American Companies Doing Business in Russia: How It Works

What "still doing business" actually means

Public discussion treats corporate presence as binary: in or out. In practice there are at least four distinct states, and the same brand can sit in different ones in different jurisdictions.

The legal form matters more than the news headline. A subsidiary that continues to manufacture and sell locally is a different legal situation from a parent that has sold its Russian entity and kept only a trademark licence or a buyback option.

• Full local operation - Russian legal entity, employees, production or distribution, local contracts.
• Servicing mode - no new investment, but existing supply, service and warranty obligations continue.
• Licence or franchise model - the Russian business is owned locally and pays for brand, technology or recipes.
• Exited with a clause - asset sold to a local buyer, often with a repurchase option and a right of first refusal.

The US side: licensing, not a blanket ban

US persons are bound by US sanctions and export control rules regardless of where they sit. The practical question is not whether a prohibition exists but which general licence or specific licence covers the activity, and what the written scope of that licence says.

This is the part where general education stops. The permitted scope, reporting duties and record-keeping obligations are fact-specific, and any company weighing activity should take independent US legal advice rather than rely on sector summaries or on what a competitor is doing.

• Work out which authority applies: sanctions rules, export controls, or both, and whether the entity involved is a US person, a US-owned foreign entity or a third-country subsidiary.
• Check whether a general licence covers the activity or whether a specific licence application is needed.
• Document the analysis and the correspondence trail before, not after, a transaction.
• Screen counterparties, banks and end users continuously, not once at onboarding.
• Re-check periodically: licence scope and designations change, and a structure that worked last year may not work now.

The Russian side: approvals and restricted accounts

Russia applies its own layer. Investors from countries designated unfriendly face special account regimes and government approvals for transactions involving Russian assets, including the sale of shares in Russian companies. Practically, this means a deal can be agreed commercially and still not close until an approval is issued.

Foreigners also cannot own agricultural land, and may only lease it for up to 49 years. Border areas, including Sochi, Anapa, Gelendzhik and Novorossiysk, are closed to foreign land ownership. Investment in strategic sectors requires approval under Law 57-FZ. Any specific rate, threshold or deadline in this area changes and must be verified with a qualified adviser at the time of the transaction.

• Budget for approval lead time as a project phase, with its own documents and conditions.
• Expect conditions attached to approvals, including payment routing and pricing.
• Type C and similar special account arrangements can affect how proceeds are received and used.
• Real estate and land rules differ sharply from ordinary commercial investment, and sector restrictions sit on top.

Where American corporate footprints remain thickest

The remaining presence is concentrated where local production, licensing or distribution is hard to replace quickly: packaged food and beverages, pharmaceuticals and medical products, agricultural inputs and equipment, industrial and laboratory equipment, and consumer goods distribution.

A large share of what remains runs through local legal entities with Russian management, local supply chains and, increasingly, local owners. In some cases the American parent has left the equity entirely and earns only from a licence or supply agreement.

• Consumer staples and food production, where local plants and brands are assets that cannot be moved.
• Pharmaceuticals, where registration, clinical data and local packaging create switching costs.
• Industrial and agricultural machinery, where service networks and spare parts matter as much as the sale.
• Trademark and technology licensing, a lighter structure that keeps revenue without local equity.

The economics: tax, payments and capital

The Russian tax system is not the main constraint. The corporate profit tax is 25%, with rates of 0-5% available in special regimes, and the standard VAT rate is 22% since 1 January 2026. These are headline rates; sector reliefs, regional incentives and special regimes change the effective burden and need to be confirmed case by case.

Payments are the harder problem. Cross-border banking is constrained by compliance on the sending side, and 86% of Russian exports are settled in rubles and friendly-country currencies (Bank of Russia, 2025). Domestic infrastructure is modern - 88% of retail payments are cashless (Bank of Russia, 2025) - but that does not solve repatriation. The Bank of Russia key rate stood at 14% in September 2026, which sets the cost of local financing.

• Model repatriation separately from local profitability: profit on paper and cash out of the country are two different questions.
• Check which banks will handle the flow before signing supply contracts.
• Local borrowing is possible but priced off a high policy rate; hedging ruble exposure has its own cost.
• Budget for compliance staff, external counsel and audit - these are permanent costs, not one-off.

Structures used by companies that stay

The common pattern is to shrink the legal footprint rather than the commercial relationship: fewer entities, simpler supply chains, Russian management with clear delegated authority, and a parent that governs through contracts rather than equity.

For manufacturing, special investment contracts are the main instrument: 90 such contracts covering more than RUB 2 trillion of investment were reported by the government in 2025. They offer long-term stability of conditions in exchange for committed local investment, typically in priority sectors.

Special administrative regions host 674 companies (Ministry of Economic Development, 2025), but that regime is aimed mainly at redomiciling holding structures, not at accommodating new foreign entrants. Separately, Russia's Far East and Arctic offer their own regimes: 2,130 projects in the Free Port of Vladivostok (KRDV, 2026) and 1,000 residents in the Arctic Zone with RUB 1.1 trillion declared (KRDV, December 2025).

• Local subsidiary with Russian management and a narrow, audited mandate.
• Joint venture with a Russian partner who carries the local operational and regulatory load.
• Licence, franchise or supply agreement instead of equity.
• Special investment contract for greenfield or modernisation projects with long payback.
• Regional regimes in the Far East and Arctic for projects that physically fit those geographies.

If you are weighing entry or return

Assume the decision is reversible only at a cost. Companies that left often retained buyback options or repurchase rights; those that stayed invested in compliance and local management. Both paths were expensive, and the difference was usually how much legal certainty the parent was willing to buy.

A realistic sequence for a US-linked investor is: define the permitted activity under US rules with counsel, confirm what Russian approvals are needed for the chosen structure, test the payment route with the banks involved, then decide on legal form. Doing these in the reverse order is how deals stall.

• Step 1 - activity definition and US licensing analysis, in writing.
• Step 2 - Russian-side approval mapping for the asset, sector and entity type.
• Step 3 - payment and repatriation route, confirmed with actual banks.
• Step 4 - legal form, governance and exit mechanics, including any buyback or first refusal clause.
• Step 5 - ongoing screening, reporting and periodic legal re-review.

Risks that do not show up in the business case

Secondary sanctions exposure, counterparty designation after onboarding, banking refusal mid-transaction, approval conditions imposed late, and the cost of unwinding a structure you can no longer operate are the recurring failure points. None of them are visible on a discounted cash flow model.

Russia's macro position is the other side of the ledger. General government debt is 17% of GDP against 124% in the US (IMF WEO, 2025), growth was 4.1% in 2023 and 4.9% in 2024 (Rosstat), and stock market capitalisation is 19.5% of GDP against a 2030 target of 66% (Bank of Russia, August 2026). Meanwhile 75% of FDI now comes from friendly countries, up from 25% before (UNCTAD via Izvestia, 2025), which tells you where the capital flow has moved.

• Designation risk applies to counterparties, not only to you.
• Banking access can disappear between contract signature and payment date.
• Approval conditions may alter the economics after you have committed costs.
• Exit mechanics should be drafted at entry, while you still have leverage.
• Treat every rate, threshold and deadline here as something to verify with a qualified adviser before acting.

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