Russian Federation Key Geographical Data

Transcription

1 June 2013

2 Russian Federation Key Geographical Data Capital Moscow Russia is located in the eastern part of Europe and in the northern part of Asia Total area 1 17,098.2 thousand km 2 (as of 1 January 2010 agricultural acreage amounted to 13% of the total area, forests 51%, surface waters (including marsh) 13%) Population as of 1 January ,369.8 thousand people Density of the population as of 1 January people per km 2 Maximum length, thousand km: Longitudinal direction 4 Latitudinal direction 9 Russia is surrounded by: Arctic Ocean (Barents Sea, White Sea, Kara Sea, Laptev Sea, East Siberian Sea, Chukotka Sea) Pacifi c Ocean (Bering Sea, Okhotsk Sea, Sea of Japan) Atlantic Ocean (Baltic Sea, Black Sea, Sea of Azov) Largest islands, thousand km 2 : Novaya Zemlya Archipelago 82.6 Sakhalin 76.4 New Siberian Islands 38 Severnaya Zemlya Archipelago 37 State border: North-west Norway and Finland; West Poland, Estonia, Latvia, Lithuania, and Belarus; South-west Ukraine; South Azerbaijan, Georgia, and Kazakhstan; South-east China, Mongolia, Democratic People s Republic of Korea; East (maritime) the USA and Japan Longest rivers 2, km: Lena 4,337 Yenisei (with Angara) 3,844 Volga 3,694 Ob 3,676 Amur 2,824 Largest lakes 3, thousand km 2 : Baikal 31.5 Ladoga 17.7 Onega 9.7 Highest elevation, m: Elbrus 5,642 Average temperatures: January from 0, -5 С (Northern Caucasus) to -40, -50 C (east of Sakha (Yakutia) where the lowest temperatures can reach -65, -70 C); July from 1 С (northern Siberian coast) to C (Caspian lowlands) The Russian Federation has the largest land area in the world; it is eighth in population globally 4 and sixth in GDP denominated in USD at purchasing power parity 5. 1 Source: Federal State Statistics Service 2 Data from statistical handbook of the Federal Agency for Water Recourses 3 Source: Federal Agency for Water Recourses 4 According to preliminary results of the 2010 AII-Russia population census 5 Source: World Bank st in total land area, 6 th in GDP

3 Map of Russia Central Federal District MOSCOW Northwestern Federal District Southern Federal District Volga Federal District North Caucasian Federal District Ural Federal District Siberian Federal District Far East Federal District

4 Special Economic Zones 6 Industrial Production 5 Technology & Development 13 Tourist and Recreational 3 Logistics St. Petersburg SEZ Murmansk SEZ Togliatti SEZ Alabuga SEZ Innopolis SEZ Titanium Valley SEZ Moglino SEZ Dubna SEZ Zelenograd SEZ Lyudinovo SEZ Lipetsk SEZ Ulyanovsk Vostochny SEZ Skiing Cluster (8 SEZ) The Turquoise Katun SEZ Tomsk SEZ Altai Valley SEZ Baikal Gates SEZ Sovetskaya Haven SEZ Russky Island SEZ Baikal Haven SEZ

