Starting, Developing and Running a Business in the FSU

[nicknick]

I have two questions :
first what are the tax paid in case i a am an owner of (for example) four appartements which bring 2000 $ (i think i am not unrealistic) per month ?
And what have i paid when i sell it ?
I am not ukrainian of course.
Thank you for your answer.

when it comes to foregnors you can only remove the same amount of money you wired in the country , so profits made would need to be left in your bank here

Sorry, but this little bit is incorrect.

[RichyRich]

By blueprint, do you mean a set of plans, ('as built' floor plans) of the building/apartment or is it some sort of building/renovation approval document/licence? and is this unique to Odessa or is it Nationwide? as I have not come across this exact requirement in other Cities.

How do you not know what a blueprint is? Blueprints are the design of a building, floor plans etc, they are required everywhere so you have a clue as to what you are doing.

The thread has gone a way which has lost me but anyway in regards to renovations within Italy, we work on 1,000€m2 for those that have minimal work all the way up to 3,000€m2 for a new build (although it is true that 1,000€m2 can also be for a small new build)... and reading through the thread, it looks like it is similar within the FSU.

Rental return seems on the low side however that is to be expected as it is the FSU and they are no where near the same as Western Europe in those terms.

It does seem though that it is spend the same but get a smaller return, I am right or have I looked at this wrong? it does seem to be a market that can make lots of money but it isn't in the same time frame as in Western Europe.

[chelseaboy]

It doesn't look like a market where lots of money can be made to me...at all.

Going by what BridesofUkraine has said,property prices are on the high side,with rental returns on the low side,taking ten years to get your money back on your original investment.

So,unless you can sell the apartments for a profit,before the ten years is up,it's a long while to wait,to start to get a return on your investment.

Anything could happen in those ten years,and knowing how corrupt Ukraine is,probably will 

[Odessarents]

I have two questions :
first what are the tax paid in case i a am an owner of (for example) four appartements which bring 2000 $ (i think i am not unrealistic) per month ?
And what have i paid when i sell it ?
I am not ukrainian of course.
Thank you for your answer.

when it comes to foregnors you can only remove the same amount of money you wired in the country , so profits made would need to be left in your bank here

Sorry, but this little bit is incorrect.

It is correct unless you are an incorperated business or private business man registered in ukraine, What I was refering to private person not set up as a business,  such as a person buying an apartment and then reselling. The goverment has tuff rules on banks here. A foreignor can not just deposit money in a private account in ukraine, money needs to be wired in to open an account after you sold an apartment you can deposit the money in to your account because you can show where you got the money, But you will hit an issue of transfering such funds,  But if you are register as a private business men in ukraine you can make deposits in to a business account which you have been paying taxes on and then you could then remove any amounts of money from the country.

[Chris]

By blueprint, do you mean a set of plans, ('as built' floor plans) of the building/apartment or is it some sort of building/renovation approval document/licence? and is this unique to Odessa or is it Nationwide? as I have not come across this exact requirement in other Cities.

How do you not know what a blueprint is? Blueprints are the design of a building, floor plans etc, they are required everywhere so you have a clue as to what you are doing.

I am perfectly aware what a blueprint/set of plans is, its one of my main business interests, I do it for a living      that is why, I was questioning the statement because BoU has been a bit misleading in the past with some of his statements. However, if he is correct in stating what he did, then I want to know, because  I have been involved in renovations, purchasing property, drawing up plans  and such like in the past in Ukraine and it has not been my experience that this was required en-masse at least, in the parts of Ukraine where I was more familiar.

[Odessarents]

By blueprint, do you mean a set of plans, ('as built' floor plans) of the building/apartment or is it some sort of building/renovation approval document/licence? and is this unique to Odessa or is it Nationwide? as I have not come across this exact requirement in other Cities.

How do you not know what a blueprint is? Blueprints are the design of a building, floor plans etc, they are required everywhere so you have a clue as to what you are doing.

The thread has gone a way which has lost me but anyway in regards to renovations within Italy, we work on 1,000€m2 for those that have minimal work all the way up to 3,000€m2 for a new build (although it is true that 1,000€m2 can also be for a small new build)... and reading through the thread, it looks like it is similar within the FSU.

