Russia is advancing two legislative initiatives that could substantially affect businesses operating under foreign trademarks. The first proposal would establish a registry of international brands that have exited the Russian market, while the second would impose significant tax increases on companies continuing to use these registered brands.
Registry of International Brands Exited the Russian Market
Draft law No. 879812-8 proposes creating a public registry of foreign trademarks, which rightsholders exited Russia due to sanctions or voluntary withdrawal. Key features include:
- Permanent Listing: Brands would remain in the registry indefinitely unless the home country of their rightsholders is removed from Russia's “unfriendly” list.
- Transparent Process: Inclusion decisions would involve government bodies, business associations, and legislators.
- Market Protection: Aims to prevent unfair competition if foreign brands attempt to return while supporting domestic producers.
Tax Increases for Companies Using Exited Brands
For companies using brands listed in the registry, the initiative authors propose (draft law No. 879837- 8):
- Increased Tax Rate: 35% corporate tax (versus standard 25% as of 1 January, 2025) on profits from goods/services using listed trademarks.
- No Royalty Deductions: Businesses couldn't reduce taxable income by claiming trademark licensing fees.
- Broad Application: Would affect both Russian licensees and foreign companies continuing operations.
Both draft laws are currently under preliminary review, and their passage remains uncertain. Notably, the tax proposal has already faced criticism from the State Duma's Budget and Taxes Committee, which found it non-compliant with parliamentary procedures.
Nevertheless, these initiatives align with Russia's broader policy trend of imposing restrictions on businesses from “unfriendly” countries. Solstico legal is closely tracking the draft laws and stands ready to assist clients in navigating the evolving regulatory landscape.