5 Administrative Structure EXECUTIVE BRANCH President Elected for 6 years by citizens of the Russian Federation Head of State; determines the guidelines of domestic and foreign policies Vladimir Putin Government President of the Russian Federation Exercises the executive power in Russia Consists of the Prime Minister, Deputy Prime Ministers and Federal Ministers Prime Minister Appointed by the President with the consent of the State Duma Dmitry Medvedev Prime Minister of the Russian Federation Deputy Prime Ministers Coordinate activities of various federal executive power bodies, or all such bodies in a specifi c area (economy, social policy, etc.) Some of the Deputy Prime Ministers are simultaneously heads of particular ministries Deputy Prime Ministers are proposed by the Prime Ministers and appointed by the President Cabinet of Ministers The Interior Civil Defence, Emergencies, and Disaster Relief Foreign Affairs Defence Justice Healthcare Labour and Social Security Culture Education and Science Natural Resources and Environmental Protection Industry and Trade Communications and Mass Media Regional Development Agriculture Sport Transport Finance Economic Development Energy Development of the Russian Far East Coordination of Open Government LEGISLATIVE BRANCH JUDICIAL BRANCH The Federal Assembly Consists of two chambers: the Council of the Federation and the State Duma The Council of the Federation includes two representatives from each subject of the Russian Federation: one from the legislative and one from the executive body of state authority The State Duma consists of 450 deputies (parties present in the current Duma are United Russia, KPRF, LDPR, and A Just Russia), and shall be elected for a term of fi ve years Constitutional Court (consists of two chambers, represented by 10 and 9 judges respectively, judges are selected by lot; main function is checking the laws for consistency with the Constitution) The Supreme Court of the Russian Federation is the supreme judicial body for civil, criminal, administrative, and other cases under the jurisdiction of common courts, shall carry out judicial supervision over their activities and provide explanations on the issues of court proceedings

6 Key Macroeconomic Indicators Production Indicators GDP change (%), year-on-year GDP per capita, PPP ($) Nominal GDP per capita ($) Industrial output, change (%), year-on-year Manufacturing, change (%), year-on-year Extraction of mineral resources, change (%), year-on-year Fixed capital investment, change (%), year-on-year Fiscal and Monetary Indicators Defi cit (surplus) of the federal budget, (% of GDP) Federal budget expenditures, USD Bn Public debt (% of GDP) M2, change (%), end year/end year Infl ation (CPI), change (%), at year-end GDP deflator Producer price index (PPI), (%), at year-end Nominal exchange rate, average, RUB/USD Real effective exchange rate, change (%), year-on-year Reserve Fund, USD Bn, at the end of period National Wealth Fund, USD Bn, at the end of the period Reserves (including gold), USD Bn, at the end of the period Source: IMF, Federal State Statistics Service, Central Bank of the Russian Federation, Ministry of Finance of the Russian Federation

7 Key Macroeconomic Indicators (Continued) Balance of Payment Indicators Trade balance, USD Bn Share of energy resources in export of goods, % Current account, USD Bn Export of goods, USD Bn Import of goods, USD Bn Gross foreign direct investments, USD Bn Average export price of Russian crude oil, USD/bbl Financial Markets Indicators Weighted average corporate loan rate, % CBR refi nancing rate, %, at the end of the period Assets of Russian Banking System, USD Bn Stock market index (RTS, in RUB, at the end of the period) Capitalization of Russian stock market, USD Bn Income, Poverty, and Labour Market Real disposable income, change (%),yearon-year Average wages in USD Unemployment rate, % Source: Federal State Statistics Service, Central Bank of the Russian Federation, NAUFOR, Federal Customs Service. 1 Average weighted rate for RUB loans to non-fi nancial institutions up to 1 year.

8 Russia and ROW Comparison Russia s global ranking in production of select industrial and agricultural products Crude Oil Production 2011 mbpd Saudi Arabia Russian Federation US Iran China Canada United Arab Emirates Mexico Kuwait Iraq Source: BP Statistical Review of World Energy June 2012 Gas Production 2011 bcm One of the leading countries in crude oil and gas production US Russian Federation Canada Iran Qatar China Norway Saudi Arabia Algeria Indonesia Source: BP Statistical Review of World Energy June 2012 Coal Production 2011 MM tons 3, China US India Australia Russian Federation Indonesia Germany Poland Kazakhstan Ukraine Source: BP Statistical Review of World Energy June 2012 Global Leader in Metal Reserves % of total global reserves 15% 2% 10% 8% 4% Russia s ranking Iron ore PGM Gold Nickel Copper Source: US Geological Survey, 2013

