liters (175 gallons) a day and an average • Quality control after construction (0-3) wastewater flow of 568 liters (150 gallons) a day. Will have a peak water use of 1,325 liters (350 gallons) a day and a peak wastewater flow of 1,136 liters (300 • Liability and insurance regimes (0-2) gallons) a day. • Professional certifications (0-4) - Will have a constant level of water demand and wastewater flow throughout the year; will be 1 inch in diameter for the water connection and 4 inches in diameter for the sewerage connection. Page 14 Doing Business 2019 Russian Federation Dealing with Construction Permits - Moscow Standardized Warehouse Estimated value of warehouse RUB 30,554,030.80 City Covered Moscow Indicator Moscow Europe & OECD high Best Regulatory Central Asia income Performance Procedures (number) 16 16.0 12.7 None in 2017/18 Time (days) 194.5 170.1 153.1 None in 2017/18 Cost (% of warehouse value) 1.3 4.0 1.5 None in 2017/18 Building quality control index (0-15) 14.0 12.0 11.5 15.0 (3 Economies) Figure – Dealing with Construction Permits in Moscow and comparator economies – Ranking and Score DB 2019 Dealing with Construction Permits Score 0 100 77.09: Saint Petersburg 73.55: Moscow 68.62: Mexico (Rank: 93) 65.16: China (Rank: 121) 49.86: Brazil (Rank: 175) Note: The ranking of economies on the ease of dealing with construction permits is determined by sorting their scores for dealing with construction permits. These scores are the simple average of the scores for each of the component indicators. Figure – Dealing with Construction Permits in Moscow – Procedure, Time and Cost Time (days) Cost (% of warehouse value) 0.4 0.35 Cost (% of warehouse value) 150 0.3 Time (days) 0.25 100 0.2 0.15 50 0.1 0.05 0 0 1 2 *3 *4 5 6 7 *8 9 10 11 12 13 14 15 16 Procedures (number) * This symbol is shown beside procedure numbers that take place simultaneously with the previous procedure. Note: Online procedures account for 0.5 days in the total time calculation. For economies that have a different procedure list for men and women, the graph shows the time for women. For more information on methodology, see the Doing Business website (http://doingbusiness.org/en/methodology ). For details on the procedures reflected here, see the summary below. Page 15 Doing Business 2019 Russian Federation Figure – Dealing with Construction Permits in Moscow and comparator economies – Measure of Quality 15 14.0 14.0 11.7 12.0 11.1 Index score 10 9.0 5 0 Moscow Brazil China Mexico Saint Petersburg Europe & Central Asia Details – Dealing with Construction Permits in Moscow – Procedure, Time and Cost No. Procedures Time to Complete Associated Costs 1 Request and obtain the development plan of land plot (GPZU) at the 30 days no charge Moscow Architecture and City Planning Committee Agency : The Moscow Architecture and City Planning Committee The development plan of land plot (GPZU) must be obtained prior to obtaining any studies of the land plot or the technical conditions. It is the first step in the sequence of steps to obtain a building permit. A one-stop shop has been implemented at the Moscow Architecture and City Planning Committee (MoskomArchitektura) in order to deal with all procedures related to land. BuildCo does not have to visit each agency in order to obtain the documents. Rather, BuildCo applies for the copy of the development plan of the land plot at MoskomArchitektura and they take care of all the steps. 2 Request a topographic survey of the land plot 30 days RUB 100,000 Agency : Private Organization BuildCo must obtain a land survey at a scale of 1:500/1 by a specialized organization. A report is prepared as a result of the topographic survey with a layout of the building and structure. 3 Request and obtain an engineering, geological and ecological survey and 45 days RUB 100,000 obtain Act of Moscow Geological - Geodesic Department Agency : Mosgorgeotrest or Private Licensed Companies Information about conditions of the land plot (geological, geodesic and ecological) is needed for project design. There are 5 types of mandatory engineering surveys. All or a few of them are requested, depending on the land plot and surrounding territorial conditions. In the Doing Business case, there could be 2 -- 3 types of surveys. Mosgorgeotrest conduct these surveys, but private licensed companies can also conduct these surveys but in that case, the companies are requested to get the results ‘stamped’ by Mosgorgeotrest. 4 Request and obtain technical conditions for water and sewage 30 days no charge Agency : Moscow Water and Sewage Company - Mosvodokanal The technical conditions are defined by the Moscow Water and Sewage Company. 5 Obtain compliance certificate from Moscow Water and Sewage Company 30 days no charge Agency : Moscow Water and Sewage Company - Mosvodokanal BuildCo must obtain approval of the final construction design from the Moscow Water and Sewage Company, which will verify if the final design is in compliance with the technical conditions. 6 Request and obtain permission for construction 11 days no charge Agency : Moscow State Committee of Construction Supervision To obtain the building permit (permission for construction), BuildCo must submit the following documents to the Moscow State Committee of Construction Supervision: • Application form • Documents confirming title to the land • Town (planning) plan of land • Relevant project documentation The application is submitted online through www.stroi.mos.ru. The permit is free of charge. Page 16 Doing Business 2019 Russian Federation 7 Request and obtain an opening order of production of works from the 7 days no charge Union of Administrative Technical Inspections (UATI) Agency : Union of Administrative Technical Inspections (UATI) The construction company must obtain an order of conducting of construction works and for building the utility networks. It is possible to obtain the order at once or in stages, individually for each network and for each phase of construction. The list of required document to apply for this order are listed on the website oati.mos.ru. The order must be closed after completion of construction works. 8 Receive control-geodesic survey from Mosgorgeotrest 1 day RUB 30,000 Agency : Mosgorgeotrest Prior to beginning the construction, Mosgorgeotrest conducts topographic and geodesic surveys (geodesic base, general construction plan). This is conducted in order to verify the compliance of the project design documentation with the existing schemes of underground infrastructure lines. 9 Receive random inspection during construction 1 day no charge Agency : Union of Administrative Technical Inspections (UATI) Construction activities are not interrupted during inspections. 10 Notify Moscow Water and Sewage Company (Mosvodokanal) of completion 1 day no charge of construction works Agency : Moscow Water and Sewage Company - Mosvodokanal When construction works are completed, BuildCo notifies Moscow Water and Sewage Company (Mosvodokanal) that the construction site is ready for inspection and water and sewage connection. 11 Connect to water and sewage services 30 days RUB 109,259 Agency : Moscow Water and Sewage Company - Mosvodokanal An agreement must be concluded between BuildCo and the Moscow Water and Sewage Company. The connection to water service is then installed. 12 Close the order on conducting of construction works from the Union of 0.5 days no charge Administrative Technical Inspections (UATI) Agency : Union of Administrative Technical Inspections (UATI) After the completion of construction works, it is mandatory to close the order on conducting of construction works from the Union of Administrative Technical Inspections (UATI). The request to close the order is submitted online at www.stroi.mos.ru. The documents that are required for the closing of the order are requested by UATI through an online interaction with other agencies, without the involvement of the investor. The closing of the order can take up to 8 business days. However, the investor does not need to wait for for the order to be officially close before beginning other procedures, as submitting the request is sufficient. The requirement to submit the request online was introduced by Resolution of the Government of Moscow № 284-PP on May 19, 2015. 13 Receive a final inspection 1 day no charge Agency : Moscow State Committee of Construction Supervision According to the Article 55 of the Urban Development Code dated 29 December 2004, after the completion of construction works, the Moscow State Committee of Construction Supervision conducts a final inspection to verify if the building was built according to the approved design conditions. The occupancy permit may be obtained only if the final inspection certificate is available confirming the compliance of the constructed project with the design documentation and technical regulations based on the building inspection results. 14 Request and receive the technical plans / cadastre passports of the 14 days RUB 40,000 building Agency : Federal Agency for Technical Inventory BuildCo has to provide technical and cadastral plans of the building in order to be able to register the building at the Federal Service for State Registration, Cadastre and Cartography. Page 17 Doing Business 2019 Russian Federation 15 Request and receive the disposition on operation of building (occupancy 9 days no charge permit) Agency : Moscow State Committee of Construction Supervision In order to obtain permission to use the building, it is necessary to apply to the Moscow State Committee of Construction Supervision with the following documents: 1) land ownership documents 2) development plan of the land plot 3) building permit 4) a document confirming that the constructed building meets the requirements of technical regulations signed by the person responsible for conducting the construction works 5) a detailed map showing the location of the construction, location of the utility networks within the boundaries of the land plot and the schematic plan of the land plot. The document should be signed by the person responsible for conducting the construction works. The application is submitted online through www.stroi.mos.ru. 16 Register the building after completion in Rosreestr 14 days RUB 22,000 Agency : Federal Service for State Registration, Cadastre and Cartography (Rosreestr) According to the Russian Federation Civil Code, the right to own and "create" immovable things, including buildings, is subject to state registration at the Unified State Register of rights to immovable assets and associated transactions. To complete the registration, BuildCo must submit an application, the real property plan, and approval of the building, confirming that real property has been built. Takes place simultaneously with previous procedure. Page 18 Doing Business 2019 Russian Federation Details – Dealing with Construction Permits in Moscow – Measure of Quality Answer Score Building quality control index (0-15) 14.0 Quality of building regulations index (0-2) 2.0 How accessible are building laws and regulations in your economy? (0-1) Available online; 1.0 Free of charge. Which requirements for obtaining a building permit are clearly specified in the building List of required 1.0 regulations or on any accessible website, brochure or pamphlet? (0-1) documents; Fees to be paid; Required preapprovals. Quality control before construction index (0-1) 1.0 Which third-party entities are required by law to verify that the building plans are in Licensed 1.0 compliance with existing building regulations? (0-1) architect; Licensed engineer. Quality control during construction index (0-3) 3.0 What types of inspections (if any) are required by law to be carried out during construction? Inspections by in- 2.0 (0-2) house engineer; Risk-based inspections. Do legally mandated inspections occur in practice during construction? (0-1) Mandatory 1.0 inspections are always done in practice. Quality control after construction index (0-3) 3.0 Is there a final inspection required by law to verify that the building was built in accordance Yes, final 2.0 with the approved plans and regulations? (0-2) inspection is done by government agency. Do legally mandated final inspections occur in practice? (0-1) Final inspection 1.0 always occurs in practice. Liability and insurance regimes index (0-2) 1.0 Which parties (if any) are held liable by law for structural flaws or problems in the building Architect or 1.0 once it is in use (Latent Defect Liability or Decennial Liability)? (0-1) engineer; Construction company. Which parties (if any) are required by law to obtain an insurance policy to cover possible No party is 0.0 structural flaws or problems in the building once it is in use (Latent Defect Liability Insurance required by law or Decennial Insurance)? (0-1) to obtain insurance . Professional certifications index (0-4) 4.0 What are the qualification requirements for the professional responsible for verifying that the Minimum number 2.0 architectural plans or drawings are in compliance with existing building regulations? (0-2) of years of experience; University degree in architecture or engineering; Passing a certification exam. Page 19 Doing Business 2019 Russian Federation What are the qualification requirements for the professional who supervises the construction Minimum number 2.0 on the ground? (0-2) of years of experience; University degree in engineering, construction or construction management; Passing a certification exam. Page 20 Doing Business 2019 Russian Federation Dealing with Construction Permits - Saint Petersburg Standardized Warehouse Estimated value of warehouse RUB 30,554,030.80 City Covered Saint Petersburg Indicator Saint Europe & OECD high Best Regulatory Petersburg Central Asia income Performance Procedures (number) 13 16.0 12.7 None in 2017/18 Time (days) 192 170.1 153.1 None in 2017/18 Cost (% of warehouse value) 1.0 4.0 1.5 None in 2017/18 Building quality control index (0-15) 14.0 12.0 11.5 15.0 (3 Economies) Figure – Dealing with Construction Permits in Saint Petersburg and comparator economies – Ranking and Score DB 2019 Dealing with Construction Permits Score 0 100 77.09: Saint Petersburg 73.55: Moscow 68.62: Mexico (Rank: 93) 65.16: China (Rank: 121) 49.86: Brazil (Rank: 175) Note: The ranking of economies on the ease of dealing with construction permits is determined by sorting their scores for dealing with construction permits. These scores are the simple average of the scores for each of the component indicators. Figure – Dealing with Construction Permits in Saint Petersburg – Procedure, Time and Cost Time (days) Cost (% of warehouse value) 0.35 0.3 Cost (% of warehouse value) 150 0.25 Time (days) 0.2 100 0.15 0.1 50 0.05 0 0 1 2 *3 *4 *5 6 7 8 9 10 11 12 13 Procedures (number) * This symbol is shown beside procedure numbers that take place simultaneously with the previous procedure. Note: Online procedures account for 0.5 days in the total time calculation. For economies that have a different procedure list for men and women, the graph shows the time for women. For more information on methodology, see the Doing Business website (http://doingbusiness.org/en/methodology ). For details on the procedures reflected here, see the summary below. Page 21 Doing Business 2019 Russian Federation Figure – Dealing with Construction Permits in Saint Petersburg and comparator economies – Measure of Quality 15 14.0 14.0 11.7 12.0 11.1 Index score 10 9.0 5 0 Saint Petersburg Brazil China Mexico Moscow Europe & Central Asia Details – Dealing with Construction Permits in Saint Petersburg – Procedure, Time and Cost No. Procedures Time to Complete Associated Costs 1 Request and obtain the development plan of land plot (GPZU) 30 days no charge Agency : Saint-Petersburg Architecture and City Planning Committee The development plan of land plot (GPZU) must be obtained prior to obtaining any studies of the land plot or the technical conditions. It is the first step in the sequence of steps to obtain a building permit. It is also required at the end of the construction in order to obtain the occupancy certificate. 2 Request a topographic survey of the land plot 30 days RUB 100,000 Agency : Specialized Organization BuildCo must obtain a land survey at a scale of 1:500/1 by a specialized organization. A report is prepared as a result of the topographic survey with a layout of the building and structure. 3 Request and obtain an engineering, geological and ecological survey of the 45 days RUB 100,000 land plot Agency : Licensed Private Company Information about conditions of the land plot (geological, geodesic and ecological) is needed for project design. There are 5 types of mandatory engineering surveys. All or a few of them are requested, depending on the land plot and surrounding territorial conditions. In the Doing Business case, there could be 2 -- 3 types of surveys. Engineering surveys are performed by private companies which belong to self-regulated organizations (SRO). 4 Request and obtain technical conditions for water and sewage 30 days no charge Agency : Saint-Petersburg Water and Sewage Company (Vodokanal) After obtaining a topographic survey of the land plot and an engineering, geological, and ecological survey, BuildCo can obtain the technical conditions for water and sewage. According to the applicable regulations, the technical conditions should be provided within 16 business days. However, in practice it takes about 45 days to obtain the technical conditions for the water and sewage connection. 5 Request terms of connection to utility networks and request a contract for 30 days no charge water and sewage connection Agency : Saint-Petersburg Water and Sewage Company (Vodokanal) BuildCo submits the following documents to Vodokanal of Saint-Petersburg in order to request a water and sewage connection: - Copies of constituent documents (registration documents and other supporting documentation verifying the legal status of BuildCo) - Cadastral plan of the land - Technical conditions for water and sewage - Estimated balance of water consumption and wastewater usage - Topographic map of the land on a scale of 1:500 - Urban development plan for the land 6 Request and obtain permission for construction 10 days no charge Agency : State Agency of Construction Supervision and Expertise of Saint- Petersburg To obtain the building permit (permission for construction), BuildCo must submit the following documents to the State Agency of Construction Supervision and Expertise of Saint-Petersburg: • Application form • Documents confirming title to the land • Town (planning) plan of land • Relevant project documentation The permit is free of charge. The application is submitted through http://info.essk.gov.spb.ru/ Page 22 Doing Business 2019 Russian Federation 7 Request and obtain an opening order of production of works from the State 14 days no charge Administrative Technical Inspectorate Agency : State Administrative Technical Inspectorate The construction company must obtain an order of conducting of construction works and for building the utility networks outside its own land plot. It is possible to obtain the order at once or in stages, individually for each network and for each phase of construction. 8 Receive inspection from the State Agency of Construction Supervision and 1 day no charge Expertise to check working conditions Agency : State Agency of Construction Supervision and Expertise of Saint- Petersburg The State Agency of Construction Supervision and Expertise of Saint-Petersburg will generally perform one inspection during construction to check that the working conditions at the construction site are appropriate for the workers and that there is temporary electricity, running water, and safety mechanisms in place. 9 Obtain connection to water and sewage services 30 days RUB 37,161 Agency : Saint-Petersburg Water and Sewage Company (Vodokanal) BuildCo signs the contract prepared by the water and sewage company and requests the date of connection to water and sewage services. The water and sewage company will provide the connection according to the date specified in the contract. 10 Receive a final inspection 1 day no charge Agency : State Construction Supervision and Expertise Service According to the Article 55 of the Urban Development Code dated 29 December 2004, after the completion of construction works, the State Agency of Construction Supervision and Expertise of Saint-Petersburg conducts a final inspection to verify if the building was built according to the approved design conditions. The occupancy permit may be obtained only if the final inspection certificate is available confirming the compliance of the constructed project with the design documentation and technical regulations based on the building inspection results. 