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. Last Updated: 07/27/2016

Is Accreditation Useful? It Gets You on Aeroflot

For most foreigners living in Moscow these days, an "accredited representative" is a vestige of a bygone era who carries unnecessary paraphernalia like a kartochka. Accreditation is becoming less common and less relevant, but even its limited persistence prompts the question, "What is accreditation anyway and can it help me? "

Accreditation is a creature of Soviet law designed for the archaic peculiarities of the Soviet economy. The legal basis is a 1989 regulation which requires a foreign company to demonstrate its current and expected trade activities in the country, its financial strength and the support of two or three Soviet/Russian organizations.

On this -basis, the Ministry of Foreign Economic Relations or one of a few other ministries determines whether the company should be accredited and thereby permitted to open a "representation office". The office resembles an embassy of the foreign company, and the representatives, like diplomats, are expected to serve as liaison between the company overseas and Russian organizations without getting involved in business themselves.

For this reason, representation offices may open only special ruble bank accounts that permit them to buy rubles only at the Central Bank rate and use them only for office operating expenses. Ruble sales of goods or services are not permitted,

since foreign companies only in rare circumstances may do business in rubles and the representation office itself is not a legal entity and cannot sign contracts in its own name.

Indeed, the Soviet regulation does not contemplate that the representation office itself will conduct business in any currency. Reality is somewhat different, as recognized in the Russian tax law which imposes a net profits tax on foreign companies conducting business in Russia through "permanent establishments" like representation offices.

Accreditation is the only way to have official recognition in Russia without forming a Russian subsidiary or joint venture. It is the closest thing to having a branch in the country, although the restrictions on doing business belie this description.

In today's world, accreditation simply is one way, sometimes faster, to get multiple-entry visas and register cars for foreigners working in Russia.

Accreditation entitles the company to obtain an UPDK office or apartment, but this entitlement is like the right to shop at slate stores:

the right to wait on a long line. Joint ventures and wholly-owned subsidiaries also can get visas, register cars and rent housing.

The only exclusive benefit of accreditation may be the kartochka that the accredited representative carries and can use to get on Aeroflot without a passport, a dubious benefit indeed.