9 Russia and ROW Comparison (Continued) Wheat 2012 MM tons EU-27 China India Russia USA Australia Canada Pakistan Kazakhstan Ukraine Source: FAO (Food and Agriculture Organization of the United Nations) Centrifugal Sugar 2012 MM tons Brazil India EU-27 China Thailand USA Mexico Russia Pakistan Australia Source: USDA Milk 2012 MM tons EU-27 United States India China Russia Brazil New Zealand Argentina Mexico Ukraine Source: USDA Poultry, Meat, Broiler 2012 MM tons China Brazil EU-27 India Mexico Russia Argentina Turkey Indonesia Thailand Source: USDA

10 Russian Exports Goods Export Structure $524.7 Bn Volume in 2012 Other; 15.7% Fertilizers; 2.1% Coal; 2.5% Machinery, Equipment & Transport; 5.0% Metals; 8.5% Crude Oil; 34.5% Natural Gas; 12.0% Petroleum Products; 19.7% Source: Federal Customs Service Exports of Goods By Direction of Trade Ukraine; 5.2% Turkey; 5.2% Italy; 6.2% Germany; 6.8% Other countries; 55.2% China; 6.8% Netherlands; 14.6% Source: Federal Customs Service

11 Russian Imports Structure of Imported Goods $312.6 Bn Volume in 2012 Other; 20.8% Medicines; 3.4% Clothing and footwear; 5.6% Machinery, Equipment & Transport; 50.3% Source: Federal Customs Service Metals and steel; 7.0% Food products and agricultural raw materials; 12.9% Imports of Goods By Origin of Trade China 16.6% Germany; 12.2% Other countries; 51.1% Ukraine; 5.7% Japan; 5.0% France; 4.4% USA; 4.9% Source: Federal Customs Service

12 Employment and Education Distribution of Employed Population by Age in Total Men Women Employed total Including people aged, years: Less than Average age of employed population, years Source: Federal State Statistics Service Distribution of Employed Population by Education in Total Men Women 4.1% 0.3% 5.0% 0.4% 3.1% 0.2% 20.6% 29.6% 23.4% 25.9% 17.7% 33.5% 14.6% 19.5% 25.8% 24.3% 21.1% 30.8% Higher professional education Secondary education Secondary professional education Primary education Primary professional education No education Source: Federal State Statistics Service 1 According to a random poll of the population on employment issues.

13 Economically Active Population Economically Active Population total Including: As percent of the total Employed Unemployed Men Including: Employed Unemployed Women Including: Employed Unemployed Source: Federal State Statistics Service 1 According to the data obtained from a random poll of the population on employment issues: 1992, 1995 as of the end of October; as of the end of November; average annual rate. Starting from 2006 data includes the Chechen Republic.

14 Eurasian Customs Union A Large Addressable Market Population 2012 (in millions) Russia Kazakhstan Belarus Total Source: Global Insight Nominal GDP 2012 ($ in billions) 2,500 2,000 1,500 1, ,968 2, Russia Kazakhstan Belarus Total Source: Global Insight Retail Market 2012 ($ in billions) Russia Kazakhstan Belarus Total Source: Planet Retail

15 Human Capital Highly educated labour force. One of the 7 leading countries by the number of Nobel Prize winners, most prizes awarded for achievements in the field of physics. High level of basic education. Signifi cant scientific research and technical resources base. Substantial human capital supporting favourable opportunities for innovative growth. Level of Education: gross enrolment ratio OECD Countries 1 % 120% 90% 60% 99% 102%103% 89% 76% 110% 113% 107% 103% 102% 105% 57% 60% 60% 105% 102% 98% 96% 95% 67% 30% 0% NA Russia Germany France Japan UK USA OECD average Primary Secondary Tretiary (gross) Source: World Bank, 2011 Literacy Rate (% of population aged 15+) OECD Countries % 99.6% 100.0% 100.0% 99.9% 99.9% 99.9% 98.9% Russia Japan UK USA Germany France OECD average Source: Euromonitor, Gross enrolment ratio is the total enrollment in primary education, regardless of age, expressed as a percentage of the population of offi cial primary education age. GER is higher than the net enrolment ratio and can exceed 100% due to the inclusion of over-aged and under-aged students because of early or late school entrance and grade repetition.