11 Request and obtain a technical plan of the building 20 days RUB 55,000 Agency : Cadastral Engineers / Bureau of Technical Inventory BuildCo has to provide technical and cadastral plans of the building in order to be able to register the building at the Federal Service for State Registration, Cadastre and Cartography. Preparation of the technical plan of the building can be done by either a licensed cadatstral engineer or the Bureau of Technical Inventory. The preparation of the technical plan can take from 10 to 30 days. 12 Request and receive the disposition on operation of the building 10 days no charge (occupancy permit) Agency : State Agency of Construction Supervision and Expertise of Saint- Petersburg In order to obtain permission to use the building, it is necessary to apply to the State Agency of Construction Supervision and Expertise of Saint-Petersburg with the following documents: 1) land ownership documents 2) development plan of the land plot 3) building permit 4) a document confirming that the constructed building meets the requirements of technical regulations signed by the person responsible for conducting the construction works 5) a detailed map showing the location of the construction, location of the utility networks within the boundaries of the land plot and the schematic plan of the land plot. The document should be signed by the person responsible for conducting the construction works. The application is submitted through http://info.essk.gov.spb.ru/ 13 Register the building at Rosreestr 30 days RUB 22,000 Agency : Federal Service for State Registration, Cadastre and Cartography (Rosreestr) According to the Russian Federation Civil Code, the right to own and "create" immovable things, including buildings, is subject to state registration at the Unified State Register of rights to immovable assets and associated transactions. Takes place simultaneously with previous procedure. Page 23 Doing Business 2019 Russian Federation Details – Dealing with Construction Permits in Saint Petersburg – Measure of Quality Answer Score Building quality control index (0-15) 14.0 Quality of building regulations index (0-2) 2.0 How accessible are building laws and regulations in your economy? (0-1) Available online; 1.0 Free of charge. Which requirements for obtaining a building permit are clearly specified in the building List of required 1.0 regulations or on any accessible website, brochure or pamphlet? (0-1) documents; Fees to be paid; Required preapprovals. Quality control before construction index (0-1) 1.0 Which third-party entities are required by law to verify that the building plans are in Licensed 1.0 compliance with existing building regulations? (0-1) architect; Licensed engineer. Quality control during construction index (0-3) 3.0 What types of inspections (if any) are required by law to be carried out during construction? Inspections by in- 2.0 (0-2) house engineer; Risk-based inspections. Do legally mandated inspections occur in practice during construction? (0-1) Mandatory 1.0 inspections are always done in practice. Quality control after construction index (0-3) 3.0 Is there a final inspection required by law to verify that the building was built in accordance Yes, final 2.0 with the approved plans and regulations? (0-2) inspection is done by government agency. Do legally mandated final inspections occur in practice? (0-1) Final inspection 1.0 always occurs in practice. Liability and insurance regimes index (0-2) 1.0 Which parties (if any) are held liable by law for structural flaws or problems in the building Architect or 1.0 once it is in use (Latent Defect Liability or Decennial Liability)? (0-1) engineer; Construction company. Which parties (if any) are required by law to obtain an insurance policy to cover possible No party is 0.0 structural flaws or problems in the building once it is in use (Latent Defect Liability Insurance required by law or Decennial Insurance)? (0-1) to obtain insurance . Professional certifications index (0-4) 4.0 What are the qualification requirements for the professional responsible for verifying that the Minimum number 2.0 architectural plans or drawings are in compliance with existing building regulations? (0-2) of years of experience; University degree in architecture or engineering; Passing a certification exam. Page 24 Doing Business 2019 Russian Federation What are the qualification requirements for the professional who supervises the construction Minimum number 2.0 on the ground? (0-2) of years of experience; University degree in engineering, construction or construction management; Passing a certification exam. Page 25 Doing Business 2019 Russian Federation Getting Electricity This topic measures the procedures, time and cost required for a business to obtain a permanent electricity connection for a newly constructed warehouse. Additionally, the reliability of supply and transparency of tariffs index measures reliability of supply, transparency of tariffs and the price of electricity. The most recent round of data collection for the project was completed in May 2018. See the methodology for more information. What the indicators measure Case study assumptions Procedures to obtain an electricity connection To make the data comparable across economies, several assumptions about the (number) warehouse, the electricity connection and the monthly consumption are used. • Submitting all relevant documents and obtaining The warehouse: all necessary clearances and permits - Is owned by a local entrepreneur and is used for storage of goods. • Completing all required notifications and - Is located in the economy’s largest business city. For 11 economies the data are receiving all necessary inspections also collected for the second largest business city. • Obtaining external installation works and possibly - Is located in an area where similar warehouses are typically located and is in an purchasing material for these works area with no physical constraints. For example, the property is not near a railway. - Is a new construction and is being connected to electricity for the first time. • Concluding any necessary supply contract and obtaining final supply - Has two stories with a total surface area of approximately 1,300.6 square meters (14,000 square feet). The plot of land on which it is built is 929 square meters Time required to complete each procedure (10,000 square feet). (calendar days) The electricity connection: • Is at least 1 calendar day - Is a permanent one with a three-phase, four-wire Y connection with a subscribed • Each procedure starts on a separate day capacity of 140-kilo-volt-ampere (kVA) with a power factor of 1, when 1 kVA = 1 • Does not include time spent gathering kilowatt (kW). information - Has a length of 150 meters. The connection is to either the low- or medium-voltage distribution network and is either overhead or underground, whichever is more • Reflects the time spent in practice, with little common in the area where the warehouse is located and requires works that involve follow-up and no prior contact with officials the crossing of a 10-meter road (such as by excavation or overhead lines) but are all Cost required to complete each procedure (% of carried out on public land. There is no crossing of other owners’ private property because the warehouse has access to a road. income per capita) - Does not require work to install the internal wiring of the warehouse. This has • Official costs only, no bribes already been completed up to and including the customer’s service panel or • Value added tax excluded switchboard and the meter base. The reliability of supply and transparency of The monthly consumption: tariffs index (0-8) - It is assumed that the warehouse operates 30 days a month from 9:00 a.m. to 5:00 • Duration and frequency of power outages (0–3) p.m. (8 hours a day), with equipment utilized at 80% of capacity on average and that • Tools to monitor power outages (0–1) there are no electricity cuts (assumed for simplicity reasons) and the monthly energy consumption is 26,880 kilowatt-hours (kWh); hourly consumption is 112 kWh. • Tools to restore power supply (0–1) - If multiple electricity suppliers exist, the warehouse is served by the cheapest • Regulatory monitoring of utilities’ performance supplier. (0–1) - Tariffs effective in January of the current year are used for calculation of the price of electricity for the warehouse. Although January has 31 days, for calculation • Financial deterrents limiting outages (0–1) purposes only 30 days are used. • Transparency and accessibility of tariffs (0–1) Price of electricity (cents per kilowatt-hour)* • Price based on monthly bill for commercial warehouse in case study *Note: Doing Business measures the price of electricity, but it is not included in the ease of doing business score nor the ranking on the ease of getting electricity. Page 26 Doing Business 2019 Russian Federation Getting Electricity - Moscow Standardized Connection Price of electricity (US cents per kWh) 8.0 Name of utility MOESK City Covered Moscow Indicator Moscow Europe & OECD high Best Regulatory Central Asia income Performance Procedures (number) 2 5.3 4.5 3 (25 Economies) Time (days) 70 110.3 77.2 18 (3 Economies) Cost (% of income per capita) 5.3 325.1 64.2 0.0 (3 Economies) Reliability of supply and transparency of tariff 8 5.5 7.5 8.0 (27 Economies) index (0-8) Figure – Getting Electricity in Moscow and comparator economies – Ranking and Score DB 2019 Getting Electricity Score 0 100 94.33: Moscow 93.24: Saint Petersburg 92.01: China (Rank: 14) 84.37: Brazil (Rank: 40) 71.06: Mexico (Rank: 99) Note: The ranking of economies on the ease of getting electricity is determined by sorting their scores for getting electricity. These scores are the simple average of the scores for all the component indicators except the price of electricity. Page 27 Doing Business 2019 Russian Federation Figure – Getting Electricity in Moscow – Procedure, Time and Cost Time (days) Cost (% of income per capita) 70 6 60 Cost (% of income per capita) 5 50 4 Time (days) 40 3 30 2 20 1 10 0 0 1 2 Procedures (number) * This symbol is shown beside procedure numbers that take place simultaneously with the previous procedure. Note: Online procedures account for 0.5 days in the total time calculation. For economies that have a different procedure list for men and women, the graph shows the time for women. For more information on methodology, see the Doing Business website (http://doingbusiness.org/en/methodology ). For details on the procedures reflected here, see the summary below. Figure – Getting Electricity in Moscow and comparator economies – Measure of Quality 8 8 8 7 7 6 6 6 5.5 Index score 5 4 3 2 1 0 Moscow Brazil China Mexico Saint Petersburg Europe & Central Asia Page 28 Doing Business 2019 Russian Federation Details – Getting Electricity in Moscow – Procedure, Time and Cost No. Procedures Time to Complete Associated Costs 1 Submit application to MOESK and electronically sign contract for 7 calendar days RUB 32,477.26 connection Agency : MOESK The application for electrical connection is submitted electronically through the online personal account on the MOESK website (http://utp.moesk.ru/my/). There is no need to visit the client services office. The application should be supported by the documents required by the utility, including the internal wiring and equipment location plan, justification of the requested capacity, copy of the license of the firm which prepared the plan, and documents certifying the legal status of the customer. Within 7 days after receiving the connection application, MOESK provides the customer with the technical conditions for connection along with a signed connection and supply contracts. All the documents are available online in the customer's personal account on the MOESK website, where those can be signed electronically. The customer is not required to go to the office of MOESK. At every stage of the application processing, the applicant receives a text-message notification to the cellular phone indicated on the application form. The customer can track the status of the application through his/her personal account on the MOESK website. Upon signing the connection contract the customer makes the payment of the connection cost online. 2 Receive external works and final connection 63 calendar days RUB 0 Agency : MOESK Upon having the connection contract signed electronically by the customer, the utility prepares the project design for building a network for connection. MOESK will also obtain all approvals for construction work (such as the permit for the laying underground or overhead lines), and carry out all the external works according to the contract and the technical conditions. The external works and meter installation do not involve the customer. MOESK performs all the work up to the land boundaries of the applicant. The customer is responsible for having the internal network ready with all the necessary equipment installed, including the metering equipment. Internal wiring can be done by a company engineer, or can be outsourced to a specialized electric company or the utility under a separate contract. Before energizing, the utility checks the readiness of the internal network and equipment of the customer, including the meter and sealing it, to receive electric energy. If there are no any issues on the customer side, the utility energizes the warehouse and provides the customer with the final set of documents - including the inspection certificate, the certificate of fulfillment of the obligations mentioned in the technical conditions, the balance separation certificate (акт разграничения балансовой принадлежности), and certificate of responsibilities. Takes place simultaneously with previous procedure. Page 29 Doing Business 2019 Russian Federation Details – Getting Electricity in Moscow – Measure of Quality Answer Reliability of supply and transparency of tariff index (0-8) 8 Total duration and frequency of outages per customer a year (0-3) 3 System average interruption duration index (SAIDI) 0.4 System average interruption frequency index (SAIFI) 0.1 What is the minimum outage time (in minutes) that the utility considers for the calculation of SAIDI/SAIFI 1.0 Mechanisms for monitoring outages (0-1) 1 Does the distribution utility use automated tools to monitor outages? Yes Mechanisms for restoring service (0-1) 1 Does the distribution utility use automated tools to restore service? Yes Regulatory monitoring (0-1) 1 Does a regulator—that is, an entity separate from the utility—monitor the utility’s performance on reliability of Yes supply? Financial deterrents aimed at limiting outages (0-1) 1 Does the utility either pay compensation to customers or face fines by the regulator (or both) if outages Yes exceed a certain cap? Communication of tariffs and tariff changes (0-1) 1 Are effective tariffs available online? Yes Link to the website, if available online http://www.mosenerg osbyt.ru/website/face s/legals/tariffs-n- prices?_adf.ctrl- state=11iei8idwi_17& _afrLoop=45784643 8209203& Are customers notified of a change in tariff ahead of the billing cycle? Yes Note: If the duration and frequency of outages is 100 or less, the economy is eligible to score on the Reliability of supply and transparency of tariff index. If the duration and frequency of outages is not available, or is over 100, the economy is not eligible to score on the index. If the minimum outage time considered for SAIDI/SAIFI is over 5 minutes, the economy is not eligible to score on the index. Page 30 Doing Business 2019 Russian Federation Getting Electricity - Saint Petersburg Standardized Connection Price of electricity (US cents per kWh) 8.5 Name of utility Lenenergo (Ленэнерго) City Covered Saint Petersburg Indicator Saint Europe & OECD high Best Regulatory Petersburg Central Asia income Performance Procedures (number) 2 5.3 4.5 3 (25 Economies) Time (days) 80 110.3 77.2 18 (3 Economies) Cost (% of income per capita) 6.5 325.1 64.2 0.0 (3 Economies) Reliability of supply and transparency of tariff 8 5.5 7.5 8.0 (27 Economies) index (0-8) Figure – Getting Electricity in Saint Petersburg and comparator economies – Ranking and Score DB 2019 Getting Electricity Score 0 100 94.33: Moscow 93.24: Saint Petersburg 92.01: China (Rank: 14) 84.37: Brazil (Rank: 40) 71.06: Mexico (Rank: 99) Note: The ranking of economies on the ease of getting electricity is determined by sorting their scores for getting electricity. These scores are the simple average of the scores for all the component indicators except the price of electricity. Page 31 Doing Business 2019 Russian Federation Figure – Getting Electricity in Saint Petersburg – Procedure, Time and Cost Time (days) Cost (% of income per capita) 80 7 70 6 Cost (% of income per capita) 60 5 Time (days) 50 4 40 3 30 2 20 10 1 0 0 1 2 Procedures (number) * This symbol is shown beside procedure numbers that take place simultaneously with the previous procedure. Note: Online procedures account for 0.5 days in the total time calculation. For economies that have a different procedure list for men and women, the graph shows the time for women. For more information on methodology, see the Doing Business website (http://doingbusiness.org/en/methodology ). For details on the procedures reflected here, see the summary below. Figure – Getting Electricity in Saint Petersburg and comparator economies – Measure of Quality 8 8 8 7 7 6 6 6 5.5 Index score 5 4 3 2 1 0 Saint Petersburg Brazil China Mexico Moscow Europe & Central Asia Page 32 Doing Business 2019 Russian Federation Details – Getting Electricity in Saint Petersburg – Procedure, Time and Cost No. Procedures Time to Complete Associated Costs 1 Submit application to Lenenergo and sign contract for connection 7 calendar days RUB 39,420 Agency : Lenenergo The application for electrical connection is submitted electronically through the online personal account on the Lenenergo website (https://lkk.lenenergo.ru/SiteAssets/tags.aspx). There is no need to visit the client services office. The application should be supported by the documents required by the utility, including the internal wiring and equipment location plan, justification of the requested capacity, copy of the license of the firm which prepared the plan, and documents certifying the legal status of the customer. Within 7 days after receiving the connection application Lenenergo provides the customer with technical conditions for connection along with signed connection and supply contracts. All the documents are available online in the customer's personal account on the Lenenergo website, where those can be signed electronically. The customer is not required to go to the office of Lenenergo. At every stage of the application processing, the applicant receives a text-message notification to the cellular phone indicated on the application form. It is also possible to track the status of the application online in the customer's personal account on the Lenenergo website. Upon signing the connection contract the customer makes the payment of the connection cost online. 2 Receive external works and final connection 73 calendar days RUB 0 Agency : Lenenergo Upon having the connection contract signed electronically by the customer, the utility prepares the project design for building a network for connection. Lenenergo will also obtain all approvals for construction work (such as the permit for the laying underground or overhead lines), and carry out all the external works according to the contract and the technical conditions. The external works and meter installation do not involve the customer. Lenenergo performs all the work up to the land boundaries of the applicant. The customer is responsible for having the internal network ready with all the necessary equipment installed, including the metering equipment. Internal wiring can be done by a company engineer, or can be outsourced to a specialized electric company or the utility under a separate contract. Before energizing, the utility checks the readiness of the internal network and equipment of the customer, including the meter and sealing it, to receive electric energy. If there are no issues on the customer side, the utility energizes the warehouse and provides the customer with the final set of documents - including the inspection certificate, the certificate of fulfillment of the obligations mentioned in the technical conditions, the balance separation certificate (акт разграничения балансовой принадлежности), and certificate of responsibilities. Takes place simultaneously with previous procedure. Page 33 Doing Business 2019 Russian Federation Details – Getting Electricity in Saint Petersburg – Measure of Quality Answer Reliability of supply and transparency of tariff index (0-8) 8 Total duration and frequency of outages per customer a year (0-3) 3 System average interruption duration index (SAIDI) 0.2 System average interruption frequency index (SAIFI) 0.1 What is the minimum outage time (in minutes) that the utility considers for the calculation of SAIDI/SAIFI 1.0 Mechanisms for monitoring outages (0-1) 1 Does the distribution utility use automated tools to monitor outages? Yes Mechanisms for restoring service (0-1) 1 Does the distribution utility use automated tools to restore service? Yes Regulatory monitoring (0-1) 1 Does a regulator—that is, an entity separate from the utility—monitor the utility’s performance on reliability of Yes supply? Financial deterrents aimed at limiting outages (0-1) 1 Does the utility either pay compensation to customers or face fines by the regulator (or both) if outages Yes exceed a certain cap? Communication of tariffs and tariff changes (0-1) 1 Are effective tariffs available online? Yes Link to the website, if available online http://www.pesc.ru/fo r_clients/disclosure_ of_information/St_Pe tersburg/ http://www.pesc.ru/fo r_clients/disclosure_ of_information/len_o bl/ Are customers notified of a change in tariff ahead of the billing cycle? Yes Note: If the duration and frequency of outages is 100 or less, the economy is eligible to score on the Reliability of supply and transparency of tariff index. If the duration and frequency of outages is not available, or is over 100, the economy is not eligible to score on the index. If the minimum outage time considered for SAIDI/SAIFI is over 5 minutes, the economy is not eligible to score on the index. Page 34 Doing Business 2019 Russian Federation Registering Property This topic examines the steps, time and cost involved in registering property, assuming a standardized case of an entrepreneur who wants to purchase land and a building that is already registered and free of title dispute. In addition, the topic also measures the quality of the land administration system in each economy. The quality of land administration index has five dimensions: reliability of infrastructure, transparency of information, geographic coverage, land dispute resolution, and equal access to property rights. The most recent round of data collection for the project was completed in May 2018. See the methodology for more information. What the indicators measure Case study assumptions Procedures to legally transfer title on To make the data comparable across economies, several