Effective January 10, 2014, a law created a new immigration category for foreign individuals assigned to work in Russia by commercial organizations registered in World Trade Organization member states.
A new Russian law1 came into force on 10 January 2014, that creates a new category of foreign worker for immigration purposes: foreign individuals assigned to work in Russia by foreign commercial organizations that are registered in the territory of a World Trade Organization (WTO) member state.2
In order to mitigate the risk of penalties due to non-compliance, it is important to understand the recent changes to Russia’s immigration rules in light of the country’s accession to the WTO.
Bringing foreign employees into Russia who will work for a foreign commercial organization of a WTO member state could be, in certain circumstances, an easier process than bringing a foreign employee into Russia under the normal work permit procedures.
However, bringing foreign employees into Russia under the new WTO-related provisions in Russia’s immigration law means that these employees, under certain conditions, will be subject to coverage under the Russian Pension Fund rules. This could mean higher international assignment costs for employers.
The new Federal law “On changes into separate legislative decrees of the Russian Federation”, added Article 13.5 to 115-FZ3. This article regulates the employment of foreign individuals assigned to Russia by foreign commercial organizations that are registered in the territory of a WTO member-state (hereinafter, “foreign employees” and “FCC”) and assigned to:
Under the new rules, the key features of the work permit process for foreign employees are as follows:
It is important to note that:
Although the law creating this new category of foreign employees entered into force on 10 January 2014, further detailed guidance on the application procedures/documents is still pending.
The hiring of foreign employees in Russia according to Article 13.5 of 115-FZ may serve as an alternative to hiring foreigners on the basis of a regular work permit.
Unlike highly-qualified specialists (whose employment is regulated by article 13.2. of 115-FZ), foreign employees are not excluded from the list of insured persons provided for in the Federal law “On compulsory pension insurance” dated 15.12.2001 N 167-FZ. Therefore, the FCC representative office, branch, or subsidiary making payments to foreign employees who are temporarily present in Russia with employment contracts valid for at least six months during one calendar year are obliged to contribute into the Russian Pension Fund on behalf of those employees.
1 The Federal law “On changes into separate legislative decrees of the Russian Federation.”
2 For the list of World Trade Organization member-states please follow this link: http://www.wto.org.
3 At the end of 2013, the Russian parliament had passed the Federal law “On ratification of Protocol about accession of the Russian Federation to Marrakesh Agreement Establishing the World Trade Organization dated 15 April 1994” dated 28 December 2013, No. 390-FZ, the law which approved Russia’s accession to the WTO. This law amended the Federal law “On the legal status of foreign citizens in the Russian Federation” dated 25 July 2002, No. 115-FZ (hereinafter, “115-FZ”).
4 Every employer is obliged to inform the local employment center about the number of expatriates it plans to employ in the coming year (few exceptions exist). The employment center then approves this, generally. This information is gathered by Russia’s migration authority and before a new year begins, the authority issues information on how many expatriates may be employed in Russia and by a given region/employer in the next year (“quota”).
Along with a work permit (document issued for an individual) there is a requirement for certain employers to have a corporate permit to employ expatriates (this document is issued for employers).
For further information or assistance, please contact your local KPMG IES or People Services professional, or one of the following professionals with KPMG in Russia:
Alevtina Borisova, Partner
Tel. +7 (495) 937 44 77 (ext. 12987)
Anna Salnikova, Senior Manager
Tel. +7 (495) 937 44 77 (ext. 15088)
Olga Kiramova, Manager
Tel. +7 (495) 937 44 77 (ext. 12406)
The information contained in this newsletter was submitted by the KPMG International member firm in Russia.
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