16 Infrastructure Investment Infrastructure Investment USD Bn 150 8% % 4% 2% % Infrastructure investment, % of GDP Infrastructure investment, Bn USD Source: Federal State Statistics Service Completed Project Name Sector Project Budget, USD Bn Short Description North Stream O&G midstream 9.6 Two line 1,224 km 55 bcma pipelines from Russia (Vyborg) to Germany (Greifswald) Sakhalin-Khabarovsk- Vladivostok pipeline O&G midstream 10.0 Construction of 1,800 km Sakhalin Khabarovsk Vladivostok gas transmission system BPS-2 O&G midstream 3.2 Construction of 1,000 km pipeline from Unechka on Belarus border to Ust Luga Port near St. Petersburg Source: Broker reports In Progress Project Name Sector Project Budget, USD Bn Short Description Bovanenko O&G E&P 15.0 Construction of 572 km railway Obskaya-Bovanenko (almost complete) and 2400 km gas pipeline Bovanenko-Ukhta, Ukhta-Torzhok. Moscow-St. Petersburg toll road Boguchansk Hydro Power and Aluminium Plant Development of Sochi Region (Sochi 2014) Roads km 4-8 lane Moscow-St. Petersburg highway, of which the first 43 Petersburg toll road West km has been contracted. Energy 5.8 The Boguchansk Dam in the middle of Siberia on the Angara River is one of the largest. Planned capacity is 3000 Mv. Length exceeds 2.5 km, artificial lake will cover 2,326 km². Transport 31.7 Besides sport venues and the construction of supporting facilities, development of the Sochi area will also include construction of a gas pipeline, the creation of area transport infrastructure (widening of existing rail road, construction of roads on the shore and in the mountains). More than half of the funds come from the private sector. Ust-Luga Port Water transport 8.1 Harbour deepening, construction of quays, rail connections, and road connections from Novgorod. It is one of the largest infrastructure projects in Russia. Construction is planned to be completed in Source: Broker reports Russian infrastructure investment as a percentage of GDP has grown by over 3.5 % of GDP over the last decade, and by about ten times in terms of US dollars, amounting to 7.2% of GDP ($145 Bn) in The Russian government seeks to increase the role of the private sector in building, operating, and fi nancing infrastructure projects.

17 Russia Investment Priorities Diversification of Economy Development Priority Share of mineral resources sector in GDP and in export is still fairly high; however, specific measures are being taken in order to diversify the Russian economy, this should have a positive effect on Russia s global competitiveness 2012 GDP Breakdown Public health and social work 3.3% Public administration and defence, compulsory social security 5.6% Other 4.8% Net taxes on goods 14.5% Real estate, renting and service rendering 10.1% Agriculture, hunting, forestry, fi shing and fi sh farms 3.3% Financial activity 3.7% Mining and quarrying 9.3% Transport and communications 7.0% Manufacturing 13.0% Wholesale and retail trade, repair of motor vehicles, motorcycles and personal and household goods 16.9% Electricity, gas and water production and supply Construction 3.0% 5.5% Source: Federal State Statistics Service Key areas of diversification identified by the Russian President: Energy efficiency; Nuclear technologies; IT and software; Space technologies and telecommunications; Medical technologies and pharmaceuticals. The goal is to modernize and to diversify the economy