assumptions about the immovable property (number) parties to the transaction, the property and the procedures are used. • Preregistration procedures (for example, The parties (buyer and seller): checking for liens, notarizing sales agreement, paying property transfer taxes) - Are limited liability companies (or the legal equivalent). - Are located in the periurban area of the economy’s largest business city. For 11 • Registration procedures in the economy's largest economies the data are also collected for the second largest business city. business city. - Are 100% domestically and privately owned. • Postregistration procedures (for example, filling - Have 50 employees each, all of whom are nationals. title with municipality) - Perform general commercial activities. Time required to complete each procedure The property (fully owned by the seller): (calendar days) - Has a value of 50 times income per capita, which equals the sale price. • Does not include time spent gathering - Is fully owned by the seller. information - Has no mortgages attached and has been under the same ownership for the past • Each procedure starts on a separate day - 10 years. though procedures that can be fully completed - Is registered in the land registry or cadastre, or both, and is free of title disputes. online are an exception to this rule - Is located in a periurban commercial zone, and no rezoning is required. - Consists of land and a building. The land area is 557.4 square meters (6,000 • Procedure is considered completed once final square feet). A two-story warehouse of 929 square meters (10,000 square feet) is document is received located on the land. The warehouse is 10 years old, is in good condition, has no • No prior contact with officials heating system and complies with all safety standards, building codes and legal requirements. The property, consisting of land and building, will be transferred in its Cost required to complete each procedure (% of entirety. property value) - Will not be subject to renovations or additional construction following the purchase. • Official costs only (such as administrative fees, - Has no trees, natural water sources, natural reserves or historical monuments of duties and taxes). any kind. - Will not be used for special purposes, and no special permits, such as for • Value Added Tax, Capital Gains Tax and illicit residential use, industrial plants, waste storage or certain types of agricultural payments are excluded activities, are required. - Has no occupants, and no other party holds a legal interest in it. Quality of land administration index (0-30) • Reliability of infrastructure index (0-8) • Transparency of information index (0–6) • Geographic coverage index (0–8) • Land dispute resolution index (0–8) • Equal access to property rights index (-2–0) Page 35 Doing Business 2019 Russian Federation Registering Property - Moscow Indicator Moscow Europe & OECD high Best Regulatory Central Asia income Performance Procedures (number) 4 5.3 4.7 1 (4 Economies) Time (days) 13 20.3 20.1 1 (New Zealand) Cost (% of property value) 0.1 2.6 4.2 0.0 (Saudi Arabia) Quality of the land administration index (0-30) 26.0 19.6 23.0 None in 2017/18 Figure – Registering Property in Moscow and comparator economies – Ranking and Score DB 2019 Registering Property Score 0 100 88.74: Moscow 88.74: Saint Petersburg 80.80: China (Rank: 27) 60.42: Mexico (Rank: 103) 51.94: Brazil (Rank: 137) Note: The ranking of economies on the ease of registering property is determined by sorting their scores for registering property. These scores are the simple average of the scores for each of the component indicators. Figure – Registering Property in Moscow – Procedure, Time and Cost Time (days) Cost (% of property value) 0.16 12 0.14 Cost (% of property value) 10 0.12 Time (days) 8 0.1 0.08 6 0.06 4 0.04 2 0.02 0 0 1 *2 *3 4 Procedures (number) * This symbol is shown beside procedure numbers that take place simultaneously with the previous procedure. Note: Online procedures account for 0.5 days in the total time calculation. For economies that have a different procedure list for men and women, the graph shows the time for women. For more information on methodology, see the Doing Business website (http://doingbusiness.org/en/methodology ). For details on the procedures reflected here, see the summary below. Page 36 Doing Business 2019 Russian Federation Figure – Registering Property in Moscow and comparator economies – Measure of Quality 30 26.0 26.0 25 23.7 Index score 19.6 20 16.3 15 13.8 10 5 0 Moscow Brazil China Mexico Saint Petersburg Europe & Central Asia Details – Registering Property in Moscow – Procedure, Time and Cost No. Procedures Time to Complete Associated Costs 1 Seller obtains a “reconciliation report” from the local utility 1 day no charge Agency : Local Utility Company At the request of the buyer, the seller obtains a “reconciliation report” from the local utility, showing that no outstanding debts are owed to the utility company. Usually, the seller can obtain this report within a day by requesting it directly from the local utility. Although not a legal requirement, the reconciliation report is commonly obtained in transactions involving commercial real estate, so the buyer can rest assured that the property is free from any possible creditors and to avoid problems with future utility hook up. The process of registering a new contract in the buyer’s name may take much longer if there are any outstanding bills (up to one month) and the service will be interrupted, which is not desirable for the commercial property. 2 Buyer checks for encumbrances on property at the Federal Service for Less than one day, RUB 600; (RUB 2200 State Registration, Cadastre and Cartography online (for a hard copy) and Agency : Federal Service of State Registration, Cadastre and Cartography RUB 600 (electronic (Rosreestr) document)) Even though not mandatory by law, in practice most buyers do check for non- encumbrances on the property to prove the validity of the seller's title. The complete information on the property (ownership rights, encumbrances) can be obtained by the Buyer in two ways with equal legal power of each. In a form of the official document provided by the authorized agency (Rosreestr) and in electronic format. According to the Federal Law No.218 - upon the official request for information the registration authority shall provide an official document with all information available in the Unified State Register of Real Estate Property within three working days. Alternatively, checking and verification ownership rights of the seller can be performed on-line on the main web page of the Federal Service for State Registration, Cadastre and Cartography (www.rosreestr.ru). The Buyer can also obtain a paper copy of the extract from Real Estate Property Register by making an application as individual (not the legal entity) with the cost being RUB 200. There is also an option to access the information resource of Rosreestr: any individual or legal entity may obtain an electronic extract from the Property Register and verify ownership title to any real estate facility and existence of encumbrances, if any. The procedure includes the following steps: 1) obtaining an electronic access key (free of charge); 2) refilling one's account with the help of a credit card for a minimum sum of RUB 150; 3) receiving the electronic extract from the Property Register within a day with the charge being RUB 1 for one query. 3 Check for legal status and current conditions of the buyer at the Unified Less than one day, Electronic document - State Register of Legal Entities online no charge. Agency : Unified State Register of Legal Entities (Officially managed and maintained by the Federal Tax Service (FNS)) Official documents in Legal entities will obtain extracts from the Unified State Register of Legal Entities, hard copy - RUB 200 officially managed and maintained by the Federal Tax Service (FNS) (regular procedure - 5 (http://egrul.nalog.ru/#). Although Russian legislation does not establish the term of working days) or RUB validity for the extracts, in practice most state authorities accept the extracts issued not 400 (expedited earlier than 30 days before their submission to the respective state authority. procedure - 1 working Since 2015 the official information on the legal status of a legal entity became available day) in a form of the official electronic extract with encrypted digital signature of FNS on its official website: https://service.nalog.ru/vyp/. The statutory term for obtaining the official electronic extract is the same as for the official hard copy extract (not more than 5 days). Page 37 Doing Business 2019 Russian Federation 4 Apply for state registration of title transfer in the Unified State Register of 11 days RUB 44,000; (RUB Rights to Real Estate 44,000: RUB 22,000 Agency : Multifunctional Center (MFC) (building) + RUR The most common way to apply for state registration of title transfer is completed within 22,000 (land plot 9 business days. An application and relevant documents are submitted at the transfer)) Multifunctional Centers (MFCs), which provide services on federal, regional and municipal levels, using a "One-Stop-Shop" principle and are widely spread across all regions of the country. MFC accepts the application and documents, sends them to Rosreestr internally, and receives them back (all electronically). It is also possible to apply for state registration of title transfer directly at the Roseester, which is completed within 7 business days. However, the option is less popular since Roseester centers are more scarce. Additionally, the application together with all relevant documents can also be submitted in an electronic format, using the following link: https://rosreestr.ru/wps/portal/p/cc_present/reg_rights#/ However, the online application for the registration of the property transfer is subject to the special requirements listed in Order No. 883 of November 26, 2015. For example, all documents submitted online be signed by the encrypted digital signature of a relevant person. In practice, submission of documents in electronic format is not frequently done, since there are only a few legal entities/individuals who have the encrypted digital signature software necessary for the transaction. Takes place simultaneously with previous procedure. Page 38 Doing Business 2019 Russian Federation Details – Registering Property in Moscow – Measure of Quality Answer Score Reliability of infrastructure index (0-8) 8.0 What is the institution in charge of immovable property registration? Directorate General of the Federal Service of State Registration, Cadastre and Cartography in Moscow (Directorate General of Rosreestr in Moscow) In what format are the majority of title or deed records kept in the largest business city—in a Computer/Fully 2.0 paper format or in a computerized format (scanned or fully digital)? digital Is there an electronic database for checking for encumbrances (liens, mortgages, restrictions Yes 1.0 and the like)? Institution in charge of the plans showing legal boundaries in the largest business city: Federal State Budgetary Enterprise Federal Cadastral Chamber of Rosreestr In what format are the majority of maps of land plots kept in the largest business city—in a Computer/Fully 2.0 paper format or in a computerized format (scanned or fully digital)? digital Is there an electronic database for recording boundaries, checking plans and providing Yes 1.0 cadastral information (geographic information system)? Is the information recorded by the immovable property registration agency and the cadastral Single database 1.0 or mapping agency kept in a single database, in different but linked databases or in separate databases? Do the immovable property registration agency and cadastral or mapping agency use the Yes 1.0 same identification number for properties? Transparency of information index (0–6) 6.0 Who is able to obtain information on land ownership at the agency in charge of immovable Freely accessible 1.0 property registration in the largest business city? by anyone Is the list of documents that are required to complete any type of property transaction made Yes, online 0.5 publicly available–and if so, how? Link for online access: https://rosreestr.r u/site/fiz/zaregistr irovat- nedvizhimoe- imushchestvo-/pr edstavlenie- dokumentov-na- gosudarstvennuy u-registraciyu- prav/ https://www.gosu slugi.ru/pgu/ Is the applicable fee schedule for any property transaction at the agency in charge of Yes, online 0.5 immovable property registration in the largest business city made publicly available–and if so, how? Link for online access: https://rosreestr.r u/site/ur/zaregistr irovat- nedvizhimoe- imushchestvo-/? price Page 39 Doing Business 2019 Russian Federation Does the agency in charge of immovable property registration commit to delivering a legally Yes, online 0.5 binding document that proves property ownership within a specific time frame–and if so, how does it communicate the service standard? Link for online access: https://rosreestr.r u/site/fiz/zaregistr irovat- nedvizhimoe- imushchestvo-/sr oki-polucheniya- uslugi/ https://rosreestr.r u/site/fiz/zaregistr irovat- nedvizhimoe- imushchestvo-/ Is there a specific and separate mechanism for filing complaints about a problem that Yes 1.0 occurred at the agency in charge of immovable property registration? Contact information: https://rosreestr.r u/wps/portal/p/cc _ib_support/cc_ib _complaint Are there publicly available official statistics tracking the number of transactions at the Yes 0.5 immovable property registration agency? Number of property transfers in the largest business city in 2017: 26227.0 Who is able to consult maps of land plots in the largest business city? Freely accessible 0.5 by anyone Is the applicable fee schedule for accessing maps of land plots made publicly available— Yes, online 0.5 and if so, how? Link for online access: https://rosreestr.r u/site/ur/poluchit- svedeniya-iz- egrn/ Does the cadastral or mapping agency commit to delivering an updated map within a Yes, online 0.5 specific time frame—and if so, how does it communicate the service standard? Link for online access: https://rosreestr.r u/site/ur/poluchit- svedeniya-iz- egrn/ Is there a specific and separate mechanism for filing complaints about a problem that Yes 0.5 occurred at the cadastral or mapping agency? Contact information: https://rosreestr.r u/wps/portal/p/cc _ib_support/cc_ib _complaint Geographic coverage index (0–8) 4.0 Are all privately held land plots in the economy formally registered at the immovable property No 0.0 registry? Are all privately held land plots in the largest business city formally registered at the Yes 2.0 immovable property registry? Are all privately held land plots in the economy mapped? No 0.0 Are all privately held land plots in the largest business city mapped? Yes 2.0 Land dispute resolution index (0–8) 8.0 Does the law require that all property sale transactions be registered at the immovable Yes 1.5 property registry to make them opposable to third parties? Is the system of immovable property registration subject to a state or private guarantee? Yes 0.5 Is there a specific compensation mechanism to cover for losses incurred by parties who Yes 0.5 engaged in good faith in a property transaction based on erroneous information certified by the immovable property registry? Page 40 Doing Business 2019 Russian Federation Does the legal system require a control of legality of the documents necessary for a property Yes 0.5 transaction (e.g., checking the compliance of contracts with requirements of the law)? If yes, who is responsible for checking the legality of the documents? Registrar; Does the legal system require verification of the identity of the parties to a property Yes 0.5 transaction? If yes, who is responsible for verifying the identity of the parties? Registrar; Is there a national database to verify the accuracy of identity documents? Yes 1.0 For a standard land dispute between two local businesses over tenure rights of a property Arbitration Court worth 50 times gross national income (GNI) per capita and located in the largest business of the Moscow city, what court would be in charge of the case in the first instance? city How long does it take on average to obtain a decision from the first-instance court for such a Less than a year 3.0 case (without appeal)? Are there any statistics on the number of land disputes in the first instance? Yes 0.5 Number of land disputes in the largest business city in 2017: For entire country - 25 892 land disputes in the first half of 2017 Equal access to property rights index (-2–0) 0.0 Do unmarried men and unmarried women have equal ownership rights to property? Yes Do married men and married women have equal ownership rights to property? Yes 0.0 Page 41 Doing Business 2019 Russian Federation Registering Property - Saint Petersburg Indicator Saint Europe & OECD high Best Regulatory Petersburg Central Asia income Performance Procedures (number) 4 5.3 4.7 1 (4 Economies) Time (days) 13 20.3 20.1 1 (New Zealand) Cost (% of property value) 0.1 2.6 4.2 0.0 (Saudi Arabia) Quality of the land administration index (0-30) 26.0 19.6 23.0 None in 2017/18 Figure – Registering Property in Saint Petersburg and comparator economies – Ranking and Score DB 2019 Registering Property Score 0 100 88.74: Moscow 88.74: Saint Petersburg 80.80: China (Rank: 27) 60.42: Mexico (Rank: 103) 51.94: Brazil (Rank: 137) Note: The ranking of economies on the ease of registering property is determined by sorting their scores for registering property. These scores are the simple average of the scores for each of the component indicators. Figure – Registering Property in Saint Petersburg – Procedure, Time and Cost Time (days) Cost (% of property value) 0.16 12 0.14 Cost (% of property value) 10 0.12 Time (days) 8 0.1 0.08 6 0.06 4 0.04 2 0.02 0 0 1 *2 *3 4 Procedures (number) * This symbol is shown beside procedure numbers that take place simultaneously with the previous procedure. Note: Online procedures account for 0.5 days in the total time calculation. For economies that have a different procedure list for men and women, the graph shows the time for women. For more information on methodology, see the Doing Business website (http://doingbusiness.org/en/methodology ). For details on the procedures reflected here, see the summary below. Page 42 Doing Business 2019 Russian Federation Figure – Registering Property in Saint Petersburg and comparator economies – Measure of Quality 30 26.0 26.0 25 23.7 Index score 19.6 20 16.3 15 13.8 10 5 0 Saint Petersburg Brazil China Mexico Moscow Europe & Central Asia Details – Registering Property in Saint Petersburg – Procedure, Time and Cost No. Procedures Time to Complete Associated Costs 1 Seller obtains a “reconciliation report” from the local utility 1 day no charge Agency : Local Utility Company At the request of the buyer, the seller obtains a “reconciliation report” from the local utility, showing that no outstanding debts are owed to the utility company. Usually, the seller can obtain this report within a day by requesting it directly from the local utility. Although not a legal requirement, the reconciliation report is commonly obtained in transactions involving commercial real estate, so the buyer can rest assured that the property is free from any possible creditors and to avoid problems with future utility hook up. The process of registering a new contract in the buyer’s name may take much longer if there are any outstanding bills (up to one month) and the service will be interrupted, which is not desirable for the commercial property. 2 Buyer checks for encumbrances on property at the Federal Service for Less than one day, RUB 600; (RUB 2200 State Registration, Cadastre and Cartography online (for a hard copy) and Agency : Federal Service of State Registration, Cadastre and Cartography RUB 600 (electronic (Rosreestr) document)) Even though not mandatory by law, in practice most buyers do check for non- encumbrances on the property to prove the validity of the seller's title. The complete information on the property (ownership rights, encumbrances) can be obtained by the Buyer in two ways with equal legal power of each. In a form of the official document provided by the authorized agency (Rosreestr) and in electronic format. According to the Federal Law No.218 - upon the official request for information the registration authority shall provide an official document with all information available in the Unified State Register of Real Estate Property within three working days. Alternatively, checking and verification ownership rights of the seller can be performed on-line on the main web page of the Federal Service for State Registration, Cadastre and Cartography (www.rosreestr.ru). The Buyer can also obtain a paper copy of the extract from Real Estate Property Register by making an application as individual (not the legal entity) with the cost being RUB 200. There is also an option to access the information resource of Rosreestr: any individual or legal entity may obtain an electronic extract from the Property Register and verify ownership title to any real estate facility and existence of encumbrances, if any. The procedure includes the following steps: 1) obtaining an electronic access key (free of charge); 2) refilling one's account with the help of a credit card for a minimum sum of RUB 150; 3) receiving the electronic extract from the Property Register within a day with the charge being RUB 1 for one query. 3 Check for legal status and current conditions of the buyer at the Unified Less than one day, Electronic document - State Register of Legal Entities online no charge. Agency : Unified State Register of Legal Entities (Officially managed and maintained by the Federal Tax Service (FNS)) Official documents in Legal entities will obtain extracts from the Unified State Register of Legal Entities, hard copy - RUB 200 officially managed and maintained by the Federal Tax Service (FNS) (regular procedure - 5 (http://egrul.nalog.ru/#). Although Russian legislation does not establish the term of working days) or RUB validity for the extracts, in practice most state authorities accept the extracts issued not earlier than 30 days before their submission to the respective state authority. 