Rental return seems on the low side however that is to be expected as it is the FSU and they are no where near the same as Western Europe in those terms.

It does seem though that it is spend the same but get a smaller return, I am right or have I looked at this wrong? it does seem to be a market that can make lots of money but it isn't in the same time frame as in Western Europe.

When you purchase an apartment in odessa there are documents that show the size of the apartment , which I refured to as blue prints you need to not think like in the western, In odessa at least every apartment has a diagram which means blue print they are not details like building blue prints  you get from an  Architect to build a building or house, they are a basic diagram of the property , that show how large the space is and where each room and if a balcany it shows that, This proves what size unit you own and purchased, So if you do a renavation then you need to shows the changes on the digram.

[RichyRich]

It doesn't look like a market where lots of money can be made to me...at all.

Going by what BridesofUkraine has said,property prices are on the high side,with rental returns on the low side,taking ten years to get your money back on your original investment.

So,unless you can sell the apartments for a profit,before the ten years is up,it's a long while to wait,to start to get a return on your investment.

Anything could happen in those ten years,and knowing how corrupt Ukraine is,probably will 

It appears that building new to sell or flip renovated properties would make more money (albeit at more cost) than it would to rent, I personally have no problem doing that so long as it is viable... I guess I will look into it while I am out there.

I do have a question for whomever can answer... is it better to incorporate in Russia, Ukraine or another FSU and then trade in Russia and various FSU countries under that one company. I ask as the family business is set up with headquarters in Switzerland but also subsidiaries in France and Italy (UK has the Swiss company trading there without a subsidiary which seems fine... begs the question for the subsidiaries in France and Italy actually ).

But yeah, is it better to have one company and trade as a foreign company in each country (aside from country of incorporation) or is is better to incorporate in one and then have subsidiaries in each country?

When you purchase an apartment in odessa there are documents that show the size of the apartment , which I refured to as blue prints you need to not think like in the western, In odessa at least every apartment has a diagram which means blue print they are not details like building blue prints  you get from an  Architect to build a building or house, they are a basic diagram of the property , that show how large the space is and where each room and if a balcany it shows that, This proves what size unit you own and purchased, So if you do a renavation then you need to shows the changes on the digram.

That sounds like a floor plan....

[Chris]

By blueprint, do you mean a set of plans, ('as built' floor plans) of the building/apartment or is it some sort of building/renovation approval document/licence? and is this unique to Odessa or is it Nationwide? as I have not come across this exact requirement in other Cities.

How do you not know what a blueprint is? Blueprints are the design of a building, floor plans etc, they are required everywhere so you have a clue as to what you are doing.

The thread has gone a way which has lost me but anyway in regards to renovations within Italy, we work on 1,000€m2 for those that have minimal work all the way up to 3,000€m2 for a new build (although it is true that 1,000€m2 can also be for a small new build)... and reading through the thread, it looks like it is similar within the FSU.

Rental return seems on the low side however that is to be expected as it is the FSU and they are no where near the same as Western Europe in those terms.

It does seem though that it is spend the same but get a smaller return, I am right or have I looked at this wrong? it does seem to be a market that can make lots of money but it isn't in the same time frame as in Western Europe.

When you purchase an apartment in odessa there are documents that show the size of the apartment , which I refured to as blue prints you need to not think like in the western, In odessa at least every apartment has a diagram which means blue print they are not details like building blue prints  you get from an  Architect to build a building or house, they are a basic diagram of the property , that show how large the space is and where each room and if a balcany it shows that, This proves what size unit you own and purchased, So if you do a renavation then you need to shows the changes on the digram.

Ah right so now we are getting somewhere, so its a sketch plan, totally different to a blueprint or set of plans and not that accurate in most cases. Are you learning now Richy  that makes a whole world of difference and is of little or no use to me.

Thanks anyway.

[Chris]

It appears that building new to sell or flip renovated properties would make more money (albeit at more cost) than it would to rent, I personally have no problem doing that so long as it is viable... I guess I will look into it while I am out there.

