May 2004

This material is provided through the support of the US Agency for International Development (USAID) and the Department for International Development (DFID) under agreements with the Russian Microfinance Center and Fund "FORA." This review is for information purposes only. Neither the authors of this review nor the Russian Microfinance Center shall be liable for any damage to any organization's property due to any use of explanations, conclusions and interpretations of effective legislation contained herein.
Author: LEGEM PERFERRE
Edited by: Russian Microfinance Center

RF Tax System

Adopted Normative Legal Acts

• Ministry of Taxes and Levies (MTL) Order of 12 May 2004 SAE-3-13/318 amending the formats of tax return forms, accounting reports, and other documents used for calculation and payments of taxes and duties electronically (version 3.00)
  Published on the MTL website at (http://www.nalog.ru).
  • The order amends the format of electronic tax return forms.
  • The changes affect the composition and structure of indicators for tax calculation on amounts paid to foreign organisations; the changes are pursuant to the adoption of a new calculation method.
• The Ministry of Finance letter of 31 March 2004, No 04-03-11/52 "On Value Added Tax"
  Published in the supplement to Uchet. Nalogi. Pravo.- Official Documents of 18 May 2004. No 19.
  • The Ministry of Finance explains that free distribition of products for advertising purposes is VAT taxable. Companies distributing their products for free as advertisement must calculate and pay VAT. The taxable base is determined by the product's market value.

• RF CB Regulation of 29 March 2004, No 255-P "On required reserves of credit institutions"
  Registered with the RF Ministry of Justice on 23 April 2004, Registration No 5769.
  Becomes effective on 1 July 2004.
  • The Regulation establishes a new procedure whereby credit institutions must deposit required reserves with the Bank of Russia.
  • The method of required reserve calculation has changed:
    - attracted long-term funds are excluded from credit institutions' liabilities subject to reserves;
    - foreign debt liabilities are included, as well as liabilities on their issued securities minus their investment in debt securities of other domestic credit institutions;
    - the required reserve is reduced by the institution's rouble amount in cash up to 25% of the required ruble liability reserves.
  • The former regulation "On reguired reserves of credit institutions to be deposited with the Russian Central Bank" has been repealed.

• Federal bill "On credit histories"
  Introduced by the State Duma members: B. Gryzlov, G. Boos, V. Volodin, O. Dmitrieva, V. Zubov P. Krasheninnikov, V. Pleskachevsky, V. Reznik, and others.
  • Lenders will provide credit histories of their borrowers - both natural and legal persons - to credit bureaus, as agreed. Credit institutions must also sign an agreement with the Central Credit Bureau.
  • A credit bureau is a legal entity that generates, processes and maintains credit histories and provides credit information to authorized users for a fee.
  • Providing credit records to the credit bureau is subject to the borrower's written consent.
  • A credit bureau must be licensed, meet the technical standards of data protection, and undertake annual audits.
  • The Central Credit Bureau is affiliated with the Bank of Russia, its functions are:
    - to maintain a central catalogue of credit records;
    - to maintain information on legal entities - corporate borrowers of credit institutions.

• The RF CB Instruction of 30 March 2004 No 111-I "On the mandatory sale of foreign currency in the Russian domestic market"
  Registered with the RF Ministry of Justice on 29 April 2004, Registration No 5779.
  Effective on 18 June 2004.
  • The Instruction defines the procedure of opening transit accounts in foreign currency for purposes of selling the required portion of foreign currency in the domestic market, and establishes the procedure for such sale.
  • A transit account in foreign currency is used to identify revenues in foreign currency and to sell a required portion of such revenues in domestic markets.
  • An authorized bank transfers all amounts in foreign currency received by a Russian company to its transit account, and then the bank is obliged, within one workday following the day of the receipt, to notify the company that the money has arrived in its bank account.
  • The company then must, within 7 days, instruct the authorized bank to sell at least 25% of the foreign currency on its behalf.
  • An appendix to the Instruction contains a list of foreign currencies where the mandatory sale provision applies.
  • The Instruction replaces all former provisions.

• "On amending Part One of the Russian Civil Code"; the amendment:
  - removes the mortgage agreement notarization requirement;
  - limits the types of situations where the endorsement by the official Guardianship Body is needed for the sale of an apartment with underage residents;
  - establishes that cession of title to a residential house or apartment automatically means that the former owner's family can no longer use the premises.
• "On amending the Federal Law on Mortgage (real estate collateral)"; the amendment:
  - makes it possible to change maturities and interest rates of mortgage loans secured by a mortgage agreement;
  - removes the mortgage agreement notarization requirement;
  - enables seizure of real estate property securing a mortgage loan and prescribes the termination of its use by the former owner.
  This legislative package has been launched in the Duma and is expected to be considered soon.

• Federal bill "On housing accumulation cooperatives and their operations with personal savings"
  Introduced by the State Duma members: B. Gryzlov, G. Boos, Yu. Volkov, V. Volodin, V. Draganov, V. Zubov, P. Krasheninnikov, G. Kulik, A. Makarov, V. Pleskachevsky, V. Reznik, and others.
  • A housing accumulation cooperative is a non-profit organization established as a specialized consumer cooperative; its purpose is to meet the members' need to buy or build housing. These are the only cooperatives allowed to capture and use their members' savings in this way.
  • These cooperatives undertake to buy or build housing for their members; the type of housing and its location are subject to agreement.
  • Housing accumulation cooperatives are subject to a number of requirements and restrictions:
    - they must use the money to fund housing construction or to buy new or used housing for their members;
    - they can invest in a limited numer of ways;
    - they must balance their assets and liabilities in a way that rules out their transformation into a 'financial pyramid scheme'.
  • Housing accumulation cooperatives must be members of a self-regulating organization.

Appendix