400 (expedited procedure - 1 working Since 2015 the official information on the legal status of a legal entity became available day) in a form of the official electronic extract with encrypted digital signature of FNS on its official website: https://service.nalog.ru/vyp/. The statutory term for obtaining the official electronic extract is the same as for the official hard copy extract (not more than 5 days). Page 43 Doing Business 2019 Russian Federation 4 Apply for state registration of title transfer in the Unified State Register of 11 days RUB 44,000; (RUB Rights to Real Estate 22,000 (building) + Agency : Multifunctional Center (MFC) RUR 22,000 (land The most common way to apply for state registration of title transfer is completed within plot transfer)) 9 business days. An application and relevant documents are submitted at the Multifunctional Centers (MFCs), which provide services on federal, regional and municipal levels, using a "One-Stop-Shop" principle and are widely spread across all regions of the country. MFC accepts the application and documents, sends them to Rosreestr internally, and receives them back (all electronically). It is also possible to apply for state registration of title transfer directly at the Roseester, which is completed within 7 business days. However, the option is less popular since Roseester centers are more scarce. Additionally, since 2013 the application together with all relevant documents can also be submitted in an electronic format, using the following link: https://rosreestr.ru/wps/portal/p/cc_present/reg_rights#/ However, the online application for the registration of the property transfer is subject to the special requirements set forth by the Order No. 883 of November 26, 2015. For example, all documents submitted online be signed by the encrypted digital signature of a relevant person. In practice, submission of documents in electronic format is not frequently done, since there are only a few legal entities/individuals who have the encrypted digital signature software necessary for the transaction. Takes place simultaneously with previous procedure. Page 44 Doing Business 2019 Russian Federation Details – Registering Property in Saint Petersburg – Measure of Quality Answer Score Reliability of infrastructure index (0-8) 8.0 What is the institution in charge of immovable property registration? Department of Federal Service of Registration, Cadastre and Cartography in St. Petersburg In what format are the majority of title or deed records kept in the largest business city—in a Computer/Fully 2.0 paper format or in a computerized format (scanned or fully digital)? digital Is there an electronic database for checking for encumbrances (liens, mortgages, restrictions Yes 1.0 and the like)? Institution in charge of the plans showing legal boundaries in the largest business city: Department of Federal Service of State Registration, Cadastre and Cartography in St. Petersburg In what format are the majority of maps of land plots kept in the largest business city—in a Computer/Fully 2.0 paper format or in a computerized format (scanned or fully digital)? digital Is there an electronic database for recording boundaries, checking plans and providing Yes 1.0 cadastral information (geographic information system)? Is the information recorded by the immovable property registration agency and the cadastral Single database 1.0 or mapping agency kept in a single database, in different but linked databases or in separate databases? Do the immovable property registration agency and cadastral or mapping agency use the Yes 1.0 same identification number for properties? Transparency of information index (0–6) 6.0 Who is able to obtain information on land ownership at the agency in charge of immovable Freely accessible 1.0 property registration in the largest business city? by anyone Is the list of documents that are required to complete any type of property transaction made Yes, online 0.5 publicly available–and if so, how? Link for online access: https://rosreestr.r u/site/fiz/zaregistr irovat- nedvizhimoe- imushchestvo-/pr edstavlenie- dokumentov-na- gosudarstvennuy u-registraciyu- prav/ Is the applicable fee schedule for any property transaction at the agency in charge of Yes, online 0.5 immovable property registration in the largest business city made publicly available–and if so, how? Link for online access: https://rosreestr.r u/site/fiz/zaregistr irovat- nedvizhimoe- imushchestvo-/? price Does the agency in charge of immovable property registration commit to delivering a legally Yes, online 0.5 binding document that proves property ownership within a specific time frame–and if so, how does it communicate the service standard? Page 45 Doing Business 2019 Russian Federation Link for online access: https://rosreestr.r u/site/fiz/zaregistr irovat- nedvizhimoe- imushchestvo-/sr oki-polucheniya- uslugi/ Is there a specific and separate mechanism for filing complaints about a problem that Yes 1.0 occurred at the agency in charge of immovable property registration? Contact information: https://rosreestr.r u/wps/portal/cc_i b_complaint Are there publicly available official statistics tracking the number of transactions at the Yes 0.5 immovable property registration agency? Number of property transfers in the largest business city in 2017: 693730.0 Who is able to consult maps of land plots in the largest business city? Freely accessible 0.5 by anyone Is the applicable fee schedule for accessing maps of land plots made publicly available— Yes, online 0.5 and if so, how? Link for online access: https://rosreestr.r u/site/ur/poluchit- svedeniya-iz- egrn/?price Does the cadastral or mapping agency commit to delivering an updated map within a Yes, online 0.5 specific time frame—and if so, how does it communicate the service standard? Link for online access: https://rosreestr.r u/site/fiz/poluchit- svedeniya-iz- egrn/sroki- polucheniya- egrn/?lang=ru Is there a specific and separate mechanism for filing complaints about a problem that Yes 0.5 occurred at the cadastral or mapping agency? Contact information: https://rosreestr.r u/wps/portal/cc_i b_complaint Geographic coverage index (0–8) 4.0 Are all privately held land plots in the economy formally registered at the immovable property No 0.0 registry? Are all privately held land plots in the largest business city formally registered at the Yes 2.0 immovable property registry? Are all privately held land plots in the economy mapped? No 0.0 Are all privately held land plots in the largest business city mapped? Yes 2.0 Land dispute resolution index (0–8) 8.0 Does the law require that all property sale transactions be registered at the immovable Yes 1.5 property registry to make them opposable to third parties? Is the system of immovable property registration subject to a state or private guarantee? Yes 0.5 Is there a specific compensation mechanism to cover for losses incurred by parties who Yes 0.5 engaged in good faith in a property transaction based on erroneous information certified by the immovable property registry? Does the legal system require a control of legality of the documents necessary for a property Yes 0.5 transaction (e.g., checking the compliance of contracts with requirements of the law)? If yes, who is responsible for checking the legality of the documents? Registrar; Notary; Does the legal system require verification of the identity of the parties to a property Yes 0.5 transaction? Page 46 Doing Business 2019 Russian Federation If yes, who is responsible for verifying the identity of the parties? Registrar; Notary; Is there a national database to verify the accuracy of identity documents? Yes 1.0 For a standard land dispute between two local businesses over tenure rights of a property State worth 50 times gross national income (GNI) per capita and located in the largest business Commercial city, what court would be in charge of the case in the first instance? ('Arbitrazhny") Court for St. Petersburg and Leningrad Region) How long does it take on average to obtain a decision from the first-instance court for such a Less than a year 3.0 case (without appeal)? Are there any statistics on the number of land disputes in the first instance? Yes 0.5 Number of land disputes in the largest business city in 2017: For entire country - 51,802 land disputes in 2016 Equal access to property rights index (-2–0) 0.0 Do unmarried men and unmarried women have equal ownership rights to property? Yes Do married men and married women have equal ownership rights to property? Yes 0.0 Page 47 Doing Business 2019 Russian Federation Getting Credit This topic explores two sets of issues—the strength of credit reporting systems and the effectiveness of collateral and bankruptcy laws in facilitating lending. The most recent round of data collection for the project was completed in May 2018. See the methodology for more information. What the indicators measure Case study assumptions Strength of legal rights index (0–12) Doing Business assesses the sharing of credit information and the legal rights of borrowers and lenders with respect to secured transactions through 2 sets of • Rights of borrowers and lenders through indicators. The depth of credit information index measures rules and practices collateral laws (0-10) affecting the coverage, scope and accessibility of credit information available • Protection of secured creditors’ rights through through a credit registry or a credit bureau. The strength of legal rights index bankruptcy laws (0-2) measures the degree to which collateral and bankruptcy laws protect the rights of borrowers and lenders and thus facilitate lending. For each economy it is first Depth of credit information index (0–8) determined whether a unitary secured transactions system exists. Then two case • Scope and accessibility of credit information scenarios, case A and case B, are used to determine how a nonpossessory security distributed by credit bureaus and credit registries interest is created, publicized and enforced according to the law. Special emphasis (0-8) is given to how the collateral registry operates (if registration of security interests is possible). The case scenarios involve a secured borrower, company ABC, and a Credit bureau coverage (% of adults) secured lender, BizBank. • Number of individuals and firms listed in largest In some economies the legal framework for secured transactions will allow only case credit bureau as a percentage of adult population A or case B (not both) to apply. Both cases examine the same set of legal provisions Credit registry coverage (% of adults) relating to the use of movable collateral. • Number of individuals and firms listed in credit Several assumptions about the secured borrower (ABC) and lender (BizBank) registry as a percentage of adult population are used: - ABC is a domestic limited liability company (or its legal equivalent). - ABC has up to 50 employees. - ABC has its headquarters and only base of operations in the economy’s largest business city. For 11 economies the data are also collected for the second largest business city. - Both ABC and BizBank are 100% domestically owned. The case scenarios also involve assumptions. In case A, as collateral for the loan, ABC grants BizBank a nonpossessory security interest in one category of movable assets, for example, its machinery or its inventory. ABC wants to keep both possession and ownership of the collateral. In economies where the law does not allow nonpossessory security interests in movable property, ABC and BizBank use a fiduciary transfer-of-title arrangement (or a similar substitute for nonpossessory security interests). In case B, ABC grants BizBank a business charge, enterprise charge, floating charge or any charge that gives BizBank a security interest over ABC’s combined movable assets (or as much of ABC’s movable assets as possible). ABC keeps ownership and possession of the assets. Page 48 Doing Business 2019 Russian Federation Getting Credit - Moscow Indicator Moscow Europe & OECD high Best Regulatory Central Asia income Performance Strength of legal rights index (0-12) 9 7.2 6.1 12 (5 Economies) Depth of credit information index (0-8) 7 6.6 6.7 8 (42 Economies) Credit registry coverage (% of adults) 0 25.3 21.8 100.0 (4 Economies) Credit bureau coverage (% of adults) 88 43.4 65.3 100.0 (25 Economies) Figure – Getting Credit in Moscow and comparator economies – Ranking and Score DB 2019 Getting Credit Score 0 100 90.00: Mexico (Rank: 8) 80.00: Moscow 80.00: Saint Petersburg 60.00: China (Rank: 73) 50.00: Brazil (Rank: 99) Note: The ranking of economies on the ease of getting credit is determined by sorting their scores for getting credit. These scores are the sum of the scores for the strength of legal rights index and the depth of credit information index. Figure – Legal Rights in Moscow and comparator economies 9 10 9 8 7.2 7 6 Index Score 5 4 4 3 2 2 1 0 Moscow Brazil China Mexico Saint Petersburg Europe & Central Asia Page 49 Doing Business 2019 Russian Federation Details – Legal Rights in Moscow Strength of legal rights index (0-12) 9 Does an integrated or unified legal framework for secured transactions that extends to the creation, publicity and No enforcement of functional equivalents to security interests in movable assets exist in the economy? Does the law allow businesses to grant a non possessory security right in a single category of movable assets, without No requiring a specific description of collateral? Does the law allow businesses to grant a non possessory security right in substantially all of its assets, without requiring a Yes specific description of collateral? May a security right extend to future or after-acquired assets, and does it extend automatically to the products, proceeds and Yes replacements of the original assets? Is a general description of debts and obligations permitted in collateral agreements; can all types of debts and obligations be Yes secured between parties; and can the collateral agreement include a maximum amount for which the assets are encumbered? Is a collateral registry in operation for both incorporated and non-incorporated entities, that is unified geographically and by Yes asset type, with an electronic database indexed by debtor's name? Does a notice-based collateral registry exist in which all functional equivalents can be registered? No Does a modern collateral registry exist in which registrations, amendments, cancellations and searches can be performed Yes online by any interested third party? Are secured creditors paid first (i.e. before tax claims and employee claims) when a debtor defaults outside an insolvency Yes procedure? Are secured creditors paid first (i.e. before tax claims and employee claims) when a business is liquidated? Yes Are secured creditors subject to an automatic stay on enforcement when a debtor enters a court-supervised reorganization Yes procedure? Does the law protect secured creditors’ rights by providing clear grounds for relief from the stay and sets a time limit for it? Does the law allow parties to agree on out of court enforcement at the time a security interest is created? Does the law allow Yes the secured creditor to sell the collateral through public auction or private tender, as well as, for the secured creditor to keep the asset in satisfaction of the debt? Figure – Credit Information in Moscow and comparator economies 8 8 8 8 7 7 7 6.6 6 Index Score 5 4 3 2 1 0 Moscow Brazil China Mexico Saint Petersburg Europe & Central Asia Page 50 Doing Business 2019 Russian Federation Details – Credit Information in Moscow Depth of credit information index (0-8) Credit Credit Score bureau registry Are data on both firms and individuals distributed? Yes No 1 Are both positive and negative credit data distributed? Yes No 1 Are data from retailers or utility companies - in addition to data from banks and No No 0 financial institutions - distributed? Are at least 2 years of historical data distributed? (Credit bureaus and registries Yes No 1 that distribute more than 10 years of negative data or erase data on defaults as soon as they are repaid obtain a score of 0 for this component.) Are data on loan amounts below 1% of income per capita distributed? Yes No 1 By law, do borrowers have the right to access their data in the credit bureau or Yes No 1 credit registry? Can banks and financial institutions access borrowers’ credit information online Yes No 1 (for example, through an online platform, a system-to-system connection or both)? Are bureau or registry credit scores offered as a value-added service to help Yes No 1 banks and financial institutions assess the creditworthiness of borrowers? Total Score ("yes" to either public bureau or private registry) 7 Note: An economy receives a score of 1 if there is a "yes" to either bureau or registry. If the credit bureau or registry is not operational or covers less than 5% of the adult population, the total score on the depth of credit information index is 0. Coverage Credit bureau Credit registry Number of individuals 85,000,000 0 Number of firms 1,700,000 0 Total 86,700,000 0 Percentage of adult population 88 0 Page 51 Doing Business 2019 Russian Federation Getting Credit - Saint Petersburg Indicator Saint Europe & OECD high Best Regulatory Petersburg Central Asia income Performance Strength of legal rights index (0-12) 9 7.2 6.1 12 (5 Economies) Depth of credit information index (0-8) 7 6.6 6.7 8 (42 Economies) Credit registry coverage (% of adults) 0 25.3 21.8 100.0 (4 Economies) Credit bureau coverage (% of adults) 88 43.4 65.3 100.0 (25 Economies) Figure – Getting Credit in Saint Petersburg and comparator economies – Ranking and Score DB 2019 Getting Credit Score 0 100 90.00: Mexico (Rank: 8) 80.00: Moscow 80.00: Saint Petersburg 60.00: China (Rank: 73) 50.00: Brazil (Rank: 99) Note: The ranking of economies on the ease of getting credit is determined by sorting their scores for getting credit. These scores are the sum of the scores for the strength of legal rights index and the depth of credit information index. Figure – Legal Rights in Saint Petersburg and comparator economies 9 10 9 8 7.2 7 6 Index Score 5 4 4 3 2 2 1 0 Saint Petersburg Brazil China Mexico Moscow Europe & Central Asia Page 52 Doing Business 2019 Russian Federation Details – Legal Rights in Saint Petersburg Strength of legal rights index (0-12) 9 Does an integrated or unified legal framework for secured transactions that extends to the creation, publicity and No enforcement of functional equivalents to security interests in movable assets exist in the economy? Does the law allow businesses to grant a non possessory security right in a single category of movable assets, without No requiring a specific description of collateral? Does the law allow businesses to grant a non possessory security right in substantially all of its assets, without requiring a Yes specific description of collateral? May a security right extend to future or after-acquired assets, and does it extend automatically to the products, proceeds and Yes replacements of the original assets? Is a general description of debts and obligations permitted in collateral agreements; can all types of debts and obligations be Yes secured between parties; and can the collateral agreement include a maximum amount for which the assets are encumbered? Is a collateral registry in operation for both incorporated and non-incorporated entities, that is unified geographically and by Yes asset type, with an electronic database indexed by debtor's name? Does a notice-based collateral registry exist in which all functional equivalents can be registered? No Does a modern collateral registry exist in which registrations, amendments, cancellations and searches can be performed Yes online by any interested third party? Are secured creditors paid first (i.e. before tax claims and employee claims) when a debtor defaults outside an insolvency Yes procedure? Are secured creditors paid first (i.e. before tax claims and employee claims) when a business is liquidated? Yes Are secured creditors subject to an automatic stay on enforcement when a debtor enters a court-supervised reorganization Yes procedure? Does the law protect secured creditors’ rights by providing clear grounds for relief from the stay and sets a time limit for it? Does the law allow parties to agree on out of court enforcement at the time a security interest is created? Does the law allow Yes the secured creditor to sell the collateral through public auction or private tender, as well as, for the secured creditor to keep the asset in satisfaction of the debt? Figure – Credit Information in Saint Petersburg and comparator economies 8 8 8 8 7 7 7 6.6 6 Index Score 5 4 3 2 1 0 Saint Petersburg Brazil China Mexico Moscow Europe & Central Asia Page 53 Doing Business 2019 Russian Federation Details – Credit Information in Saint Petersburg Depth of credit information index (0-8) Credit Credit Score bureau registry Are data on both firms and individuals distributed? Yes No 1 Are both positive and negative credit data distributed? Yes No 1 Are data from retailers or utility companies - in addition to data from banks and No No 0 financial institutions - distributed? Are at least 2 years of historical data distributed? (Credit bureaus and registries Yes No 1 that distribute more than 10 years of negative data or erase data on defaults as soon as they are repaid obtain a score of 0 for this component.) Are data on loan amounts below 1% of income per capita distributed? Yes No 1 By law, do borrowers have the right to access their data in the credit bureau or Yes No 1 credit registry? Can banks and financial institutions access borrowers’ credit