Probably, but very difficult in today's climate. My sister in law has numerous property interests in WU (both commercial and domestic), she has had some of them on the market for nearly 4 years and cannot sell them, I know what she has been through to try and get all the paperwork together, cost her lots and still cannot sell them, its not easy over there.

[Odessarents]

By blueprint, do you mean a set of plans, ('as built' floor plans) of the building/apartment or is it some sort of building/renovation approval document/licence? and is this unique to Odessa or is it Nationwide? as I have not come across this exact requirement in other Cities.

How do you not know what a blueprint is? Blueprints are the design of a building, floor plans etc, they are required everywhere so you have a clue as to what you are doing.

The thread has gone a way which has lost me but anyway in regards to renovations within Italy, we work on 1,000€m2 for those that have minimal work all the way up to 3,000€m2 for a new build (although it is true that 1,000€m2 can also be for a small new build)... and reading through the thread, it looks like it is similar within the FSU.

Rental return seems on the low side however that is to be expected as it is the FSU and they are no where near the same as Western Europe in those terms.

It does seem though that it is spend the same but get a smaller return, I am right or have I looked at this wrong? it does seem to be a market that can make lots of money but it isn't in the same time frame as in Western Europe.

When you purchase an apartment in odessa there are documents that show the size of the apartment , which I refured to as blue prints you need to not think like in the western, In odessa at least every apartment has a diagram which means blue print they are not details like building blue prints  you get from an  Architect to build a building or house, they are a basic diagram of the property , that show how large the space is and where each room and if a balcany it shows that, This proves what size unit you own and purchased, So if you do a renavation then you need to shows the changes on the digram.

Ah right so now we are getting somewhere, so its a sketch plan, totally different to a blueprint or set of plans and not that accurate in most cases. Are you learning now Richy  that makes a whole world of difference and is of little or no use to me.

Thanks anyway.

Thats correct more a sketch but the offical term is easier to say blue print , these documents get registered and recoreded with the MBTE OFFICE , which i do not know the full title in english ,

[Chris]

Its not really a blueprint in the true sense of the word, (its a sketch plan as it is not to scale) however, obviously good enough for Ukraine.

That gives me another reason why it was so hard selling our surveying software over there.

[Odessarents]

Its not really a blueprint in the true sense of the word, (its a sketch plan as it is not to scale) however, obviously good enough for Ukraine.

That gives me another reason why it was so hard selling our surveying software over there.

Thats because they still do most of there documents like the past ,they love paper work here and love to make you fill out forms and more forms

[JezP]

I wasnt talking about Odessa, Dion.

its a big country and there are many opportunities still to be had all over the place.


 

[Chris]

Its not really a blueprint in the true sense of the word, (its a sketch plan as it is not to scale) however, obviously good enough for Ukraine.

That gives me another reason why it was so hard selling our surveying software over there.

Thats because they still do most of there documents like the past ,they love paper work here and love to make you fill out forms and more forms

Yes don't I know it, they haven't heard of saving trees over there 

[Odessarents]

I wasnt talking about Odessa, Dion.

its a big country and there are many opportunities still to be had all over the place.


 

Ok ! Because you where not clear in your statements earlier then what cities are still a good place for property investments , I would say kiev is out of that list since it is worse then odessa in property prices and many other things.

[lukeyboy]

it does seem to be a market that can make lots of money but it isn't in the same time frame as in Western Europe.

Maybe if you have millions to spare yes...

Why don't you try somewhere else like Bulgaria? Land is cheap there and so is Labour - Plenty of people retiring/relocating/second homing there as a much cheaper alternative to Spain...it's not in the Euro so prices are low and you can even get yourself a little taste of the mafia too?

[cufflinks]

Looks like Russia and Ukraine not the only FCPA challenged places to do business:

http://finance.yahoo.com/news/wal-marts-mexico-probe-could-lead-departures-top-200638484--sector.html

[RichyRich]

Maybe if you have millions to spare yes...

Why don't you try somewhere else like Bulgaria? Land is cheap there and so is Labour - Plenty of people retiring/relocating/second homing there as a much cheaper alternative to Spain...it's not in the Euro so prices are low and you can even get yourself a little taste of the mafia too?

My family has money but not that much money hahah.

