In our country, the national legal regulation of foreign investment is determined by a number of specific laws adopted to streamline specific legal relations. A distinctive feature of the MCH regarding current standards is the duality of sources. Based on this, the legal regulation of foreign investment in private equity is divided into two large blocks of rules. These are national regulatory acts that govern the position of legal entities within a country, as well as international, generally accepted in all states provisions. This duality provokes considerable problems of the legal regulation of foreign investments, connected with different interpretations and different approaches in case of disputed, conflict situations.
Not so simple
It should be borne in mind that the impact on legal relations caused by investing from abroad is also determined by contracts concluded upon entering into this interaction. In our country, the concept and legal regulation of foreign investment is rather confusing, which is why it is recommended to understand it with the help of a lawyer specializing in this particular area of relations, taking into account legislative norms. It must be remembered that certain standards can be entered into an agreement between a country and an investor who invests in another state privately, but such agreements should not violate generally accepted international and domestic sovereign laws.
Domestic laws
Mostly the states, which are characterized by either a developed market economy or going forward at an active pace, in the legal aspect, investment is provided with a national regime. Such features of the legal regulation of foreign investment are typical of powers in transitional economic status. The interstate community agrees that it is the national regime that is the best option for resolving legal issues related to the investment activities of foreign individuals.
The national regime provides for the provision of a number of advantages based on the status of a private foreign investor. An entrepreneur officially registered in one country, as declared by international legal and national regulation of foreign investment, can organize an enterprise in another power. The business rules for this economic activity will be similar to those applied to the local population. The alien and domestic entrepreneurs are competing. The rivalry is full-fledged, it does not imply the provision of any significant indulgences solely on the basis of belonging to a certain power. It is on this principle that the legal regulation of foreign investment in the Russian Federation is built. True, many agree that what is declared by law is not always one hundred percent observed in practice as prescribed in regulatory enactments.
Question specifics
Currently, within the framework of investing in the economy of another country, it is allowed to choose the most convenient option of management from those allowed in the recipient country. This applies to both legal aspects and organizational form. Activities must be carried out taking into account their own interests, but without violating the laws of the state.
The concept, types and legal regulation of foreign investment inherently imply the provision to a foreign legal entity of the same preferences as those accorded to local entrepreneurs. If there are preferential programs in the country, the foreigner has the right to take part in them if he meets the established conditions. Also, a foreign investor has the right to access various resources of the state in which money is invested. In the framework of the national legal regulation of foreign investment in the Russian Federation, the possibility of access to the work of the local population, the financial resources of the state, as well as technology and scientific opportunities is separately stipulated.
International legal regulations
These can be divided into two major aspects, equally significant, mandatory for accounting both by lawyers of the country in which they invest, and by a private investor planning to make a profit through the program he developed. We are talking about multilateral, bilateral legal regulation of foreign investment. In Russia and a number of other states, such standards are adopted that comply with international standards for the regulation of economic activity. Bilateral international agreements are primarily trading, as well as those designed to protect the investment of capital and its owner. Effective legal regulation of foreign investment in Russia is aimed at encouraging the infusion of money into the country by legal entities from other powers. In addition, bilateral agreements are regulatory features of taxation of foreign legal entities.
Bilateral regulation of legal relations related to investments of an international scale is carried out using a number of specific documentation, discussed below.
Trade Agreements: Protecting Foreign Investment
Legal regulation of foreign investment according to this logic has existed since ancient times. Arrangements that protected entrepreneurs, foreign merchants, were practiced in the Middle Ages and earlier. Undoubtedly, from that time protective legal mechanisms went far ahead, and today, when national markets are clearly formed, and business transactions on a global scale have established themselves as a single economic entity, the trade agreement has become an effective method for regulating relations. It helps to solve international issues, including those related to investment. Through such agreements, legal regulation of foreign investment in the Russian Federation and other powers is carried out.
Foreign Investment Agreements
For the first time such a practice of legal regulation appeared only after the Second World War. The main idea pursued by leading lawyers, proposing a similar mechanism for regulating market and economic relations, was to guarantee the inflow of private capital from one state to another. To stimulate this process, the legal regulation of foreign investments in the Russian Federation and other countries of our planet was set up in such a way that the potential investor had guarantees. This means that the entrepreneur is protected by specialized legal instruments. An effective guarantee of the preservation of funds in case of a number of non-commercial risks is provided. Particular attention is paid to political.
Such an idea of the legal regulation of foreign investment allows us to guarantee that a foreign entrepreneur does not face a situation of nationalization of his business. In addition, currencies receive protection from non-convertibility when it is necessary to transfer the profits to their home country. Also, the modern international legal regulation of foreign investments implies guaranteed protection of funds invested in another power if a cataclysm or other similar situation has occurred in society.International agreements created specifically to protect the interests of investors are supplemented by a decoding of the key concept - what can be considered investments and what does not belong to this category. An equally important point is the definition of an investor in the international legal regulation of foreign investments, the formulation of the characteristics inherent in this group of persons.
International agreements: important aspects
Agreements generally accepted at the interstate level in the political and economic community provide such an accurate and correct legal regulation of foreign investment, within which the entrepreneur gets the opportunity to access the most favorable conditions. At the same time, the agreements stipulate the specifics of the national regime, as well as the admissibility of legal support in the native state. In addition, the state, which is the recipient within the framework of the business, must provide legal support, protect the rights of the investor, for which the entrepreneur has the opportunity to apply to the court if such a need arises. Equally important is the opportunity to seek help from international institutions to protect the rights of investors - those who have invested in another power have it.