information online Yes No 1 (for example, through an online platform, a system-to-system connection or both)? Are bureau or registry credit scores offered as a value-added service to help Yes No 1 banks and financial institutions assess the creditworthiness of borrowers? Total Score ("yes" to either public bureau or private registry) 7 Note: An economy receives a score of 1 if there is a "yes" to either bureau or registry. If the credit bureau or registry is not operational or covers less than 5% of the adult population, the total score on the depth of credit information index is 0. Coverage Credit bureau Credit registry Number of individuals 85,000,000 0 Number of firms 1,700,000 0 Total 86,700,000 0 Percentage of adult population 88 0 Page 54 Doing Business 2019 Russian Federation Protecting Minority Investors This topic measures the strength of minority shareholder protections against misuse of corporate assets by directors for their personal gain as well as shareholder rights, governance safeguards and corporate transparency requirements that reduce the risk of abuse. The most recent round of data collection for the project was completed in May 2018. See the methodology for more information. What the indicators measure Case study assumptions • Extent of disclosure index (0–10): Review and To make the data comparable across economies, a case study uses several approval requirements for related-party assumptions about the business and the transaction. transactions; Disclosure requirements for related- party transactions The business (Buyer): • Extent of director liability index (0–10): Ability - Is a publicly traded corporation listed on the economy’s most important stock of minority shareholders to sue and hold exchange. If there are fewer than ten listed companies or if there is no stock interested directors liable for prejudicial related- exchange in the economy, it is assumed that Buyer is a large private company with party transactions; Available legal remedies multiple shareholders. (damages, disgorgement of profits, fines, - Has a board of directors and a chief executive officer (CEO) who may legally act on imprisonment, rescission of the transaction) behalf of Buyer where permitted, even if this is not specifically required by law. • Ease of shareholder suits index (0–10): - Has a supervisory board in economies with a two-tier board system on which Mr. Access to internal corporate documents; James appointed 60% of the shareholder-elected members. Evidence obtainable during trial and allocation of - Has not adopted bylaws or articles of association that go beyond the minimum legal expenses requirements. Does not follow codes, principles, recommendations or guidelines that are not mandatory. • Extent of conflict of interest regulation index - Is a manufacturing company with its own distribution network. (0–10): Simple average of the extent of disclosure, extent of director liability and ease of The transaction involves the following details: shareholder indices - Mr. James owns 60% of Buyer, sits on Buyer’s board of directors and elected two • Extent of shareholder rights index (0-10): directors to Buyer’s five-member board. Shareholders’ rights and role in major corporate - Mr. James also owns 90% of Seller, a company that operates a chain of retail decisions hardware stores. Seller recently closed a large number of its stores. • Extent of ownership and control index (0-10): - Mr. James proposes that Buyer purchase Seller’s unused fleet of trucks to expand Governance safeguards protecting shareholders Buyer’s distribution of its food products, a proposal to which Buyer agrees. The price from undue board control and entrenchment is equal to 10% of Buyer’s assets and is higher than the market value. - The proposed transaction is part of the company’s principal activity and is not • Extent of corporate transparency index (0-10): outside the authority of the company. Corporate transparency on ownership stakes, - Buyer enters into the transaction. All required approvals are obtained, and all compensation, audits and financial prospects required disclosures made—that is, the transaction was not entered into fraudulently. • Extent of shareholder governance index (0– - The transaction causes damages to Buyer. Shareholders sue Mr. James and the 10): Simple average of the extent of shareholders executives and directors that approved the transaction. rights, extent of ownership and control and extent of corporate transparency indices • Strength of minority investor protection index (0–10): Simple average of the extent of conflict of interest regulation and extent of shareholder governance indices Page 55 Doing Business 2019 Russian Federation Protecting Minority Investors - Moscow Indicator Moscow Europe & OECD high Best Regulatory Central Asia income Performance Extent of disclosure index (0-10) 6.0 7.3 6.5 10 (13 Economies) Extent of director liability index (0-10) 2.0 4.9 5.3 10 (Cambodia) Ease of shareholder suits index (0-10) 7.0 6.8 7.3 10 (Djibouti) Extent of shareholder rights index (0-10) 9.0 7.1 6.4 10 (Kazakhstan) Extent of ownership and control index (0-10) 5.0 5.6 5.4 None in 2017/18 Extent of corporate transparency index (0-10) 8.0 7.5 7.6 10 (6 Economies) Figure – Protecting Minority Investors in Moscow and comparator economies – Ranking and Score DB 2019 Protecting Minority Investors Score 0 100 65.00: Brazil (Rank: 48) 61.67: Moscow 61.67: Saint Petersburg 60.00: China (Rank: 64) 58.33: Mexico (Rank: 72) Note: The ranking of economies on the strength of minority investor protections is determined by sorting their scores for protecting minority investors. These scores are the simple average of the scores for the extent of conflict of interest regulation index and the extent of shareholder governance index. Figure – Protecting Minority Investors in Moscow and comparator economies – Measure of Quality Moscow 8 2 6 5 9 7 Brazil 9 8 5 6 7 4 China 9 1 10 4 7 5 Mexico 4 5 8 6 7 5 Saint Petersburg 8 2 6 5 9 7 OECD high income 7.4 5.5 6.5 5.2 6.3 7.4 Europe & Central Asia 7.6 4.6 7.2 5.6 7.3 6.8 0 5 10 15 20 25 30 35 40 45 Sub-Indicator Score Extent of corporate transparency index (0-10) Extent of director liability index (0-10) Extent of disclosure index (0-10) Extent of ownership and control index (0-10) Extent of shareholder rights index (0-10) Ease of shareholder suits index (0-10) Page 56 Doing Business 2019 Russian Federation Details – Protecting Minority Investors in Moscow – Measure of Quality Answer Score Extent of conflict of interest regulation index (0-10) 5 Extent of disclosure index (0-10) 6.0 Whose decision is sufficient to approve the Buyer-Seller transaction? (0-3) CEO alone 0.0 Must an external body review the terms of the transaction before it takes place? (0-1) No 0.0 Must Mr. James disclose his conflict of interest to the board of directors? (0-2) Full disclosure of 2.0 all material facts Must Buyer disclose the transaction in periodic filings (e.g. annual reports)? (0-2) Disclosure on the 2.0 transaction and on the conflict of interest Must Buyer immediately disclose the transaction to the public? (0-2) Disclosure on the 2.0 transaction and on the conflict of interest Extent of director liability index (0-10) 2.0 Can shareholders representing 10% of Buyer's share capital sue for the damage the Yes 1.0 transaction caused to Buyer? (0-1) Can shareholders hold Mr. James liable for the damage the transaction caused to Buyer? (0- Not liable 0.0 2) Can shareholders hold the other directors liable for the damage the transaction caused to Liable if negligent 1.0 Buyer (0-2) Must Mr. James pay damages for the harm caused to Buyer upon a successful claim by No 0.0 shareholders? (0-1) Must Mr. James repay profits made from the transaction upon a successful claim by No 0.0 shareholders? (0-1) Is Mr. James disqualified upon a successful claim by shareholders? (0-1) No 0.0 Can a court void the transaction upon a successful claim by shareholders? (0-2) Only in case of 0.0 fraud or bad faith Ease of shareholder suits index (0-10) 7.0 Before suing, can shareholders representing 10% of Buyer's share capital inspect the No 0.0 transaction documents? (0-1) Can the plaintiff obtain any documents from the defendant and witnesses at trial? (0-3) Any relevant 3.0 document Can the plaintiff request categories of documents from the defendant without identifying No 0.0 specific ones? (0-1) Can the plaintiff directly question the defendant and witnesses at trial? (0-2) Yes 2.0 Is the level of proof required for civil suits lower than that of criminal cases? (0-1) Yes 1.0 Can shareholder plaintiffs recover their legal expenses from the company? (0-2) Yes if successful 1.0 Extent of shareholder governance index (0-10) 7.3 Extent of shareholder rights index (0-10) 9.0 Does the sale of 51% of Buyer's assets require shareholder approval? Yes 1.0 Can shareholders representing 10% of Buyer's share capital call for a meeting of Yes 1.0 shareholders? Must Buyer obtain its shareholders’ approval every time it issues new shares? No 0.0 Do shareholders automatically receive preemption rights every time Buyer issues new Yes 1.0 shares? Page 57 Doing Business 2019 Russian Federation Must shareholders approve the election and dismissal of the external auditor? Yes 1.0 Are changes to the rights of a class of shares only possible if the holders of the affected Yes 1.0 shares approve? Assuming that Buyer is a limited company, does the sale of 51% of its assets require Yes 1.0 member approval? Assuming that Buyer is a limited company, can members representing 10% call for a Yes 1.0 meeting of members? Assuming that Buyer is a limited company, must all or almost all members consent to add a Yes 1.0 new member? Assuming that Buyer is a limited company, must a member first offer to sell their interest to Yes 1.0 the existing members before they can sell to non-members? Extent of ownership and control index (0-10) 5.0 Is it forbidden to appoint the same individual as CEO and chairperson of the board of Yes 1.0 directors? Must the board of directors include independent and nonexecutive board members? No 0.0 Can shareholders remove members of the board of directors without cause before the end Yes 1.0 of their term? Must the board of directors include a separate audit committee exclusively comprising board No 0.0 members? Must a potential acquirer make a tender offer to all shareholders upon acquiring 50% of Yes 1.0 Buyer? Must Buyer pay declared dividends within a maximum period set by law? Yes 1.0 Is a subsidiary prohibited from acquiring shares issued by its parent company? No 0.0 Assuming that Buyer is a limited company, must Buyer have a mechanism to resolve No 0.0 disagreements among members? Assuming that Buyer is a limited company, must a potential acquirer make a tender offer to No 0.0 all shareholders upon acquiring 50% of Buyer? Assuming that Buyer is a limited company, must Buyer distribute profits within a maximum Yes 1.0 period set by law? Extent of corporate transparency index (0-10) 8.0 Must Buyer disclose direct and indirect beneficial ownership stakes representing 5%? Yes 1.0 Must Buyer disclose information about board members’ primary employment and Yes 1.0 directorships in other companies? Must Buyer disclose the compensation of individual managers? No 0.0 Must a detailed notice of general meeting be sent 21 days before the meeting? No 0.0 Can shareholders representing 5% of Buyer’s share capital put items on the general meeting Yes 1.0 agenda? Must Buyer's annual financial statements be audited by an external auditor? Yes 1.0 Must Buyer disclose its audit reports to the public? Yes 1.0 Assuming that Buyer is a limited company, must members meet at least once a year? Yes 1.0 Assuming that Buyer is a limited company, can members representing 5% put items on the Yes 1.0 meeting agenda? Assuming that Buyer is a limited company, must Buyer's annual financial statements be Yes 1.0 audited by an external auditor? Page 58 Doing Business 2019 Russian Federation Protecting Minority Investors - Saint Petersburg Indicator Saint Europe & OECD high Best Regulatory Petersburg Central Asia income Performance Extent of disclosure index (0-10) 6.0 7.3 6.5 10 (13 Economies) Extent of director liability index (0-10) 2.0 4.9 5.3 10 (Cambodia) Ease of shareholder suits index (0-10) 7.0 6.8 7.3 10 (Djibouti) Extent of shareholder rights index (0-10) 9.0 7.1 6.4 10 (Kazakhstan) Extent of ownership and control index (0-10) 5.0 5.6 5.4 None in 2017/18 Extent of corporate transparency index (0-10) 8.0 7.5 7.6 10 (6 Economies) Figure – Protecting Minority Investors in Saint Petersburg and comparator economies – Ranking and Score DB 2019 Protecting Minority Investors Score 0 100 65.00: Brazil (Rank: 48) 61.67: Moscow 61.67: Saint Petersburg 60.00: China (Rank: 64) 58.33: Mexico (Rank: 72) Note: The ranking of economies on the strength of minority investor protections is determined by sorting their scores for protecting minority investors. These scores are the simple average of the scores for the extent of conflict of interest regulation index and the extent of shareholder governance index. Figure – Protecting Minority Investors in Saint Petersburg and comparator economies – Measure of Quality Saint Petersburg 8 2 6 5 9 7 Brazil 9 8 5 6 7 4 China 9 1 10 4 7 5 Mexico 4 5 8 6 7 5 Moscow 8 2 6 5 9 7 OECD high income 7.4 5.5 6.5 5.2 6.3 7.4 Europe & Central Asia 7.6 4.6 7.2 5.6 7.3 6.8 0 5 10 15 20 25 30 35 40 45 Sub-Indicator Score Extent of corporate transparency index (0-10) Extent of director liability index (0-10) Extent of disclosure index (0-10) Extent of ownership and control index (0-10) Extent of shareholder rights index (0-10) Ease of shareholder suits index (0-10) Page 59 Doing Business 2019 Russian Federation Details – Protecting Minority Investors in Saint Petersburg – Measure of Quality Answer Score Extent of conflict of interest regulation index (0-10) 5 Extent of disclosure index (0-10) 6.0 Whose decision is sufficient to approve the Buyer-Seller transaction? (0-3) CEO alone 0.0 Must an external body review the terms of the transaction before it takes place? (0-1) No 0.0 Must Mr. James disclose his conflict of interest to the board of directors? (0-2) Full disclosure of 2.0 all material facts Must Buyer disclose the transaction in periodic filings (e.g. annual reports)? (0-2) Disclosure on the 2.0 transaction and on the conflict of interest Must Buyer immediately disclose the transaction to the public? (0-2) Disclosure on the 2.0 transaction and on the conflict of interest Extent of director liability index (0-10) 2.0 Can shareholders representing 10% of Buyer's share capital sue for the damage the Yes 1.0 transaction caused to Buyer? (0-1) Can shareholders hold Mr. James liable for the damage the transaction caused to Buyer? (0- Not liable 0.0 2) Can shareholders hold the other directors liable for the damage the transaction caused to Liable if negligent 1.0 Buyer (0-2) Must Mr. James pay damages for the harm caused to Buyer upon a successful claim by No 0.0 shareholders? (0-1) Must Mr. James repay profits made from the transaction upon a successful claim by No 0.0 shareholders? (0-1) Is Mr. James disqualified upon a successful claim by shareholders? (0-1) No 0.0 Can a court void the transaction upon a successful claim by shareholders? (0-2) Only in case of 0.0 fraud or bad faith Ease of shareholder suits index (0-10) 7.0 Before suing, can shareholders representing 10% of Buyer's share capital inspect the No 0.0 transaction documents? (0-1) Can the plaintiff obtain any documents from the defendant and witnesses at trial? (0-3) Any relevant 3.0 document Can the plaintiff request categories of documents from the defendant without identifying No 0.0 specific ones? (0-1) Can the plaintiff directly question the defendant and witnesses at trial? (0-2) Yes 2.0 Is the level of proof required for civil suits lower than that of criminal cases? (0-1) Yes 1.0 Can shareholder plaintiffs recover their legal expenses from the company? (0-2) Yes if successful 1.0 Extent of shareholder governance index (0-10) 7.3 Extent of shareholder rights index (0-10) 9.0 Does the sale of 51% of Buyer's assets require shareholder approval? Yes 1.0 Can shareholders representing 10% of Buyer's share capital call for a meeting of Yes 1.0 shareholders? Must Buyer obtain its shareholders’ approval every time it issues new shares? No 0.0 Do shareholders automatically receive preemption rights every time Buyer issues new Yes 1.0 shares? Page 60 Doing Business 2019 Russian Federation Must shareholders approve the election and dismissal of the external auditor? Yes 1.0 Are changes to the rights of a class of shares only possible if the holders of the affected Yes 1.0 shares approve? Assuming that Buyer is a limited company, does the sale of 51% of its assets require Yes 1.0 member approval? Assuming that Buyer is a limited company, can members representing 10% call for a Yes 1.0 meeting of members? Assuming that Buyer is a limited company, must all or almost all members consent to add a Yes 1.0 new member? Assuming that Buyer is a limited company, must a member first offer to sell their interest to Yes 1.0 the existing members before they can sell to non-members? Extent of ownership and control index (0-10) 5.0 Is it forbidden to appoint the same individual as CEO and chairperson of the board of Yes 1.0 directors? Must the board of directors include independent and nonexecutive board members? No 0.0 Can shareholders remove members of the board of directors without cause before the end Yes 1.0 of their term? Must the board of directors include a separate audit committee exclusively comprising board No 0.0 members? Must a potential acquirer make a tender offer to all shareholders upon acquiring 50% of Yes 1.0 Buyer? Must Buyer pay declared dividends within a maximum period set by law? Yes 1.0 Is a subsidiary prohibited from acquiring shares issued by its parent company? No 0.0 Assuming that Buyer is a limited company, must Buyer have a mechanism to resolve No 0.0 disagreements among members? Assuming that Buyer is a limited company, must a potential acquirer make a tender offer to No 0.0 all shareholders upon acquiring 50% of Buyer? Assuming that Buyer is a limited company, must Buyer distribute profits within a maximum Yes 1.0 period set by law? Extent of corporate transparency index (0-10) 8.0 Must Buyer disclose direct and indirect beneficial ownership stakes representing 5%? Yes 1.0 Must Buyer disclose information about board members’ primary employment and Yes 1.0 directorships in other companies? Must Buyer disclose the compensation of individual managers? No 0.0 Must a detailed notice of general meeting be sent 21 days before the meeting? No 0.0 Can shareholders representing 5% of Buyer’s share capital put items on the general meeting Yes 1.0 agenda? Must Buyer's annual financial statements be audited by an external auditor? Yes 1.0 Must Buyer disclose its audit reports to the public? Yes 1.0 Assuming that Buyer is a limited company, must members meet at least once a year? Yes 1.0 Assuming that Buyer is a limited company, can members representing 5% put items on the Yes 1.0 meeting agenda? Assuming that Buyer is a limited company, must Buyer's annual financial statements be Yes 1.0 audited by an external auditor? Page 61 Doing Business 2019 Russian Federation Paying Taxes This topic records the taxes and mandatory contributions that a medium-size company must pay or withhold in a given year, as well as the administrative burden of paying taxes and contributions and complying with postfiling procedures (VAT refund and tax audit). The most recent round of data collection for the project was completed in May 2018 covering for the Paying Taxes indicator calendar year 2017 (January 1, 2017 – December 31, 2017). See the methodology for more information. What the indicators measure Case study assumptions Tax payments for a manufacturing company in Using a case scenario, Doing Business records taxes and mandatory contributions a 2017 (number per year adjusted for electronic medium size company must pay in a year, and measures the administrative burden and joint filing and payment) of paying taxes, contributions and dealing with postfiling processes. Information is also compiled on frequency of filing and payments, time taken to comply with tax • Total number of taxes and contributions paid or laws, time taken to comply with the requirements of postfiling processes and time withheld, including consumption taxes (value waiting. added tax, sales tax or goods and service tax) • Method and frequency of filing and payment To make data comparable across economies, several assumptions are used: - TaxpayerCo is a medium-size business that started operations on January 1, 2016. Time required to comply with 3 major taxes It produces ceramic flowerpots and sells them at retail. All taxes and contributions (hours per year) recorded are paid in the second year of operation (calendar year 2017). Taxes and • Collecting information, computing tax payable mandatory contributions are measured at all levels of government. • Preparing separate tax accounting books, if The VAT refund process: required - In June 2017, TaxpayerCo. makes a large capital purchase: the value of the • Completing tax return, filing with agencies machine is 65 times income per capita of the economy. Sales are equally spread per month (1,050 times income per capita divided by 12) and cost of goods sold are • Arranging payment or withholding equally expensed per month (875 times income per capita divided by 12). The Total tax and contribution rate (% of commercial machinery seller is registered for VAT and excess input VAT incurred in June will be fully recovered after four consecutive months if the VAT rate is the same for inputs, profits) sales and the machine and the tax reporting period is every month. Input VAT will • Profit or corporate income tax exceed Output VAT in June 2017. • Social contributions, labor taxes paid by The corporate income tax audit process: employer - An error in