While having a cheap land and labour is good... that isn't the only factor that businesses must look that, I'd need to make a profit but I will check it out more

Looks like Russia and Ukraine not the only FCPA challenged places to do business

I am not a US citizen so FCPA does not affect me... well it shouldn't unless it is related to companies in US doing business in those countries?

[cufflinks]

Maybe if you have millions to spare yes...

Why don't you try somewhere else like Bulgaria? Land is cheap there and so is Labour - Plenty of people retiring/relocating/second homing there as a much cheaper alternative to Spain...it's not in the Euro so prices are low and you can even get yourself a little taste of the mafia too?

My family has money but not that much money hahah.

While having a cheap land and labour is good... that isn't the only factor that businesses must look that, I'd need to make a profit but I will check it out more

Looks like Russia and Ukraine not the only FCPA challenged places to do business

I am not a US citizen so FCPA does not affect me... well it shouldn't unless it is related to companies in US doing business in those countries?

Due to reciprocal treaties with the USA UK EU etc pretty much any European/North American is effected...  So if you go to the Middle East-Central Asia, India And/or Trading Partners (Most of the FSU and Africa and Much of Asia) and try to do a deal and actually pay anyone baksheesh you have violated the FCPA...

In the west our culture considers gifts given as bribes - in the Middle East it is considered courteous and respectful

http://en.wikipedia.org/wiki/Baksheesh

Or...

bak·sheesh  (bkshsh, bk-shsh)
n. pl. baksheesh
A gratuity, tip, or bribe paid to expedite service, especially in some Near Eastern countries.
[Persian bakhshish, present, from Middle Persian bakhshishn, from bakhshdan, bakhsh-, to give presents, from Avestan bakhsh-; see bhag- in Indo-European roots.]

The American Heritage® Dictionary of the English Language, Fourth Edition copyright ©2000 by Houghton Mifflin Company. Updated in 2009. Published by Houghton Mifflin Company. All rights reserved.
baksheesh, backsheesh [ˈbækʃiːʃ] (in some Eastern countries, esp formerly)
n  money given as a tip, a present, or alms
vb  to give such money to (a person)
[from Persian bakhshīsh, from bakhshīdan to give; related to Sanskrit bhaksati he enjoys]


http://en.wikipedia.org/wiki/Foreign_Corrupt_Practices_Act

Interestingly FCPA is more of a rubber ruler than cast in stone:

The anti-bribery provisions of the FCPA prohibit:

Issuers, domestic concerns, and any person from making use of interstate commerce corruptly, in furtherance of an offer or payment of anything of value to a foreign official, foreign political party, or candidate for political office, for the purpose of influencing any act of that foreign official in violation of the duty of that official, or to secure any improper advantage in order to obtain or retain business.

However:  Bribes bad but Grease OK??

Regarding payments to foreign officials, the act draws a distinction between bribery and facilitation or "grease payments", which may be permissible under the FCPA but may still violate local laws. The primary distinction is that grease payments are made to an official to expedite his performance of the duties he is already bound to perform. Payments to foreign officials may be legal under the FCPA if the payments are permitted under the written laws of the host country. Certain payments or reimbursements relating to product promotion may also be permitted under the FCPA.

[RichyRich]

Due to reciprocal treaties with the USA UK EU etc pretty much any European/North American is effected...  So if you go to the Middle East-Central Asia, India And/or Trading Partners (Most of the FSU and Africa and Much of Asia) and try to do a deal and actually pay anyone baksheesh you have violated the FCPA...

In the west our culture considers gifts given as bribes - in the Middle East it is considered courteous and respectful

http://en.wikipedia.org/wiki/Baksheesh

http://en.wikipedia.org/wiki/Foreign_Corrupt_Practices_Act

The FCPA does not affect me, I have no ties to the USA and form what I have read, you need to have some kind of ties to the US to be tried.

The Bribery Act 2010 affects me but I am unsure to what extent, although it does seem I can make payments that are customary in a foreign country. I don't intend on bribing anyone though

[NS1]

Due to reciprocal treaties with the USA UK EU etc pretty much any European/North American is effected...  So if you go to the Middle East-Central Asia, India And/or Trading Partners (Most of the FSU and Africa and Much of Asia) and try to do a deal and actually pay anyone baksheesh you have violated the FCPA...