18 Priorities in Modernization of Russia s Economy Energy Efficiency Main Objectives Reduce Russia s energy intensity to GDP ratio by 40% through energy saving, improving energy efficiency and eliminating regulatory gaps by 2020 Energy Intensity of GDP in 2011 USD per Rg of oil equivalent Uzbekistan Ukraine Kazakhstan Russia Saudi Arabia South Africa Iran China Kuwait Source: Enerdata 1 In 2005 prices

19 Priorities in Modernization of Russia s Economy (Continued) Space Technologies and Telecommunications Main Objectives Increase the efficiency and quality of information services Develop a modern information infrastructure in all sectors of the national economy Number of Blast-offs 2012 Russia plays a leading role in space exploration Russia USA China Europe India Japan South Korea Israel Russia China USA Europe India Japan Russia USA China Europe India Japan South Korea Israel

20 Priorities in Modernization of Russia s Economy (Continued) Medical Technologies and Pharmaceuticals Main Objectives Production of most medications and medical equipment in Russia Development and production of innovative medical products, expansion of Russian manufacturers into new markets While Russia s healthcare spending is still low, funding has been increasing at a fast pace One of the fastestgrowing health markets Total HC Spending per Capita 2012 ($ per capita) Total HC Spending per Capita, Growth CAGR (%) USA Germany France United Kingdom Kazakhstan Ukraine Russia China 19.9% 18.5% 16.2% 15.8% Spain Brazil 12.9% Italy Lithuania 11.1% Brazil India 9.4% Turkey Turkey 7.9% Lithuania 763 Spain 6.4% Russia 565 United Kingdom 5.9% Kazakhstan 425 USA 5.1% Ukraine 256 Germany 4.8% China 241 France 4.2% India 58 Italy 3.4% % 10% 20% 30% Source: Euromonitor

21 Priorities in Modernization of Russia s Economy (Continued) Information Technologies and Software Main Objectives Develop a high-performance, application-oriented computing systems Improve the efficiency and quality of information services Develop a modern social and industrial information infrastructure By international standards, current Russian IT spending is low, but growing fast IT Spending % of GDP, 2012 IT Spending USD Bn, Japan United States United Kingdom Sweden 6.3% Russia 6.3% Finland 6.0% Denmark 5.5% France 5.2% Germany 4.5% 0% 5% 7.6% % 7.4% % 18% p.a Hardware Software Services CAGR % World Market Growth in : 2015: 6% 6% Source: Gartner, Global Insight, IDC Number of Households with Broadband Internet Access per 100 Households Source: MED

22 Priorities in Modernization of Russia s Economy (Continued) Nuclear Technologies Main Objectives Ensure overall and consistent development of the national nuclear power potential Guarantee long-term supply of cheap energy Maintain Russia s leadership on the global nuclear market Substantially reduce uranium consumption Mitigate environmental impact and nuclear proliferation risk The Safest Nuclear Technology 2 Containment is a double leak-proof envelope that protects the reactor from outside impacts, both natural and technogenic 1 A four physical barrier defence-indepth system that prevents the potential release of radioactive emissions outside the power unit 3 A safer two-loop steam cycle of the reactor that precludes the potential release of radioactive substance outside of the reactor hall 4 There are passive and active (power supply-dependent) safety systems in place at all the reactors, which, in combination, ensure the highest level of safety in all contingencies