calculation of income tax liability (for example, use of incorrect tax • Property and property transfer taxes depreciation rates, or incorrectly treating an expense as tax deductible) leads to an • Dividend, capital gains, financial transactions incorrect income tax return and a corporate income tax underpayment. TaxpayerCo. taxes discovered the error and voluntarily notified the tax authority. The value of the underpaid income tax liability is 5% of the corporate income tax liability • Waste collection, vehicle, road and other taxes due. TaxpayerCo. submits corrected information after the deadline for submitting the annual tax return, but within the tax assessment period. Postfiling Index • Time to comply with a VAT refund (hours) • Time to obtain a VAT refund (weeks) • Time to comply with a corporate income tax correction (hours) • Time to complete a corporate income tax correction (weeks) Page 62 Doing Business 2019 Russian Federation Paying Taxes - Moscow Indicator Moscow Europe & OECD high Best Regulatory Central Asia income Performance Payments (number per year) 7 16.6 11.2 3 (Hong Kong SAR, China) Time (hours per year) 168 214.8 159.4 49 (Singapore) Total tax and contribution rate (% of profit) 46.3 32.3 39.8 26.1% (32 Economies) Postfiling index (0-100) 73.14 64.41 84.41 None in 2017/18 Figure – Paying Taxes in Moscow and comparator economies – Ranking and Score DB 2019 Paying Taxes Score 0 100 79.85: Saint Petersburg 79.74: Moscow 67.53: China (Rank: 114) 66.65: Mexico (Rank: 116) 34.40: Brazil (Rank: 184) Note: The ranking of economies on the ease of paying taxes is determined by sorting their scores for paying taxes. These scores are the simple average of the scores for each of the component indicators, with a threshold and a nonlinear transformation applied to one of the component indicators, the total tax and contribution rate. The threshold is defined as the total tax and contribution rate at the 15th percentile of the overall distribution for all years included in the analysis up to and including Doing Business 2015, which is 26.1%. All economies with a total tax and contribution rate below this threshold receive the same score as the economy at the threshold. Figure – Paying Taxes in Moscow and comparator economies – Measure of Quality 100 80 73.14 73.14 64.41 Index score 60 50.00 40.51 40 20 7.80 0 Moscow Brazil China Mexico Saint Petersburg Europe & Central Asia Page 63 Doing Business 2019 Russian Federation Details – Paying Taxes in Moscow Tax or Payments Notes on Time Statutory Tax base Total tax Notes on mandatory (number) Payments (hours) tax rate and TTCR contribution contribution rate (% of profit) Pension fund 1.0 online 22% gross salaries 24.68 contribution Corporate 1.0 online 53.0 20% taxable profits 7.34 income tax Federal 0.0 online and 5.1% gross salaries 5.75 obligatory jointly medical insurance fund contributions Social 1.0 online 76.0 2.9% gross salaries 3.18 security insurance Accidents tax 0.0 online and 2.5% gross salaries 2.82 jointly Property tax 1.0 online 2.2% book value of 2.08 property Land tax 1.0 online 0.3%-1.5% cadastral 0.44 value of the land plot Transport tax 1.0 online various rates engine 0.05 capacity of vehicles Value Added 1.0 online 39.0 18% value added 0.00 not included Tax Personal 0.0 online and 13% gross salaries 0.00 withheld income tax jointly Totals 7 168 46.3 Page 64 Doing Business 2019 Russian Federation Details – Paying Taxes in Moscow – Tax by Type Taxes by type Answer Profit tax (% of profit) 7.3 Labor tax and contributions (% of profit) 36.4 Other taxes (% of profit) 2.6 Page 65 Doing Business 2019 Russian Federation Details – Paying Taxes in Moscow – Measure of Quality Answer Score Postfiling index (0-100) 73.14 VAT refunds Does VAT exist? Yes Does a VAT refund process exist per the case study? Yes Restrictions on VAT refund process None Percentage of cases exposed to a VAT audit (%) 75% - 100% Is there a mandatory carry forward period? No Time to comply with VAT refund (hours) 7.2 85.6 Time to obtain a VAT refund (weeks) 19.8 67.98 Corporate income tax audits Does corporate income tax exist? Yes Percentage of cases exposed to a corporate income tax audit (%) 75% - 100% Time to comply with a corporate income tax correction (hours) 7.5 88.99 Time to complete a corporate income tax correction (weeks) 16.0 50 Notes: Names of taxes have been standardized. For instance income tax, profit tax, tax on company's income are all named corporate income tax in this table. The hours for VAT include all the VAT and sales taxes applicable. The hours for Social Security include all the hours for labor taxes and mandatory contributions in general. The postfiling index is the average of the scores on time to comply with VAT refund, time to obtain a VAT refund, time to comply with a corporate income tax correction and time to complete a corporate income tax correction. N/A = Not applicable. Page 66 Doing Business 2019 Russian Federation Paying Taxes - Saint Petersburg Indicator Saint Europe & OECD high Best Regulatory Petersburg Central Asia income Performance Payments (number per year) 7 16.6 11.2 3 (Hong Kong SAR, China) Time (hours per year) 168 214.8 159.4 49 (Singapore) Total tax and contribution rate (% of profit) 46.1 32.3 39.8 26.1% (32 Economies) Postfiling index (0-100) 73.14 64.41 84.41 None in 2017/18 Figure – Paying Taxes in Saint Petersburg and comparator economies – Ranking and Score DB 2019 Paying Taxes Score 0 100 79.85: Saint Petersburg 79.74: Moscow 67.53: China (Rank: 114) 66.65: Mexico (Rank: 116) 34.40: Brazil (Rank: 184) Note: The ranking of economies on the ease of paying taxes is determined by sorting their scores for paying taxes. These scores are the simple average of the scores for each of the component indicators, with a threshold and a nonlinear transformation applied to one of the component indicators, the total tax and contribution rate. The threshold is defined as the total tax and contribution rate at the 15th percentile of the overall distribution for all years included in the analysis up to and including Doing Business 2015, which is 26.1%. All economies with a total tax and contribution rate below this threshold receive the same score as the economy at the threshold. Figure – Paying Taxes in Saint Petersburg and comparator economies – Measure of Quality 100 80 73.14 73.14 64.41 Index score 60 50.00 40.51 40 20 7.80 0 Saint Petersburg Brazil China Mexico Moscow Europe & Central Asia Page 67 Doing Business 2019 Russian Federation Details – Paying Taxes in Saint Petersburg Tax or Payments Notes on Time Statutory Tax base Total tax Notes on mandatory (number) Payments (hours) tax rate and TTCR contribution contribution rate (% of profit) Pension fund 1.0 online 22% gross salaries 24.68 contribution Corporate 1.0 online 53.0 20% taxable profits 7.41 income tax Federal 0.0 online and 5.1% gross salaries 5.75 obligatory jointly medical insurance fund contributions Social 1.0 online 76.0 2.9% gross salaries 3.18 security insurance Accidents tax 0.0 online and 2.5% gross salaries 2.82 jointly Property tax 1.0 online 2.2% book value of 2.08 property Land tax 1.0 online 0.3%-1.5% cadastral 0.09 value of the land plot Transport tax 1.0 online various rates engine 0.05 capacity of vehicles Value Added 1.0 online 39.0 18% value added 0.00 not included Tax Personal 0.0 online and 13% gross salaries 0.00 withheld income tax jointly Totals 7 168 46.1 Page 68 Doing Business 2019 Russian Federation Details – Paying Taxes in Saint Petersburg – Tax by Type Taxes by type Answer Profit tax (% of profit) 7.4 Labor tax and contributions (% of profit) 36.4 Other taxes (% of profit) 2.2 Page 69 Doing Business 2019 Russian Federation Details – Paying Taxes in Saint Petersburg – Measure of Quality Answer Score Postfiling index (0-100) 73.14 VAT refunds Does VAT exist? Yes Does a VAT refund process exist per the case study? Yes Restrictions on VAT refund process None Percentage of cases exposed to a VAT audit (%) 75% - 100% Is there a mandatory carry forward period? No Time to comply with VAT refund (hours) 7.2 85.6 Time to obtain a VAT refund (weeks) 19.8 67.98 Corporate income tax audits Does corporate income tax exist? Yes Percentage of cases exposed to a corporate income tax audit (%) 25% - 49% Time to comply with a corporate income tax correction (hours) 7.5 88.99 Time to complete a corporate income tax correction (weeks) 16.0 50 Notes: Names of taxes have been standardized. For instance income tax, profit tax, tax on company's income are all named corporate income tax in this table. The hours for VAT include all the VAT and sales taxes applicable. The hours for Social Security include all the hours for labor taxes and mandatory contributions in general. The postfiling index is the average of the scores on time to comply with VAT refund, time to obtain a VAT refund, time to comply with a corporate income tax correction and time to complete a corporate income tax correction. N/A = Not applicable. Page 70 Doing Business 2019 Russian Federation Trading across Borders Doing Business records the time and cost associated with the logistical process of exporting and importing goods. Doing Business measures the time and cost (excluding tariffs) associated with three sets of procedures—documentary compliance, border compliance and domestic transport—within the overall process of exporting or importing a shipment of goods. The most recent round of data collection for the project was completed in May 2018. See the methodology for more information. What the indicators measure Case study assumptions Documentary compliance To make the data comparable across economies, a few assumptions are made about the traded goods and the transactions: • Obtaining, preparing and submitting documents during transport, clearance, inspections and port Time: Time is measured in hours, and 1 day is 24 hours (for example, 22 days are or border handling in origin economy recorded as 22×24=528 hours). If customs clearance takes 7.5 hours, the data are • Obtaining, preparing and submitting documents recorded as is. Alternatively, suppose documents are submitted to a customs agency required by destination economy and any transit at 8:00a.m., are processed overnight and can be picked up at 8:00a.m. the next day. economies The time for customs clearance would be recorded as 24 hours because the actual procedure took 24 hours. • Covers all documents required by law and in practice, including electronic submissions of Cost: Insurance cost and informal payments for which no receipt is issued are information excluded from the costs recorded. Costs are reported in U.S. dollars. Contributors Border compliance are asked to convert local currency into U.S. dollars based on the exchange rate prevailing on the day they answer the questionnaire. Contributors are private sector • Customs clearance and inspections experts in international trade logistics and are informed about exchange rates. • Inspections by other agencies (if applied to more than 20% of shipments) Assumptions of the case study: - For all 190 economies covered by Doing Business, it is assumed a shipment is in a • Handling and inspections that take place at the warehouse in the largest business city of the exporting economy and travels to a economy’s port or border warehouse in the largest business city of the importing economy. - It is assumed each economy imports 15 metric tons of containerized auto parts (HS Domestic transport 8708) from its natural import partner—the economy from which it imports the largest • Loading or unloading of the shipment at the value (price times quantity) of auto parts. It is assumed each economy exports the warehouse or port/border product of its comparative advantage (defined by the largest export value) to its • Transport between warehouse and port/border natural export partner—the economy that is the largest purchaser of this product. Shipment value is assumed to be $50,000. • Traffic delays and road police checks while - The mode of transport is the one most widely used for the chosen export or import shipment is en route product and the trading partner, as is the seaport or land border crossing. - All electronic information submissions requested by any government agency in connection with the shipment are considered to be documents obtained, prepared and submitted during the export or import process. - A port or border is a place (seaport or land border crossing) where merchandise can enter or leave an economy. - Relevant government agencies include customs, port authorities, road police, border guards, standardization agencies, ministries or departments of agriculture or industry, national security agencies and any other government authorities. Page 71 Doing Business 2019 Russian Federation Trading across Borders - Moscow Indicator Moscow Europe & OECD high Best Regulatory Central Asia income Performance Time to export: Border compliance (hours) 66 22.1 12.5 1 (19 Economies) Cost to export: Border compliance (USD) 580 157.5 139.1 0 (19 Economies) Time to export: Documentary compliance (hours) 26 24.3 2.4 1 (26 Economies) Cost to export: Documentary compliance (USD) 80 97.9 35.2 0 (20 Economies) Time to import: Border compliance (hours) 12 21.1 8.5 0 (25 Economies) Cost to import: Border compliance (USD) 400 162.3 100.2 0 (28 Economies) Time to import: Documentary compliance (hours) 43 24.7 3.4 1 (30 Economies) Cost to import: Documentary compliance (USD) 160 93.9 24.9 0 (30 Economies) Figure – Trading across Borders in Moscow and comparator economies – Ranking and Score DB 2019 Trading Across Borders Score 0 100 82.59: China (Rank: 65) 82.09: Mexico (Rank: 66) 74.01: Moscow 69.85: Brazil (Rank: 106) 64.16: Saint Petersburg Note: The ranking of economies on the ease of trading across borders is determined by sorting their scores for trading across borders. These scores are the simple average of the scores for the time and cost for documentary compliance and border compliance to export and import. Figure – Trading across Borders in Moscow – Time and Cost Time (hours) Cost (USD) 70 66 700 60 580 600 Time (hours) 50 500 Cost (USD) 43 400 40 400 30 26 300 20 160 200 12 10 80 100 0 0 Export Export Import Import - - - - Border Documentary Border Documentary Compliance Compliance Compliance Compliance Page 72 Doing Business 2019 Russian Federation Details – Trading across Borders in Moscow Characteristics Export Import Product HS 72 : Iron and steel HS 8708: Parts and accessories of motor vehicles Trade partner Italy Germany Border St Petersburg Port Krasnaya gorka, Smolenskaya oblast. Distance (km) 724 500 Domestic transport time (hours) 20 10 Domestic transport cost (USD) 958 650 Details – Trading across Borders in Moscow – Components of Border Compliance Time to Complete (hours) Associated Costs (USD) Export: Clearance and inspections required 4.0 215.0 by customs authorities Export: Clearance and inspections required 0.0 0.0 by agencies other than customs Export: Port or border handling 62.0 365.0 Import: Clearance and inspections required 10.0 400.0 by customs authorities Import: Clearance and inspections required 0.0 0.0 by agencies other than customs Import: Port or border handling 2.0 0.0 Page 73 Doing Business 2019 Russian Federation Details – Trading across Borders in Moscow – Trade Documents Export Import Acceptance order Acceptance order Bill of lading Certificate of conformity Consignment note/ CMR waybill Commercial invoice Commercial Invoice (original) Consignment note Customs Export Declaration Customs Import Declaration Declaration of origin / Certificate of Origin Transit declaration Export/loading order Letter from the bank certifying opening of letter of credit Packing list Packing list Sales purchase contract Sales purchase contract SOLAS certificate SOLAS certificate Page 74 Doing Business 2019 Russian Federation Trading across Borders - Saint Petersburg Indicator Saint Europe & OECD high Best Regulatory Petersburg Central Asia income Performance Time to export: Border compliance (hours) 66 22.1 12.5 1 (19 Economies) Cost to export: Border compliance (USD) 580 157.5 139.1 0 (19 Economies) Time to export: Documentary compliance (hours) 24 24.3 2.4 1 (26 Economies) Cost to export: Documentary compliance (USD) 120 97.9 35.2 0 (20 Economies) Time to import: Border compliance (hours) 72 21.1 8.5 0 (25 Economies) Cost to import: Border compliance (USD) 1025 162.3 100.2 0 (28 Economies) Time to import: Documentary compliance (hours) 43 24.7 3.4 1 (30 Economies) Cost to import: Documentary compliance (USD) 135 93.9 24.9 0 (30 Economies) Figure – Trading across Borders in Saint Petersburg and comparator economies – Ranking and Score DB 2019 Trading Across Borders Score 0 100 82.59: China (Rank: 65) 82.09: Mexico (Rank: 66) 74.01: Moscow 69.85: Brazil (Rank: 106) 64.16: Saint Petersburg Note: The ranking of economies on the ease of trading across borders is determined by sorting their scores for trading across borders. These scores are the simple average of the scores for the time and cost for documentary compliance and border compliance to export and import. Figure – Trading across Borders in Saint Petersburg – Time and Cost Time (hours) Cost (USD) 80 72 1200 66 1025 70 1000 60 Time (hours) Cost (USD) 800 50 43 580 40 600 30 24 400 20 120 135 200 10 0 0 Export Export Import Import - - - - Border Documentary Border Documentary Compliance Compliance Compliance Compliance Page 75 Doing Business 2019 Russian Federation Details – Trading across Borders in Saint Petersburg Characteristics Export Import Product HS 72 : Iron and steel HS 8708: Parts and accessories of motor vehicles Trade partner Italy Germany Border St Petersburg Port Saint Petersburg port Distance (km) 8 8 Domestic transport time (hours) 4 4 Domestic transport cost (USD) 246 246 Details – Trading across Borders in Saint Petersburg – Components of Border Compliance Time to Complete (hours) Associated Costs (USD) Export: Clearance and inspections required 4.0 215.0 by customs authorities Export: Clearance and inspections required 0.0 0.0 by agencies other than customs Export: Port or border handling 62.0 365.0 Import: Clearance and inspections required 8.0 300.0 by customs authorities Import: Clearance and inspections required 0.0 0.0 by agencies other than customs Import: Port or border handling 72.0 725.0 Page 76 Doing Business 2019 Russian Federation Details – Trading across Borders in Saint Petersburg – Trade Documents Export Import Acceptance order Acceptance order Bill of lading Bill of lading Commercial invoice Certificate of conformity Consignment note Commercial invoice Customs Export Declaration Consignment note Declaration of origin Customs import declaration Export/loading order Document of warehouse Packing list Letter from the bank certifying opening of letter of credit Sales purchase contract Packing list SOLAS certificate Sales purchase contract SOLAS certificate Page 77 Doing Business 2019 Russian Federation Enforcing Contracts The enforcing contracts indicator measures the time and cost for resolving a commercial dispute through a local first-instance court, and the quality of judicial processes index, evaluating whether each economy has adopted a series of good practices that promote quality and efficiency in the court system. The most recent round of data collection was completed in May 2018. See the methodology for more information. What the indicators measure Case study assumptions Time required to enforce a contract through the The dispute in the case study involves the breach of a sales contract between 2 courts (calendar days) domestic businesses. The case study assumes that the court hears an expert on the quality of the goods in dispute. This distinguishes the case from simple debt • Time to file and serve the case enforcement. • Time for trial and to obtain the judgment To make the data comparable across economies, Doing Business uses several • Time to enforce the judgment assumptions about the case: Cost required to enforce a contract through the - The dispute concerns a lawful transaction between two businesses (Seller and courts (% of claim) Buyer), both located in the economy’s largest business city. For 11 economies the data are also collected for the second largest business city. • Attorney fees - The buyer orders custom-made goods, then fails to pay alleging that the goods are • Court fees not of adequate quality. - The value of the dispute is 200% of the income per capita or the equivalent in local • Enforcement fees currency of USD 5,000, whichever is greater. - The seller sues the buyer before the court with jurisdiction over commercial cases Quality of judicial processes index (0-18) worth 200% of income per capita or $5,000. • Court structure and proceedings (-1-5) - The seller requests the pretrial attachment of the defendant’s movable assets to secure the claim. • Case management (0-6) - The dispute on the quality of the goods requires an expert opinion. • Court automation (0-4) - The judge decides in favor of the seller; there is no appeal. • Alternative dispute resolution (0-3) - The seller enforces the judgment through a public sale of the buyer’s movable assets. Page 78 Doing Business 2019 Russian Federation Enforcing Contracts - Moscow Standardized Case Claim value RUB 1,141,590 Court name Moscow Arbitrazh Court City Covered Moscow Indicator Moscow Europe & OECD high Best Regulatory Central Asia income Performance Time (days) 340 496.3 582.4 None in 2017/18 Cost (% of claim value) 15.0 26.3 21.2 None in 2017/18 Quality of judicial processes index (0-18) 9.5 10.3 11.5 None in 2017/18 Figure – Enforcing Contracts in Moscow and comparator economies – Ranking and Score DB 2019 Enforcing Contracts Score 0 100 78.97: China (Rank: 6) 72.66: Moscow 71.06: Saint Petersburg 67.01: Mexico (Rank: 43) 66.00: Brazil (Rank: 48) Note: The ranking of economies on the ease of enforcing contracts is determined by sorting their scores for enforcing contracts. These scores are the simple average of the scores for each of the component indicators. Figure – Enforcing Contracts in Moscow – Time and Cost Time (days) Cost (% of claim value) 800 731 33.0 35 Cost (% of claim value) 700 30 26.3 582.4 600 Time (days) 22.0 496 496.4 25 21.2 20.0 500 20 400 16.2 341 340 15.0 330 15 300 10 200 100 5 0 0 Brazil China Europe Mexico Moscow OECD Saint & high Petersburg Central income Asia Page 79 Doing Business 2019 Russian Federation Figure – Enforcing Contracts in Moscow and comparator economies – Measure of Quality Moscow 2.5 4 0 3 Brazil 3 3 3 4.1 China 3 4.5 3 5 Mexico 2.5 3.3 0.5 3.8 Saint Petersburg 2.5 4 0 3 OECD high income 2.5 3.1 2.3 3.6 Europe & Central Asia 2.1 3 1.4 3.6 0 2 4 6 8 10 12 14 16 18 Sub-Indicator Score Alternative dispute resolution (0-3) Case management (0-6) Court automation (0-4) Court structure and proceedings (-1-5) Details – Enforcing Contracts in Moscow Indicator Time (days) 340 Filing and service 60 Trial and judgment 160 Enforcement of judgment 120 Cost (% of claim value) 15.0 Attorney fees 10 Court fees 5 Enforcement fees 0 Quality of judicial processes index (0-18) 9.5 Court structure and proceedings (-1-5) 3.0 Case management (0-6) 4.0 Court automation (0-4) 0.0 Alternative dispute resolution (0-3) 2.5 Page 80 Doing Business 2019 Russian Federation Details – Enforcing Contracts in Moscow – Measure of Quality Answer Score Quality of judicial processes index (0-18) 9.5 Court structure and proceedings (-1-5) 3.0 1. Is there a court or division of a court dedicated solely to hearing commercial cases? Yes 1.5 2. Small claims court 0.0 2.a. Is there a small claims court or a fast-track procedure for small claims? No 2.b. If yes, is self-representation allowed? n.a. 3. Is pretrial attachment available? Yes 1.0 4. Are new cases assigned randomly to judges? Yes, but manual 0.5 5. Does a woman's testimony carry the same evidentiary weight in court as a man's? Yes 0.0 Case management (0-6) 4.0 1. Time standards 0.0 1.a. Are there laws setting overall time standards for key court events in a civil Yes case? 1.b. If yes, are the time standards set for at least three court events? No 1.c. Are these time standards respected in more than 50% of cases? Yes 2. Adjournments 0.0 2.a. Does the law regulate the maximum number of adjournments that can be No granted? 