In the west our culture considers gifts given as bribes - in the Middle East it is considered courteous and respectful

http://en.wikipedia.org/wiki/Baksheesh

http://en.wikipedia.org/wiki/Foreign_Corrupt_Practices_Act

The FCPA does not affect me, I have no ties to the USA and form what I have read, you need to have some kind of ties to the US to be tried.

The Bribery Act 2010 affects me but I am unsure to what extent, although it does seem I can make payments that are customary in a foreign country. I don't intend on bribing anyone though

If you don't intend on using bribery as a tool, best not to do Business in the FSU

[cufflinks]

One business that seems to be thriving in RU UA RO is computer programing services - one of the most successful having done over $3M in work on Elance from Novosibirsk near the Akademgorodok NSU campus. 

Staffed by educated locals - no real shop to shake down per se - workers can work anywhere with a Notebook and Wifi and not an easy business to be dominated by the Mafia as often accounts are opened in the USA or EU and bank transfers made home to pay the programming staff and many of these staff are the Sons and daughters or grandsons and granddaughters of the former Soviet Scientific Intelligentsia with RU Military and FSB connections (Kremlin) and thus off limits to the local thugs.  Only way this works if if you get paid in an Office in the USA and EU and pay for work as it is completed similar to Elance and its work escrow program with payment either by the hour or job as agreed in advance.

[cufflinks]

Due to reciprocal treaties with the USA UK EU etc pretty much any European/North American is effected...  So if you go to the Middle East-Central Asia, India And/or Trading Partners (Most of the FSU and Africa and Much of Asia) and try to do a deal and actually pay anyone baksheesh you have violated the FCPA...

In the west our culture considers gifts given as bribes - in the Middle East it is considered courteous and respectful

http://en.wikipedia.org/wiki/Baksheesh

http://en.wikipedia.org/wiki/Foreign_Corrupt_Practices_Act

The FCPA does not affect me, I have no ties to the USA and form what I have read, you need to have some kind of ties to the US to be tried.

The Bribery Act 2010 affects me but I am unsure to what extent, although it does seem I can make payments that are customary in a foreign country. I don't intend on bribing anyone though

If you don't intend on using bribery as a tool, best not to do Business in the FSU

Especially any sort of construction or rehabs/renovations any time you need a zoning approval, environmental study approval, building permits, building inspector signoffs, occupancy permits, curb cut approvals, road grade approvals, lot setback approvals - the list goes on and size does not protect you - Google Ikea and it's chain of new Russian stores - the corruption and jerking around Ikea got was legendary - and it is a multi billion dollar multinational company based in the EU - you would think the Kremlin would keep the local wolves off their back - NO - it was not until the Swedish founder Ingvar Kamprad threatened to shut down construction of any new Stores in Russia the then President Medvedev awarded him a special business friendship award and stopped the local RU StP and Smara City "officials" from jerking Ikea around that he decided to keep the stores there - Unless you are Global 2,000 with Embassy and legal and Government connections in both your country and wherever in the FSU you want to do business - if you become successful at all you will come on to some local thugs radar screen for a shakedown likely up to 50% as your new "partners" - so good luck with that - I can tell some real horror stories in Moscow and StP so forewarned is forearmed...

http://en.rian.ru/world/20110118/162197121.html

Last February, IKEA's management dismissed two top officials in Russia, Per Kaufmann and Stefan Gross, for turning a blind eye to bribes paid by a contractor company to resolve the situation around power supplies to a Mega mall in St. Petersburg.

http://en.rian.ru/business/20101007/160863808.html

IKEA, however, has frozen its investment into new projects in Russia until its projected shopping mall in the Volga city of Samara finally opens. The opening of the Samara mall has been delayed eight times since 2007 over safety code violations, and the opening date still remains unclear.

Oh and RIA Novosti left out most of the Gory Details - Google any EU reputable Business News media and see the real horror stories...

[NS1]

I heard shake down was 20 to 30%.
Guess it depends on where and who you are dealing with.
One I know is 100 gr a day, regardless of the take.

