We would like to inform you about important potential changes regarding the state accreditation rules for IT companies1 and the current moratorium on inspections of IT companies2.

1. Changes in the state accreditation rules for IT companies

The Ministry of Digital Development, Communications, and Mass Media of the Russian Federation ("Ministry of Digital Development") has introduced a draft decree of the Russian government ("Draft Decree")3, which simplifies the procedure for Russian companies to obtain state accreditation for information technologies.

The Draft Decree also suggests including a requirement for predominant Russian ownership of such IT companies as a condition for obtaining IT accreditation. Consequently, IT companies with significant foreign ownership will be unable to obtain the corresponding accreditation.

The most important proposed changes to the state accreditation rules are noted below.

Foreign participation in IT companies

The Draft Decree introduces a new criterion for obtaining state accreditation for IT companies, which states that the share of foreign individuals in economic entities must not exceed 50% of the IT company’s authorized capital. Otherwise, companies will be denied state accreditation.

In order to confirm whether an IT company has foreign participation, extraordinary checks and planned procedures for such confirmation may be conducted.

Simplifying the state accreditation process for IT startups

In order to develop startups, the Draft Decree would make it possible for small technology companies created less than three years ago to obtain state accreditation without taking into account the criterion for income from their IT activities.

Annual planned accreditation confirmation procedure

The Draft Decree establishes a single method to apply for the annual procedure to confirm state accreditation. The application may only be submitted electronically through the personal account on the Gosuslugi portal.

As part of the confirmation procedure, the Draft Decree proposes reducing the number of periods for which compliance with the criterion for the average monthly size of payments and other remuneration accrued to individual employees is checked. Data will be subject to verification for two quarters: the fourth quarter of the previous year and the first quarter of the current year.

Organizations that received accreditation in the year of their establishment, as well as those that submitted an application for state accreditation after 25 April, i.e., after the deadline for such organizations to submit calculations of insurance contributions for the quarter preceding the date of the inspection to the tax authority, will be exempted from the planned check.

Please note that if the Draft Decree is adopted, most of the changes will come into force on ****1 May 2024****. However, for the criterion related to foreign participation, a different effective date is provided – ****1 August 2025****.

2. Possible lifting of the moratorium on antitrust regulation inspections for accredited IT companies

On 5 March 2024, Director of the Federal Antimonopoly Service of Russia (“FAS of Russia”) Maxim Shaskolsky said during a Federation Council committee meeting that the service’s authority in terms of inspections of IT companies was slightly limited due to Decree No. 448 of the Government of the Russian Federation dated 24 March 2022 “On Specific Aspects of State Control (Supervision) and Municipal Control of Accredited Organizations Engaged in Activities in the Field of Information Technologies, and on Amendments to Certain Acts of the Government of the Russian Federation” (“Decree 448”), which states that that scheduled inspections by state and municipal control bodies of IT companies from the state register shall not be carried out until 31 December 2024. The FAS of Russia plans to lift these restrictions soon.

Public information shows that no draft amendments had been made to Decree 448 as of the time this newsletter was sent out.

Therefore, we are providing you with an overview of the possible key changes that might follow the removal of the restrictions imposed by Decree 448:

• {{1.}} State control (supervision) and municipal control in accordance with the Federal Law “On State Control (Supervision) and Municipal Control in the Russian Federation” will be resumed.

• {{2.}} The federal exercising of state control (supervision) and municipal control in accordance with the Federal Law “On the Protection of the Rights of Legal Entities and Individual Entrepreneurs in the Exercising of State Control (Supervision) and Municipal Control” will be resumed.

• {{3.}} The scheduled control (oversight) activities and scheduled inspections for control specified in paragraphs 1 and 2 above will be included in the plans for scheduled control (oversight) activities and plans for scheduled inspections no earlier than the end of 2024.

We will continue to monitor these legislative initiatives and keep you informed of any updates.

Decree No. 1729 of the Government of the Russian Federation dated 30 September 2022 on the Approval of the Regulation on the State Accreditation of Russian Organizations Conducting Activities Related to Information Technologies https://fas.gov.ru/publications/24278 The text of the draft decree of the Russian government “On Amending Decree No. 1729 of the Government of the Russian Federation dated 30 September 2022” can be found on the federal portal of draft regulatory legal acts (ID: 02/07/03-24/00146156).