2.b. Are adjournments limited to unforeseen and exceptional circumstances? No 2.c. If rules on adjournments exist, are they respected in more than 50% of cases? n.a. 3. Can two of the following four reports be generated about the competent court: (i) time to Yes 1.0 disposition report; (ii) clearance rate report; (iii) age of pending cases report; and (iv) single case progress report? 4. Is a pretrial conference among the case management techniques used before the Yes 1.0 competent court? 5. Are there any electronic case management tools in place within the competent court for Yes 1.0 use by judges? 6. Are there any electronic case management tools in place within the competent court for Yes 1.0 use by lawyers? Court automation (0-4) 0.0 1. Can the initial complaint be filed electronically through a dedicated platform within the no 0.0 competent court? 2. Is it possible to carry out service of process electronically for claims filed before the No 0.0 competent court? 3. Can court fees be paid electronically within the competent court? No 0.0 4. Publication of judgments 0.0 4.a Are judgments rendered in commercial cases at all levels made available to the No general public through publication in official gazettes, in newspapers or on the internet or court website? 4.b. Are judgments rendered in commercial cases at the appellate and supreme No court level made available to the general public through publication in official gazettes, in newspapers or on the internet or court website? Alternative dispute resolution (0-3) 2.5 1. Arbitration 1.0 Page 81 Doing Business 2019 Russian Federation 1.a. Is domestic commercial arbitration governed by a consolidated law or Yes consolidated chapter or section of the applicable code of civil procedure encompassing substantially all its aspects? 1.b. Are there any commercial disputes—aside from those that deal with public Yes order or public policy—that cannot be submitted to arbitration? 1.c. Are valid arbitration clauses or agreements usually enforced by the courts? Yes 2. Mediation/Conciliation 1.5 2.a. Is voluntary mediation or conciliation available? Yes 2.b. Are mediation, conciliation or both governed by a consolidated law or Yes consolidated chapter or section of the applicable code of civil procedure encompassing substantially all their aspects? 2.c. Are there financial incentives for parties to attempt mediation or conciliation Yes (i.e., if mediation or conciliation is successful, a refund of court filing fees, income tax credits or the like)? Page 82 Doing Business 2019 Russian Federation Enforcing Contracts - Saint Petersburg Standardized Case Claim value RUB 1,141,590 Court name Commercial (Arbitrazh) Court of St. Petersburg and Leningrad Region City Covered Saint Petersburg Indicator Saint Europe & OECD high Best Regulatory Petersburg Central Asia income Performance Time (days) 330 496.3 582.4 None in 2017/18 Cost (% of claim value) 20.0 26.3 21.2 None in 2017/18 Quality of judicial processes index (0-18) 9.5 10.3 11.5 None in 2017/18 Figure – Enforcing Contracts in Saint Petersburg and comparator economies – Ranking and Score DB 2019 Enforcing Contracts Score 0 100 78.97: China (Rank: 6) 72.66: Moscow 71.06: Saint Petersburg 67.01: Mexico (Rank: 43) 66.00: Brazil (Rank: 48) Note: The ranking of economies on the ease of enforcing contracts is determined by sorting their scores for enforcing contracts. These scores are the simple average of the scores for each of the component indicators. Figure – Enforcing Contracts in Saint Petersburg – Time and Cost Time (days) Cost (% of claim value) 800 731 33.0 35 700 26.3 30 Cost (% of claim value) 582.4 600 Time (days) 22.0 496 496.4 25 21.2 20.0 500 20 400 16.2 341 340 15.0 330 15 300 10 200 100 5 0 0 Brazil China Europe Mexico Moscow OECD Saint & high Petersburg Central income Asia Page 83 Doing Business 2019 Russian Federation Figure – Enforcing Contracts in Saint Petersburg and comparator economies – Measure of Quality Saint Petersburg 2.5 4 0 3 Brazil 3 3 3 4.1 China 3 4.5 3 5 Mexico 2.5 3.3 0.5 3.8 Moscow 2.5 4 0 3 OECD high income 2.5 3.1 2.3 3.6 Europe & Central Asia 2.1 3 1.4 3.6 0 2 4 6 8 10 12 14 16 18 Sub-Indicator Score Alternative dispute resolution (0-3) Case management (0-6) Court automation (0-4) Court structure and proceedings (-1-5) Details – Enforcing Contracts in Saint Petersburg Indicator Time (days) 330 Filing and service 60 Trial and judgment 150 Enforcement of judgment 120 Cost (% of claim value) 20.0 Attorney fees 15 Court fees 5 Enforcement fees 0 Quality of judicial processes index (0-18) 9.5 Court structure and proceedings (-1-5) 3.0 Case management (0-6) 4.0 Court automation (0-4) 0.0 Alternative dispute resolution (0-3) 2.5 Page 84 Doing Business 2019 Russian Federation Details – Enforcing Contracts in Saint Petersburg – Measure of Quality Answer Score Quality of judicial processes index (0-18) 9.5 Court structure and proceedings (-1-5) 3.0 1. Is there a court or division of a court dedicated solely to hearing commercial cases? Yes 1.5 2. Small claims court 0.0 2.a. Is there a small claims court or a fast-track procedure for small claims? No 2.b. If yes, is self-representation allowed? n.a. 3. Is pretrial attachment available? Yes 1.0 4. Are new cases assigned randomly to judges? Yes, but manual 0.5 5. Does a woman's testimony carry the same evidentiary weight in court as a man's? Yes 0.0 Case management (0-6) 4.0 1. Time standards 0.0 1.a. Are there laws setting overall time standards for key court events in a civil Yes case? 1.b. If yes, are the time standards set for at least three court events? No 1.c. Are these time standards respected in more than 50% of cases? Yes 2. Adjournments 0.0 2.a. Does the law regulate the maximum number of adjournments that can be No granted? 2.b. Are adjournments limited to unforeseen and exceptional circumstances? No 2.c. If rules on adjournments exist, are they respected in more than 50% of cases? n.a. 3. Can two of the following four reports be generated about the competent court: (i) time to Yes 1.0 disposition report; (ii) clearance rate report; (iii) age of pending cases report; and (iv) single case progress report? 4. Is a pretrial conference among the case management techniques used before the Yes 1.0 competent court? 5. Are there any electronic case management tools in place within the competent court for Yes 1.0 use by judges? 6. Are there any electronic case management tools in place within the competent court for Yes 1.0 use by lawyers? Court automation (0-4) 0.0 1. Can the initial complaint be filed electronically through a dedicated platform within the no 0.0 competent court? 2. Is it possible to carry out service of process electronically for claims filed before the No 0.0 competent court? 3. Can court fees be paid electronically within the competent court? No 0.0 4. Publication of judgments 0.0 4.a Are judgments rendered in commercial cases at all levels made available to the No general public through publication in official gazettes, in newspapers or on the internet or court website? 4.b. Are judgments rendered in commercial cases at the appellate and supreme No court level made available to the general public through publication in official gazettes, in newspapers or on the internet or court website? Alternative dispute resolution (0-3) 2.5 1. Arbitration 1.0 Page 85 Doing Business 2019 Russian Federation 1.a. Is domestic commercial arbitration governed by a consolidated law or Yes consolidated chapter or section of the applicable code of civil procedure encompassing substantially all its aspects? 1.b. Are there any commercial disputes—aside from those that deal with public Yes order or public policy—that cannot be submitted to arbitration? 1.c. Are valid arbitration clauses or agreements usually enforced by the courts? Yes 2. Mediation/Conciliation 1.5 2.a. Is voluntary mediation or conciliation available? Yes 2.b. Are mediation, conciliation or both governed by a consolidated law or Yes consolidated chapter or section of the applicable code of civil procedure encompassing substantially all their aspects? 2.c. Are there financial incentives for parties to attempt mediation or conciliation Yes (i.e., if mediation or conciliation is successful, a refund of court filing fees, income tax credits or the like)? Page 86 Doing Business 2019 Russian Federation Resolving Insolvency Doing Business studies the time, cost and outcome of insolvency proceedings involving domestic legal entities. These variables are used to calculate the recovery rate, which is recorded as cents on the dollar recovered by secured creditors through reorganization, liquidation or debt enforcement (foreclosure or receivership) proceedings. To determine the present value of the amount recovered by creditors, Doing Business uses the lending rates from the International Monetary Fund, supplemented with data from central banks and the Economist Intelligence Unit. The most recent round of data collection was completed in May 2018. See the methodology for more information. What the indicators measure Case study assumptions Time required to recover debt (years) To make the data on the time, cost and outcome comparable across economies, several assumptions about the business and the case are used: • Measured in calendar years • Appeals and requests for extension are included - A hotel located in the largest city (or cities) has 201 employees and 50 suppliers. The hotel experiences financial difficulties. Cost required to recover debt (% of debtor’s - The value of the hotel is 100% of the income per capita or the equivalent in local estate) currency of USD 200,000, whichever is greater. - The hotel has a loan from a domestic bank, secured by a mortgage over the hotel’s • Measured as percentage of estate value real estate. The hotel cannot pay back the loan, but makes enough money to • Court fees operate otherwise. • Fees of insolvency administrators In addition, Doing Business evaluates the quality of legal framework applicable to • Lawyers’ fees judicial liquidation and reorganization proceedings and the extent to which best • Assessors’ and auctioneers’ fees insolvency practices have been implemented in each economy covered. • Other related fees Outcome • Whether business continues operating as a going concern or business assets are sold piecemeal Recovery rate for creditors • Measures the cents on the dollar recovered by secured creditors • Outcome for the business (survival or not) determines the maximum value that can be recovered • Official costs of the insolvency proceedings are deducted • Depreciation of furniture is taken into account • Present value of debt recovered Strength of insolvency framework index (0- 16) • Sum of the scores of four component indices: • Commencement of proceedings index (0-3) • Management of debtor’s assets index (0-6) • Reorganization proceedings index (0-3) • Creditor participation index (0-4) Page 87 Doing Business 2019 Russian Federation Resolving Insolvency - Moscow Indicator Moscow Europe & OECD high Best Regulatory Central Asia income Performance Recovery rate (cents on the dollar) 41.7 38.6 70.5 None in 2017/18 Time (years) 2.0 2.3 1.7 0.4 (Ireland) Cost (% of estate) 9.0 13.2 9.3 1.0 (Norway) Outcome (0 as piecemeal sale and 1 as going 0 .. .. .. concern) Strength of insolvency framework index (0-16) 11.5 11.1 11.9 None in 2017/18 Figure – Resolving Insolvency in Moscow and comparator economies – Ranking and Score DB 2019 Resolving Insolvency Score 0 100 70.77: Mexico (Rank: 32) 59.14: Saint Petersburg 58.39: Moscow 55.82: China (Rank: 61) 48.48: Brazil (Rank: 77) Note: The ranking of economies on the ease of resolving insolvency is determined by sorting their scores for resolving insolvency. These scores are the simple average of the scores for the recovery rate and the strength of insolvency framework index. Figure – Resolving Insolvency in Moscow – Time and Cost Time (years) Cost (% of estate) 4.5 25 4.0 22.0 4 Cost (% of estate) 3.5 18.0 20 Time (years) 3 2.3 13.2 15 2.5 12.0 2.0 2 1.7 1.8 1.7 9.3 1.8 9.0 9.0 10 1.5 1 5 0.5 0 0 Brazil China Europe Mexico Moscow OECD Saint & high Petersburg Central income Asia Page 88 Doing Business 2019 Russian Federation Figure – Resolving Insolvency in Moscow and comparator economies – Measure of Quality Moscow 5 2.5 3 1 Brazil 5.5 2.5 3 2 China 5 3 1 2.5 Mexico 5.5 2.5 2 1.5 Saint Petersburg 5 2.5 3 1 OECD high income 5.3 2.8 2.2 1.9 Europe & Central Asia 4.5 2.6 2.3 1.8 0 2 4 6 8 10 12 14 Sub-Indicator Score Management of debtor's assets index (0-6) Commencement of proceedings index (0-3) Creditor participation index (0-4) Reorganization proceedings index (0-3) Note: Even if the economy’s legal framework includes provisions related to insolvency proceedings (liquidation or reorganization), the economy receives 0 points for the strength of insolvency framework index, if time, cost and outcome indicators are recorded as “no practice.” Figure – Resolving Insolvency in Moscow and comparator economies – Recovery Rate Recovery rate(cents on the dollar) 100 80 64.7 60 41.7 43.1 36.9 38.6 40 20 14.6 0 Moscow Brazil China Mexico Saint Petersburg Europe & Central Asia Page 89 Doing Business 2019 Russian Federation Details – Resolving Insolvency in Moscow Indicator Answer Score Proceeding liquidation In accordance with Art. 9 of the Law on Insolvency (Bankruptcy), the management of Mirage must petition the court to declare the company bankrupt within 1 month of failing to pay the Bank’s claims. The court will institute a supervisory procedure and will appoint a temporary administrator. Temporary administrator will convene the first creditors’ meeting, where the creditors will decide whether to petition the court for liquidation or reorganization. Under the case study assumptions, creditors will likely choose the liquidation procedure, because the bank, as a major creditor, would be interested in receiving its money as soon as possible. Outcome piecemeal sale Despite the fact that the value of the business will be higher if it is sold as a going concern, in practice most companies similar to one indicated in the case study are sold piecemeal. Time (in years) 2.0 In accordance with Article 51 of the Law on Insolvency (Bankruptcy), a bankruptcy case must be considered within 7 months of the day the petition was received by the arbitrazh court. Liquidation proceedings by law are limited to 6 months and can be extended by 6 more months (art. 124 of the Law on Insolvency (Bankruptcy)). Therefore, the time dictated by law is 19 months. However, in practice, liquidation proceedings are extended several times and for longer periods. Main reasons for delaying include the need to spend additional time on collecting debtor's assets and addressing appeals. This being said, the hotel will be sold quickly enough. Cost (% of 9.0 The total cost of the insolvency proceedings will be around 9% of the value of the estate. The estate) main expenses will include: attorneys' fees - around 2.5%, fees of the insolvency representative - around 4.5%, fees of accountants and other experts - around 1.5%, auctioneer's fees - no more than 1%, and other fees (court fees, mailing fees, etc.) - 0.1%. Recovery rate 41.7 (cents on the dollar) Page 90 Doing Business 2019 Russian Federation Details – Resolving Insolvency in Moscow – Measure of Quality Answer Score Strength of insolvency framework index (0-16) 11.5 Commencement of proceedings index (0-3) 2.5 What procedures are available to a DEBTOR when commencing insolvency proceedings? (a) Debtor may 1.0 file for both liquidation and reorganization Does the insolvency framework allow a CREDITOR to file for insolvency of the debtor? (b) Yes, but a 0.5 creditor may file for liquidation only What basis for commencement of the insolvency proceedings is allowed under the (c) Both (a) and 1.0 insolvency framework? (b) options are available, but only one of them needs to be complied with Management of debtor's assets index (0-6) 5.0 Does the insolvency framework allow the continuation of contracts supplying essential goods No 0.0 and services to the debtor? Does the insolvency framework allow the rejection by the debtor of overly burdensome Yes 1.0 contracts? Does the insolvency framework allow avoidance of preferential transactions? Yes 1.0 Does the insolvency framework allow avoidance of undervalued transactions? Yes 1.0 Does the insolvency framework provide for the possibility of the debtor obtaining credit after Yes 1.0 commencement of insolvency proceedings? Does the insolvency framework assign priority to post-commencement credit? (b) Yes over 1.0 ordinary unsecured creditors but not over secured creditors Reorganization proceedings index (0-3) 1.0 Which creditors vote on the proposed reorganization plan? (b) Only creditors 1.0 whose rights are affected by the proposed plan Does the insolvency framework require that dissenting creditors in reorganization receive at No 0.0 least as much as what they would obtain in a liquidation? Are the creditors divided into classes for the purposes of voting on the reorganization plan, No 0.0 does each class vote separately and are creditors in the same class treated equally? Creditor participation index (0-4) 3.0 Does the insolvency framework require approval by the creditors for selection or Yes 1.0 appointment of the insolvency representative? Does the insolvency framework require approval by the creditors for sale of substantial Yes 1.0 assets of the debtor? Does the insolvency framework provide that a creditor has the right to request information No 0.0 from the insolvency representative? Does the insolvency framework provide that a creditor has the right to object to decisions Yes 1.0 accepting or rejecting creditors' claims? Note: Even if the economy’s legal framework includes provisions related to insolvency proceedings (liquidation or reorganization), the economy receives 0 points for the strength of insolvency framework index, if time, cost and outcome indicators are recorded as “no practice.” Page 91 Doing Business 2019 Russian Federation Resolving Insolvency - Saint Petersburg Indicator Saint Europe & OECD high Best Regulatory Petersburg Central Asia income Performance Recovery rate (cents on the dollar) 43.1 38.6 70.5 None in 2017/18 Time (years) 1.8 2.3 1.7 0.4 (Ireland) Cost (% of estate) 9.0 13.2 9.3 1.0 (Norway) Outcome (0 as piecemeal sale and 1 as going 0 .. .. .. concern) Strength of insolvency framework index (0-16) 11.5 11.1 11.9 None in 2017/18 Figure – Resolving Insolvency in Saint Petersburg and comparator economies – Ranking and Score DB 2019 Resolving Insolvency Score 0 100 70.77: Mexico (Rank: 32) 59.14: Saint Petersburg 58.39: Moscow 55.82: China (Rank: 61) 48.48: Brazil (Rank: 77) Note: The ranking of economies on the ease of resolving insolvency is determined by sorting their scores for resolving insolvency. These scores are the simple average of the scores for the recovery rate and the strength of insolvency framework index. Figure – Resolving Insolvency in Saint Petersburg – Time and Cost Time (years) Cost (% of estate) 4.5 25 4.0 22.0 4 Cost (% of estate) 3.5 18.0 20 Time (years) 3 2.3 13.2 15 2.5 12.0 2.0 2 1.7 1.8 1.7 9.3 1.8 9.0 9.0 10 1.5 1 5 0.5 0 0 Brazil China Europe Mexico Moscow OECD Saint & high Petersburg Central income Asia Page 92 Doing Business 2019 Russian Federation Figure – Resolving Insolvency in Saint Petersburg and comparator economies – Measure of Quality Saint Petersburg 5 2.5 3 1 Brazil 5.5 2.5 3 2 China 5 3 1 2.5 Mexico 5.5 2.5 2 1.5 Moscow 5 2.5 3 1 OECD high income 5.3 2.8 2.2 1.9 Europe & Central Asia 4.5 2.6 2.3 1.8 0 2 4 6 8 10 12 14 Sub-Indicator Score Management of debtor's assets index (0-6) Commencement of proceedings index (0-3) Creditor participation index (0-4) Reorganization proceedings index (0-3) Note: Even if the economy’s legal framework includes provisions related to