23 Incentives for Investment Projects Russian Direct Investment Fund (RDIF) The RDIF is a $10 billion fund established by the Russian government to make equity investments primarily in the Russian economy. In all of its investments, the fund is mandated to co-invest alongside some of the largest and most sophisticated global investors thus acting as a catalyst for direct investments in Russia. RDIF invests between $50 and $500 million in equity per project. The fund targets company ownership of less than 50%. RDIF has already invested $2 billion, of which the fund has directly contributed $480 million and $1.5 billion came from international co-investors. RDIF has also attracted $1.5 billion of foreign capital into the Russian economy through long-term strategic partnerships: Kirill Dmitriev Director of RDIF RDIF and China Investment Corporation ($410 billion under management) created the Russia-China Investment Fund with expected capital commitments of up to $4 billion (CIC and RDIF have committed to invest $1 billion each, while another $1-2 billion may be attracted to the Fund from Chinese institutional investors) RDIF has also set up an Automatic Co-investment Fund that enables international investors to automatically participate in all of RDIF transactions. Kuwait Investment Authority (KIA, $296 billion AuM) became the first investor in the fund. KIA will provide an initial investment of $500 million, while up to $2.5 billion may be invested by other participants RDIF and leading global investors represented by BlackRock, Templeton, Goldman ESSG have created a Pre-IPO Consortium that will invest only in Russian companies planning to hold an IPO on MICEX-RTS, which will boost the liquidity and appeal of the Russian equity market Additionally, RDIF has established partnerships with State Bank of India, Germany s Committee on Eastern European Economic Relations (CEEER) and France s Caisse des Depots to actively promote mutual investments between the two countries Transactions since inception: Investment in the IPO of the Moscow Exchange where RDIF attracted leading international co-investors from the US and China. Prior to the IPO, RDIF brought other investors to the Exchange, including China Investment Corporation, Blackrock, the European Bank for Reconstruction and Development and Cartesian Capital Acquisition of a 26.43% stake in ENEL OGK-5, one of the leading power generating companies in Europe (together with AGC Equity Partners, Macquarie Renaissance Infrastructure Fund and Xenon Capital Partners) Investment in MD Medical Group (MDMG), market leader in private network of perinatal clinics in Russia, as part of the company s IPO (together with BlackRock and other international institutional investors) Investment in Karo Film a leading Russian cinema chain (together with Baring Vostok and UFG) First investment of the Russia-China Investment Fund in Russian Forest Products, the second largest Russian forestry company Export Insurance Agency of Russia (EXIAR) EXIAR is the national export credit agency of Russia. EXIAR mandate is to support Russian export and investment abroad. EXIAR covers short-, medium- and long-term risks. The charter capital makes up USD 1 billion. The Board of Directors consists of senior executives of the Russian Government and independent directors. The Agency s activities are backed by the Russian Federation in line with the budget legislation. Major Facilities: Export Credit Insurance Investment Insurance Peter Fradkov Chairman of the Management Board & CEO

24 Russian Inwards FDI Structure By Country of Origin 2012 Luxembourg; 21.6% Netherlands; 19.9% Rest of the world 19.9% Ireland 19.2% Germany; 4.1% Bahamas; 4.1% Cyprus; 6.4% British Virgin Islands; 4.9% Source: Central Bank of the Russian Federation By Sector 2012 Other service activities; 8.1% Mining and quarrying; 10.3% Construction; 7.6% Other; 4.3% Funancial and insurance activities; 31.6% Manufacturing; 12.5% Trade; 25.6% Source: Central Bank of the Russian Federation

25 Russian Outwards FDI Structure By Country of Origin 9M 2012 Rest of world; 26.8% Cyprus; 43.0% Bermuda; 2.5% Austria; 3.1% Netherlands; 3.7% Luxembourg; 4.1% British Virgin Islands; 7.1% Turkey; 9.8% Source: Central Bank of the Russian Federation By Sector 2012 Real estate; Funancial and 6.9% insuarance activities; 4.7% Transport and communications; 6.7% Other; 0.4% Mining and quarrying; 15.8% Trade; 32.4% Manufacturing; 33.3% Source: Federal State Statistics Service

26 Capital Inflow into Russia Cumulative Stock of Inward FDI USD Bn Source: Central Bank of the Russian Federation No restrictions on free movement of capital in Russia The only limitation is investment in strategic companies which have special importance for national security and economic stability In comparison, there are restrictions on direct foreign investments in China and India, and Brazil is planning to limit the free movement of capital Unlike China and India, in Russia there are no foreign currency limitations There is a regime of a managed floating RUB exchange rate, with the rate largely determined by the market and the CBR only intervening to reduce volatility In comparison, there are foreign currency limitations in China and India Foreign direct investments over the last 10 years amounted to US $382 Bn US $51.4 Bn in 2012 VIRTUALLY no restrictions on free movement of capital