In Russia alone, the legal regulation of foreign investment is carried out through more than three dozen agreements concluded at the interstate level with the participation of several parties. Given the relative instability of internal legal standards and the imperfection of a number of areas, including aspects of entrepreneurship and taxation, such international legal standards are extremely important for entrepreneurs who want to open their international business and seek to protect their interests and rights.
Priorities, Rules, Opportunities
In the general case, the standards declared in agreements concluded at the international level that ensure the legal regulation of foreign investment are considered to be more priority than any established by internal regulatory acts. This is important when it comes to a country whose domestic legislation is incomplete, imperfect and needs to be finalized. This is precisely the situation that has developed in our country at present.
International agreements dominate the business market with regard to foreign investors, which means that agreements can be used to regulate the activities of participants in the entrepreneurial segment of the economy. By-laws, legal Russian normative and legal acts are imperfect, but international agreements, agreements signed on behalf of a state compensate for this important shortcoming, making the country more attractive for a potential investor from another state.
Taxes and Agreements
Special arrangements at the international level that determine the policy of tax rates and the rules for paying appropriate taxes by investors are extremely important both from the point of view of economic stability of a particular economic entity, and with respect to a power that attracts an investor to its territory. The key idea for concluding agreements is to ensure fairness when both parties achieve maximum benefits. Payment of taxes is a rather slippery topic in any state, and this is especially true when it comes to countries with unstable economies and difficult situations, including political ones. Many experts agree that a difficult situation regarding taxation policies and tax collection rules is taking shape in the entrepreneurial (and not only) business segment in Russia.
For any private investor, the issue of taxation is one of the most important, helping to choose the direction for investing their capital.Special international agreements have been drawn up by leading lawyers with the inclusion of the most effective and advanced rates for levying taxes and fees on entrepreneurs. All this is set up in such a way that the entrepreneur is in favorable conditions, can build and develop his business outside the home state. It is generally accepted that investment interest is one of the basic concepts for the economic development of a power, and the development of tax policy, as well as compliance with international agreements on this issue, create a good reputation of the state and ensure mutually beneficial work.
Features of tax regulation
The agreements at the interstate level, devoted to this difficult issue, are mainly drawn up in such a way that capital in the process of import and export is preserved and increased while minimizing losses. Each party agreeing to sign an international agreement thereby faces obligations to some extent or to completely refuse to charge taxes to an enterprise controlled by a representative of another power.
At first glance, this approach may seem relatively unprofitable, leading to losses, especially when large foreign entrepreneurs with impressive capital are involved in the domestic business segment. On the other hand, ensuring the lightest possible tax burden provides an opportunity for development, which leads to increased volumes and increased labor consumption, that is, ultimately provokes the attraction of additional capital to the country, and the budget gets its benefit through taxation of citizens subordinate to the government - the same workers , in which taxes are levied on wages or on products they spent at retail outlets.
Multilateral agreements to help foreign investors
The first such agreements were concluded in the sixties of the last century. Since then, the practice of multilateral agreements aimed at improving the situation of foreign investors has been significantly systematized and improved. But the very first documents that laid the foundation for the legal regulation introduced in the twentieth century appeared back in 1929, when the League of Nations initiated a conference in France. The main idea of this event was to obtain signatures at a convention dedicated to foreign entrepreneurs and the treatment of both them and their property. That event ended in failure, because the international community was not ready for such an important step towards globalization, and a military threat looming over the world played its role.
Much has changed at the international level of the Second World War. It was then that in the American city of Bretton Woods in 1944 a conference was organized with the participation of representatives of various powers. It was possible to generate a number of important legal documents, signed by representatives of developed enterprises, including the international reconstruction bank and the currency fund (also of the interstate level).
Agreements, Contracts
The agreements on investment concluded between a particular state and an investor who privately invests in another power are one of the most important and powerful tools for legal regulation of emerging relationships. As part of the agreement, the participants describe and emphasize which specific provisions of the laws on investment are applicable to an alien who wishes to invest his money. At the same time, the entrepreneur’s potential is considered from the point of view of the economy, the importance for state development of the amounts that will be allocated as part of the program.
Investor: what kind of bird?
The current legislation of our country defines this term as a legal entity registered in another power, whose civil legal capacity is described by the laws of the country where it was established. At the same time, only such entrepreneurs can be classified as investors who, according to the laws of their own power, can invest money in our state. At the same time, those companies that do not have legal entity status, but whose civil legal capacity also allows, as follows from the standards of a native state, to invest in our country, receive investor status.
An investor can also be called a separate independent person who has the right to invest money in our country, despite the fact that he is a citizen of another power, has legal capacity, is subject to the legal standards of his native state. A stateless person who finds himself in similar conditions can be considered an investor if he has rights and is recognized as capable, and the rights and opportunities are declared by the laws of the place where he constantly resides. If it follows from laws that a stateless person has the right to invest in Russia, for our country he will automatically become a potential investor. A similar status can be obtained by an international corporation, which receives investment opportunities on the basis of agreements concluded at the interstate level.
Investment: what is it?
This term in our country lawyers denote such an investment of a foreign entrepreneur in their activities in the territory of the Russian Federation, which is accompanied by a certain object of civil rights. The investor holds these rights until the object is withdrawn from circulation or limited. The force of the introduction of such restrictions has the Federal Law of our country. Investments include movable, immovable property, currency, securities, results of intellectual activity, information volumes, services.