insolvency proceedings (liquidation or reorganization), the economy receives 0 points for the strength of insolvency framework index, if time, cost and outcome indicators are recorded as “no practice.” Figure – Resolving Insolvency in Saint Petersburg and comparator economies – Recovery Rate Recovery rate(cents on the dollar) 100 80 64.7 60 43.1 41.7 36.9 38.6 40 20 14.6 0 Saint Petersburg Brazil China Mexico Moscow Europe & Central Asia Page 93 Doing Business 2019 Russian Federation Details – Resolving Insolvency in Saint Petersburg Indicator Answer Score Proceeding liquidation In accordance with Art. 9 of the Law on Insolvency (Bankruptcy), the management of Mirage must petition the court to declare the company bankrupt within 1 month of failing to pay the Bank’s claims. The court will institute a supervisory procedure and will appoint a temporary administrator. Temporary administrator will convene the first creditors’ meeting, where the creditors will decide whether to petition the court for liquidation or reorganization. Under the case study assumptions, creditors will likely choose the liquidation procedure, because the bank, as a major creditor, would be interested in receiving its money as soon as possible. Outcome piecemeal sale Despite the fact that the value of the business will be higher if it is sold as a going concern, in practice most companies similar to one indicated in the case study are sold piecemeal. Time (in years) 1.8 According to current practice, in Saint Petersburg it will take around 6 months for the arbitrazh court to institute the proceedings, complete the supervision stage and enter the liquidation. As for liquidation, because there is one major secured creditor in the case (bank), the arbitrazh court will likely decide on creditors’ claims within 10 months, which includes potential appeals. Then it will take 6 more months to arrange the public auction, find buyers, execute the sale and remit the proceeds to the bank. Cost (% of 9.0 The total cost of the insolvency proceedings will be around 9% of the value of the estate. The estate) main expenses will include: attorneys' fees - 2%, fees of the insolvency representative - 4.5%, fees of accountants and other experts - around 2%, auctioneer's fees - 1%, and other fees (court fees, mailing fees, etc.) - 0.1%. Recovery rate 43.1 (cents on the dollar) Page 94 Doing Business 2019 Russian Federation Details – Resolving Insolvency in Saint Petersburg – Measure of Quality Answer Score Strength of insolvency framework index (0-16) 11.5 Commencement of proceedings index (0-3) 2.5 What procedures are available to a DEBTOR when commencing insolvency proceedings? (a) Debtor may 1.0 file for both liquidation and reorganization Does the insolvency framework allow a CREDITOR to file for insolvency of the debtor? (b) Yes, but a 0.5 creditor may file for liquidation only What basis for commencement of the insolvency proceedings is allowed under the (c) Both (a) and 1.0 insolvency framework? (b) options are available, but only one of them needs to be complied with Management of debtor's assets index (0-6) 5.0 Does the insolvency framework allow the continuation of contracts supplying essential goods No 0.0 and services to the debtor? Does the insolvency framework allow the rejection by the debtor of overly burdensome Yes 1.0 contracts? Does the insolvency framework allow avoidance of preferential transactions? Yes 1.0 Does the insolvency framework allow avoidance of undervalued transactions? Yes 1.0 Does the insolvency framework provide for the possibility of the debtor obtaining credit after Yes 1.0 commencement of insolvency proceedings? Does the insolvency framework assign priority to post-commencement credit? (b) Yes over 1.0 ordinary unsecured creditors but not over secured creditors Reorganization proceedings index (0-3) 1.0 Which creditors vote on the proposed reorganization plan? (b) Only creditors 1.0 whose rights are affected by the proposed plan Does the insolvency framework require that dissenting creditors in reorganization receive at No 0.0 least as much as what they would obtain in a liquidation? Are the creditors divided into classes for the purposes of voting on the reorganization plan, No 0.0 does each class vote separately and are creditors in the same class treated equally? Creditor participation index (0-4) 3.0 Does the insolvency framework require approval by the creditors for selection or Yes 1.0 appointment of the insolvency representative? Does the insolvency framework require approval by the creditors for sale of substantial Yes 1.0 assets of the debtor? Does the insolvency framework provide that a creditor has the right to request information No 0.0 from the insolvency representative? Does the insolvency framework provide that a creditor has the right to object to decisions Yes 1.0 accepting or rejecting creditors' claims? Note: Even if the economy’s legal framework includes provisions related to insolvency proceedings (liquidation or reorganization), the economy receives 0 points for the strength of insolvency framework index, if time, cost and outcome indicators are recorded as “no practice.” Page 95 Doing Business 2019 Russian Federation Labor Market Regulation Doing Business presents detailed data for the labor market regulation indicators on the Doing Business website (http://www.doingbusiness.org). The report does not present rankings of economies on these indicators or include the topic in the aggregate ease of doing business score or ranking on the ease of doing business. The most recent round of data collection was completed in May 2018. See the methodology for more information. What the indicators measure Case study assumptions Hiring To make the data comparable across economies, several assumptions about the (i) whether fixed-term contracts are prohibited for worker and the business are used. permanent tasks; (ii) maximum cumulative duration of fixed-term contracts; (iii) length of the The worker: probationary period; (iv) minimum wage. - Is a cashier in a supermarket or grocery store, age 19, with one year of work experience. Working hours - Is a full-time employee. (i) maximum number of working days allowed per - Is not a member of the labor union, unless membership is mandatory. week; (ii) premiums for work: at night, on a weekly rest day and overtime; (iii) whether there are The business: restrictions on work at night, work on a weekly rest - Is a limited liability company (or the equivalent in the economy). day and for overtime work; (iv) whether - Operates a supermarket or grocery store in the economy’s largest business city. nonpregnant and nonnursing women can work For 11 economies the data are also collected for the second largest business city. same night hours as men; (v) length of paid annual - Has 60 employees. leave. - Is subject to collective bargaining agreements if such agreements cover more than 50% of the food retail sector and they apply even to firms that are not party to them. Redundancy rules - Abides by every law and regulation but does not grant workers more benefits than (i) whether redundancy can be basis for terminating those mandated by law, regulation or (if applicable) collective bargaining workers; (ii) whether employer needs to notify agreements. and/or get approval from third party to terminate 1 redundant worker and a group of 9 redundant workers; (iii) whether law requires employer to reassign or retrain a worker before making worker redundant; (iv) whether priority rules apply for redundancies and reemployment. Redundancy cost (i) notice period for redundancy dismissal; (ii) severance payments due when terminating a redundant worker. Job quality (i) whether law mandates equal remuneration for work of equal value and nondiscrimination based on gender in hiring; (ii) whether law mandates paid or unpaid maternity leave; (iii) length of paid maternity leave; (iv) whether employees on maternity leave receive 100% of wages; (v) availability of five fully paid days of sick leave a year; (vi) eligibility requirements for unemployment protection. Page 96 Doing Business 2019 Russian Federation Labor Market Regulation - Moscow Details – Labor Market Regulation in Moscow Answer Hiring Fixed-term contracts prohibited for permanent tasks? Yes Maximum length of a single fixed-term contract (months) 60.0 Maximum length of fixed-term contracts, including renewals (months) 60.0 Minimum wage applicable to the worker assumed in the case study (US$/month) 283.1 Ratio of minimum wage to value added per worker 0.3 Maximum length of probationary period (months) 3.0 Working hours Standard workday 8.0 Maximum number of working days per week 6.0 Premium for night work (% of hourly pay) 20.0 Premium for work on weekly rest day (% of hourly pay) 100.0 Premium for overtime work (% of hourly pay) 50.0 Restrictions on night work? No Whether nonpregnant and nonnursing women can work the same night hours as men Yes Restrictions on weekly holiday? Yes Restrictions on overtime work? No Paid annual leave for a worker with 1 year of tenure (working days) 22.0 Paid annual leave for a worker with 5 years of tenure (working days) 22.0 Paid annual leave for a worker with 10 years of tenure (working days) 22.0 Paid annual leave (average for workers with 1, 5 and 10 years of tenure, in working days) 22.0 Redundancy rules Dismissal due to redundancy allowed by law? Yes Third-party notification if one worker is dismissed? Yes Third-party approval if one worker is dismissed? No Third-party notification if nine workers are dismissed? Yes Third-party approval if nine workers are dismissed? No Retraining or reassignment obligation before redundancy? Yes Priority rules for redundancies? Yes Priority rules for reemployment? No Redundancy cost Notice period for redundancy dismissal for a worker with 1 year of tenure 8.7 Notice period for redundancy dismissal for a worker with 5 years of tenure 8.7 Notice period for redundancy dismissal for a worker with 10 years of tenure 8.7 Notice period for redundancy dismissal (average for workers with 1, 5 and 10 years of tenure) 8.7 Severance pay for redundancy dismissal for a worker with 1 year of tenure 8.7 Page 97 Doing Business 2019 Russian Federation Severance pay for redundancy dismissal for a worker with 5 years of tenure 8.7 Severance pay for redundancy dismissal for a worker with 10 years of tenure 8.7 Severance pay for redundancy dismissal (average for workers with 1, 5 and 10 years of tenure) 8.7 Job quality Equal remuneration for work of equal value? No Gender nondiscrimination in hiring? Yes Paid or unpaid maternity leave mandated by law? Yes Minimum length of maternity leave (calendar days)? 140.0 Receive 100% of wages on maternity leave? Yes Five fully paid days of sick leave a year? Yes Unemployment protection after one year of employment? Yes Minimum contribution period for unemployment protection (months)? 0.0 Page 98 Doing Business 2019 Russian Federation Labor Market Regulation - Saint Petersburg Details – Labor Market Regulation in Saint Petersburg Answer Hiring Fixed-term contracts prohibited for permanent tasks? Yes Maximum length of a single fixed-term contract (months) 60.0 Maximum length of fixed-term contracts, including renewals (months) 60.0 Minimum wage applicable to the worker assumed in the case study (US$/month) 256.8 Ratio of minimum wage to value added per worker 0.2 Maximum length of probationary period (months) 3.0 Working hours Standard workday 8.0 Maximum number of working days per week 6.0 Premium for night work (% of hourly pay) 20.0 Premium for work on weekly rest day (% of hourly pay) 100.0 Premium for overtime work (% of hourly pay) 50.0 Restrictions on night work? No Whether nonpregnant and nonnursing women can work the same night hours as men Yes Restrictions on weekly holiday? Yes Restrictions on overtime work? No Paid annual leave for a worker with 1 year of tenure (working days) 22.0 Paid annual leave for a worker with 5 years of tenure (working days) 22.0 Paid annual leave for a worker with 10 years of tenure (working days) 22.0 Paid annual leave (average for workers with 1, 5 and 10 years of tenure, in working days) 22.0 Redundancy rules Dismissal due to redundancy allowed by law? Yes Third-party notification if one worker is dismissed? Yes Third-party approval if one worker is dismissed? No Third-party notification if nine workers are dismissed? Yes Third-party approval if nine workers are dismissed? No Retraining or reassignment obligation before redundancy? Yes Priority rules for redundancies? Yes Priority rules for reemployment? No Redundancy cost Notice period for redundancy dismissal for a worker with 1 year of tenure 8.7 Notice period for redundancy dismissal for a worker with 5 years of tenure 8.7 Notice period for redundancy dismissal for a worker with 10 years of tenure 8.7 Notice period for redundancy dismissal (average for workers with 1, 5 and 10 years of tenure) 8.7 Severance pay for redundancy dismissal for a worker with 1 year of tenure 8.7 Page 99 Doing Business 2019 Russian Federation Severance pay for redundancy dismissal for a worker with 5 years of tenure 8.7 Severance pay for redundancy dismissal for a worker with 10 years of tenure 8.7 Severance pay for redundancy dismissal (average for workers with 1, 5 and 10 years of tenure) 8.7 Job quality Equal remuneration for work of equal value? No Gender nondiscrimination in hiring? Yes Paid or unpaid maternity leave mandated by law? Yes Minimum length of maternity leave (calendar days)? 140.0 Receive 100% of wages on maternity leave? Yes Five fully paid days of sick leave a year? Yes Unemployment protection after one year of employment? Yes Minimum contribution period for unemployment protection (months)? 0.0 Page 100 Doing Business 2019 Russian Federation Business Reforms in Russian Federation In the past year, Doing Business observed a peaking of reform activity worldwide. From June 2, 2017, to May 1, 2018, 128 economies implemented a record 314 regulatory reforms improving the business climate. Reforms inspired by Doing Business have been implemented by economies in all regions. The following are reforms implemented since Doing Business 2008. = Doing Business reform making it easier to do business. = Change making it more difficult to do business. DB2019 Dealing with Construction Permits: Russia made the process of obtaining a building permit faster by reducing the time needed to obtain construction and occupancy permits. Russia also increased quality control during construction by introducing risk-based inspections. This reform applies to both Moscow and St. Petersburg. Getting Electricity: Russia made getting electricity faster by imposing new deadlines for connection procedures and by upgrading the utility’s single window as well as its internal processes. Getting electricity was also made cheaper by reducing the costs to obtain a connection to the electric network. This reform applies to both Moscow and St. Petersburg. Paying Taxes: Russia made paying taxes less costly by allowing a higher tax depreciation rate for fixed assets. This reform applies to both Moscow and St. Petersburg. Trading across Borders: Russia made trading across borders easier by prioritizing online customs clearance and introducing shortened time limits for its automated completion. This reform applies to both Moscow and St. Petersburg. DB2018 Registering Property: The Russian Federation made it easier to transfer property by decreasing the time necessary to apply for state registration of title transfer. This reform applies to both Moscow and Saint Petersburg Getting Credit: The Russian Federation strengthened access to credit by establishing a modern collateral registry, and providing clear grounds for relief from the automatic stay for secured creditors during reorganization procedures. Trading across Borders: Russia made exporting and importing easier by opening a new deep water port on the coast of the Gulf of Finland, increasing competition and reducing the cost of border compliance at the Port of St. Petersburg. This reform applies to both Moscow and St. Petersburg. DB2017 Dealing with Construction Permits: Russian Federation Saint Petersburg made dealing with construction permits easier by removing the requirement to obtain permission to fence the construction site. Protecting Minority Investors: The Russian Federation strengthened minority investor protections by increasing shareholder rights and role in major corporate decisions. Enforcing Contracts: The Russian Federation made enforcing contracts more difficult by mandating pre-trial resolution before filing a claim, thereby lengthening the initial phase of judicial proceedings. This reform applies to both Moscow and St. Petersburg. DB2016 Starting a Business: The Russian Federation made starting a business in Moscow easier by reducing the number of days required to open a corporate bank account. Getting Electricity: Russia made the process of obtaining an electricity connection simpler, faster and less costly by eliminating a meter inspection by electricity providers and revising connection tariffs. This reform applies to both Moscow and St. Petersburg. Registering Property: Russia made transferring property easier by reducing the time required for property registration. This reform applies to both Moscow and St. Petersburg. Getting Credit: Russia improved access to credit by adopting a new law on secured transactions that established a centralized collateral registry and allows a general description of a combined category of assets granted as collateral. This reform applies to both Moscow and St. Petersburg. Paying Taxes: Russia made paying taxes less costly for companies by excluding movable property from the corporate property tax base— though it also raised the wage ceiling used in calculating social contributions. These changes apply to both Moscow and St. Petersburg. In addition, the cadastral value of land in Moscow was updated. Page 101 Doing Business 2019 Russian Federation DB2015 Starting a Business: The Russian Federation made starting a business easier by eliminating the requirement to deposit the charter capital before company registration as well as the requirement to notify tax authorities of the opening of a bank account. This reform applies to both Moscow and St. Petersburg. Registering Property: The Russian Federation made transferring property easier by eliminating the requirement for notarization and introducing tighter time limits for completing the property registration. This reform applies to both Moscow and St. Petersburg. DB2014 Starting a Business: Russia made starting a business easier by abolishing the requirement to have the bank signature card notarized before opening a company bank account. Dealing with Construction Permits: Russia made dealing with construction permits easier by eliminating several requirements for project approvals from government agencies and by reducing the time required to register a new building. Getting Electricity: Russia made getting electricity simpler and less costly by setting standard connection tariffs and eliminating many procedures previously required. Registering Property: Russia made transferring property easier by streamlining procedures and implementing effective time limits for processing transfer applications. Trading across Borders: Russia made trading across borders easier by implementing an electronic system for submitting export and import documents and by reducing the number of physical inspections. DB2013 Dealing with Construction Permits: Russia made obtaining a construction permit simpler by eliminating requirements for several preconstruction approvals. Paying Taxes: Russia eased the administrative burden of taxes for firms by simplifying compliance procedures for value added tax and by promoting the use of tax accounting software and electronic services. DB2012 Getting Electricity: Russian Federation made getting electricity less costly by revising the tariffs for connection. Registering Property: Russia made registering property transfers easier by eliminating the requirement to obtain cadastral passports on land plots. Paying Taxes: Russia increased the social security contribution rate for employers. Trading across Borders: Russia made trading across borders easier by reducing the number of documents needed for each export or import transaction and lowering the associated cost. Enforcing Contracts: Russia made filing a commercial case easier by introducing an electronic case filing system. DB2011 Dealing with Construction Permits: Russia eased construction permitting by implementing a single window for all procedures related to land use. Resolving Insolvency: Russia introduced a series of legislative measures in 2009 to improve creditor rights and the insolvency system. DB2010 Registering Property: Russia reduced the time required to register property by introducing cadastral passports in place of the previously required inventory documents and cadastral maps. Paying Taxes: Russia made paying taxes less costly for companies by reducing the corporate income tax rate. Resolving Insolvency: Russia enhanced its insolvency process by introducing several changes to its insolvency law to speed up the liquidation procedure and strengthen the legal status of secured creditors. Page 102 Doing Business 2019 Russian Federation DB2008 Dealing with Construction Permits: Russia made dealing with construction permits more expensive by increasing the cost—though at the same time it implemented several laws reducing the time and number of procedures required. The Russian Federation made dealing with construction permits more expensive by increasing the cost, and at the same time implemented several laws that reduces steps and time to obtain a construction permit. Getting Credit: In Russia access to credit information was improved by the launch of a private credit bureau, the National Bureau of Credit Histories (NBKI), and by a requirement that banks submit credit data to the credit bureau. Page 103 Doing Business 2019 Russian Federation Page 104