[cufflinks]

Now here is a problem in search of a solution:
http://themoscownews.com/business/20120730/190017920.html
Food crisis looms
by Natasha Doff at 30/07/2012 21:25

As the worst drought in over half a century ravages crops in the United States, all eyes are on Russia, the world’s second-biggest grain exporter, to prevent a food crisis similar to that seen in 2007-2008.

But if early forecasts are anything to go by, importers should look elsewhere for their desired bumper crop. Last week, west Siberia’s Altai and Orenburg joined a handful of regions in declaring states of emergency in some districts due to extreme hot and dry weather.

“It looks like the harvest will be lower than last year, although we won’t know for sure until all the harvests have been collected in late August,” Mikhail Krasnoperov, a consumer analyst at Troika Dialog investment bank, told The Moscow News. “The cold winter affected around 6 percent of the crop and now the drought in the south and Siberia is causing further problems.”

The southern Krasnodar region, one of the few to have completed its harvest, collected just 5 million tons of grain, about a third of last year’s total, according to the Agriculture Ministry’s website.

Now the Urals and west Siberian regions are also being hit, with temperatures in some places failing to dip lower than 30 degrees Celsius for over a month, sparking great swathes of wildfires.

While nowhere near as severe as the U.S. drought that has wiped out much of the country’s corn crop, Russia’s extreme hot weather caused the Agriculture Ministry to lower its forecast for grain to a minimum of 80 million tons earlier this month, 15 percent lower than last year.

On Monday, the Federal Metereorological and Environmental Monitoring Service reduced its forecast even lower, to 77 million to 80 million tons. The Agriculture Ministry is widely expected to follow suit, the Prime news agency reported.

Wheat has also been affected, with the International Grains Council downgrading its forecasts for Russia’s wheat harvest to 45 million tons last week, down from 49 million at the start of the month and some 11 million tons less than was gathered in last year’s harvest.

Prices rising

Primarily as a result of the U.S. drought, cereal prices have skyrocketed in the past month, causing many importing countries, including top wheat buyer Egypt, to hold off on purchases in the hope of good crops from elsewhere in the world.

Andrei Sizov, who heads the SovEcon agricultural consulting firm and sits on a newly formed governmental Food Security Commission, compared the situation to 2007-08, when droughts in grain-producing countries coupled with high oil prices to push up global food prices.

“The main driver for food prices at the moment is the U.S. market, but the global market is also watching Russia and how it will restrict its grain exports,” Sizov told The Moscow News.

SovEcon will release its forecast for this year’s harvest within the next few weeks, but Sizov said preliminarily that he does not expect it to exceed 80 million tons. Russia needs around 72 million tons of grain to satisfy its domestic needs, and generally exports anything left over.

Export ban feared

But for global markets a bigger fear than a lower-than-average harvest in Russia is that the country will impose export restrictions, like it did in 2010, when a drought and wildfires wiped out most of the crops in Central Russia.

Then major wheat importers that had relied on contracts from Russia were left in the cold, having received little warning of Russia’s plans. Eager to win back the trust of Russia’s customers, the authorities have staunchly denied rumors that they are planning similar tactics this year, claiming the situation is not that bad and that Russia will still be able to export up to 20 million tons.

“I think there is no need to impose any limits. The market will regulate itself,” head of Russia’s Grain Union, Arkady Zlochevsky, told Reuters last week.

However, investment bank Goldman Sachs described “a new Russian export ban” as the “biggest risk” to a forecast that wheat prices will underperform those of corn in a report released on July 16.

WTO restrictions

Imposing export restrictions may be trickier for Russia this time around due to the country’s entry to the World Trade Organization next month. The rules of the global trade body restrict the implementation of export duties, while export bans are severely frowned upon.

But SovEcon’s Sizov said that if the members of the Food Security Commission, chaired by Deputy Prime Minister Arkady Dvorkovich, decide that export restrictions are necessary when they next meet on Aug. 8, they will implement the limits despite WTO rules.

“If the government decides that Russia needs to restrict its exports, they will find measures to do that,” Sizov said. “It could say, for example, that it is a matter of food security. Ukraine has restricted its exports and it is a WTO member.”