27 Top Russian Inbound M&A Deals YTD Date Target Acquirer Value, USD Bn % Acquired Dec Dec Nov Jun May Apr-12 AF Telecom Holding Apr-12 AF Telecom Holding Mar Jan Aug Apr Feb Source: MergerMarket, S&P Capital IQ, DealWatch, Bloomberg

28 Recent Russian IPOs Date Issuer Value, USD MM Jan Nov-12 1,700 Sep ,200 Jan Jul Jun May-11 1,435 Apr Apr Apr Feb Nov Nov-10 1,003 Nov Oct Jan-10 2,239 Source: Dealogic

29 Case Study Pharmaceutical Industry The Russian pharmaceutical market in 2011 reached a value of $11,114 million Russian market is one of the top 5 pharmaceuticals market globally. Pharmstandart is the leading player in the Russian pharmaceutical markets, generating a 4.8% share of the market s value The Russian pharmaceutical market is characterized by fairly strong purchasing power, with the ease of market entry strongly affected by legal and regulatory frameworks Companies on the Russian Pharmaceutical Market USD MM CAGR, % Market share 2011, % 1 Pharmstandard % 2 Bayer AG % 3 Novartis % 4 Sanofi -Aventis % Source: 2010 IMS research for 2005, DSM Group research for 2011 data.

30 Russian Banking System As of 1 January 2013, total assets of the Russian banking system amounted to approximately $1 578 Bn Relatively low deposit activity in banking among BRIC countries 69% in Russia vs. 77% in China Share of deposits in liabilities % % 77% 69% India China Russia Sources: CBR, National Reserve Bank of India, Central Bank of China Share of Own Funds in Banking System % 117 Russian banks are controlled by non-resident entities, representing around 18% of all banking assets % 9% THE HIGHEST share of own funds in the banking system among BRIC countries 8% 6% Russia Brazil India China Sources: CBR, The World Bank, National Reserve Bank of India, Central Bank of China Relatively Low Competition Average Number of Branches of One Bank ,3 India Brazil Russia Sources: CBR, National Reserve Bank of India, Government of Brazil The scope of anti-crisis measures taken by the Bank of Russia in has been estimated at 14% of the total banking assets

31 Taxes in Different Countries Taxes in Russia vs. Other BRICS Countries, as % of GDP (2013) 1 Income Tax 2 Country Corporate Income Tax Personal Income Tax VAT China 25 % 3 45 % (progressive) 17 % Brazil 25 % % (progressive) 20 % India 30 % % (progressive) 12.5 % South Africa 28 % up to 40 % (progressive) 14 % Russia 20 % 13 % 18 % Taxes in Different Countries in 2013, as % of GDP 3 Belarus 25.6 % Italy 43.0 % Brazil 32.5 % Japan 28.8 % Canada 31.0 % Kazakhstan 13.4 % China 18.2 % South Africa 23.8 % France 42.9 % South Korea 25.1 % Germany 36.3 % United Kingdom 34.3 % India 7.4 % USA 24.8 % Russia 27.2 % Russia has the most liberal and favourable tax regime among all other BRIC countries: Lowest corporate income tax 20% Personal income tax of 13%, regardless of income size Opportunity to have a one-time write-off of 30% of depreciation costs for tax purposes Zero profit tax for educational and health care institutions No capital gain tax in case of long-term direct investments Cut in social contributions (payroll tax) from 34% to 30% from January 1, 2012 LOW corporate and personal taxes 1 Source: The Heritage Foundation 2013 Index of Economic Freedom. 2 Source: Deloitte Global Services Limited 3 Source: The Heritage Foundation 2013 Index of Economic Freedom.