Monitoring of the Federal Legislation dated 27.02.2006

Order of the Ministry of Finance of the Russian Federation No. 24n of February 7, 2006 on the Endorsement of the Form of the Tax Declaration for the Profit Tax from Organisations and Its Filling Procedure

Endorses a new form of the tax declaration for the profit tax from organisations and its filling procedure.

The taxpayers shall submit declarations for the profit tax from organisations for the reported period no later than 28 days after the end of the appropriate reporting period. The declarations shall be submitted by taxpayers, including those making advance payments on the monthly basis proceeding from the actual profit, no later than March 28 of the year following the expired tax period. The declaration is submitted on paper or in the electronic form.

The Order shall apply beginning with the tax declaration for the profit tax from organisations for the first reporting period of 2006. From this time on, the form of the declaration for the profit tax from organisations does not apply endorsed by the Order of the Ministry of Taxation of Russia No. BG-3-02/614 of November 11, 2003 and its filling Instruction endorsed by the Order of the Ministry of Taxation of Russia No. BG-3-02/585 of December 29, 2001.

Registered in the Ministry of Justice of the Russian Federation on February 20, 2005. Reg. No. 7528.

Information Letter of the Presidium of the Higher Arbitration Court of the Russian Federation No. 104 of December 21, 2005

The Presidium of the Higher Arbitration Court of the Russian Federation summarised the practice of application by arbitration courts of the norms of the Civil Code on some reasons of termination of obligations.

The Higher Arbitration Court emphasised that an obligation may be terminated on the basis of Article 417 of the Civil Code of the Russian Federation regulating the procedure of termination of obligations on the basis of the act of the state body and in cases when an act of the body of local government is adopted, making it impossible to execute the obligation. Since the issue of the consequences of adoption by the body of local government of the act making it impossible to execute the obligation is not regulated, a law analogue is to be applied. According to the Higher Arbitration Court, revocation of the license from the debtor because of illegal actions of the license holder and the failure to execute the obligation because of it may not serve as grounds to terminate the debtor obligations as a result of adoption of the act of the state body.

The Higher Arbitration Court supported the idea that discontinuation of the contract implies termination of obligations for the future and does not deprive the creditor of the right to demand from the debtor amounts of the main debt having accrued before discontinuation of the contract and proprietary sanctions because of the failure to execute or improper execution of the contract.

The courts are recommended to keep in mind that a unilateral client refusal from execution of the paid services contract does not terminate the client obligation to cover necessary executor expenses suffered by him as a payment for the services not rendered by the moment of the unilateral client refusal of execution of the contract.

The position is emphasised pertaining to delimitation of the debt forgiveness and donation. Creditor and debtor relations in debt forgiveness may be qualified as donation only if the court has revealed the creditor intention to release the debtor from the duty to pay the debt as a donation. In this case, debt forgiveness must be subject to prohibitions specified in the Civil Code of the Russian Federation pertaining to donation among commercial organisations.

Information Letter of the Presidium of the Higher Arbitration Court of the Russian Federation No. 103 of December 21, 2005

Presidium of the Higher Arbitration Court of the Russian Federation summarised the practice of application by arbitration courts of the norms of the Civil Code on termination of obligations through novation - replacement at the agreement of the parties of the initial obligation existing between them with another obligation with another subject or method of execution.

According to the Higher Arbitration Court, the courts must keep in mind that obligation is terminated by novation only if the will of the parties is definitely aimed at replacing the initial obligation existing between them with another obligation. If the parities wish to commit a novation they must express it definitely. The novation agreement must show unambiguously that the parties implied replacement of the initial obligation with another obligation which implies certain legal consequences for them, in particular, impossibility to claim execution of the initial obligation. Besides, to terminate the obligation through novation, it is necessary to coordinate significant terms of the obligations by the parties which is envisaged by the parties to terminate the initial obligation.

If otherwise is not envisaged in the agreement of the parties, from the moment of conclusion of the novation agreement, the duty to pay the forfeit for the period preceding the conclusion of the mentioned agreement accrued because of the delay of execution of the initial obligation by the debtor is terminated.

Agreement between the parties changing the time limits and procedure of payments under the credit contract does not imply the change of the method of execution of the obligation, therefore not being a novation.

According to the Higher Arbitration Court, a novation agreement between the recoverer and the debtor committed at the stage of execution proceedings, but not endorsed by the court as an accord and satisfaction, is not considered concluded. In this case, the novation agreement may have powers only if endorsed by the court as an accord and satisfaction.

Information Letter of the Presidium of the Higher Arbitration Court of the Russian Federation No. 102 of December 21, 2005

Presidium of the Higher Arbitration Court of the Russian Federation summarised the practice of application by arbitration courts of the norms of the Civil Code on the payoff (Article 409 of the Civil Code of the Russian Federation).

Obligation is terminated from the moment of granting payoff instead of execution, rather than the moment of achieving an agreement on the payoff by the parties. The payoff agreement implies the debtor right for replacement of execution and the creditor duty to accept the payoff. If the payoff agreement is concluded, the creditor may not demand execution of the initial obligation before expiry of the time of granting the payoff specified by the parities. If otherwise is not specified in the payoff agreement, any obligations under the contract, including the duty to pay the forfeit, are terminated with the granting of the payoff.

If the cost of the granted payoff is less than the debt under the obligation, it is terminated completely or partly depending on the will of the parties expressed in the payoff agreement. If it is impossible to reveal the will of the parties through a literal interpretation of the words and expressions available in the payoff agreement, comparison of an ambiguous provision with other provisions and the sense of the agreement on the whole, as well as through other methods, the courts are recommended to proceed from the fact that the obligation is terminated completely.

If the payoff agreement does not violate the rights and legal interests of third parties or public interests, the granting of the payoff may also terminate an obligation of return of what is obtained under an invalid transaction. Since the legislator did not envisage directly restrictions on similar agreements, the granting of the payoff may terminate any obligation.