Windfall tax for major companies to be introduced in Russia

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Monitoring of the Federal Legislation dated 19.07.2004

Decision of the Constitutional Court of the Russian Federation of July 16, 2004 on the Case of Constitutionality of Individual Provisions of Part 2 of Article 89 of the Tax Code of the Russian Federation Pursuant to Appeals of Citizens A.D.Yegorov and N.V.Chuyev

The applicants challenged the constitutionality of provisions of Part 2 of Article 89 of the Tax Code of the Russian Federation stating that an on-site tax check may not continue for more than two months (three as an exception) with the time of the check including only the actual presence of the inspectors on the territory of the checked taxpayer. According to the applicants, the given norm permits the tax bodies to suspend the on-site checks for an indefinite period of time, thus restricting the freedom of their entrepreneurial activities and jeopardizing the stability of their financial standing.

The Constitutional Court of the Russian Federation explained that the specified two-months period (three months as an exception) includes only the periods directly associated with inspectors presence on the taxpayer territory, namely, the time of the inventory taking, inspection of the territory and rooms used by the taxpayer for making profit or pertaining to objects of taxation, withdrawal of documents and items, as well as investigation by the inspectors of the taxpayer documents directly on his territory.

As to the counterchecks and expert evaluations, their time is not included in the period of the on-site tax check if the inspectors are not present on the taxpayer territory. The time necessary for the drawing up of the results of the check is not included in it either. Thus, the time of the on-site tax check is a sum of the periods when the inspectors are present on the taxpayer territory, with the calendar calculation of the time not applied in these cases.

In view of the above, the Constitutional Court of the Russian Federation recognised the provisions of Part 2 of Article 89 of the Tax Code of the Russian Federation regulating the time and duration of the on-site tax checks, including the renewed ones arranged by the supervising tax body as a control measure over the activities of the tax body having carried out the check, as not contradicting the Constitution of the Russian Federation.

The Decision is entered into force immediately after annunciation.

Decision of the Constitutional Court of the Russian Federation of July 16, 2004 on the Case of Constitutionality of Part 5 of Article 59 of the Code of Arbitration Procedures of the Russian Federation Pursuant to the Requests of the State Assembly - Kurultay of the Republic of Bashkortostan, the Governor of the Yaroslavl Province, Arbitration Court of the Krasnoyarsk Territory, Appeals of a Number of Organisations and Citizens

Case examination was stipulated by the appeals of a group of persons requesting to check the constitutionality of Part 5 of Article 59 of the Code of Arbitration Procedures of the Russian Federation stating that organisations in the court of arbitration may be represented by the heads of organisations acting within their sphere of authority envisaged in the federal law, other normative legal act, constituent documents or staff personnel of the mentioned organisations or lawyers and Item 4 of Article 2 of the Federal Law on the advocacy in the Russian Federation stating that organisations, bodies of state power, bodies of local government in civil and administrative cases, cases of administrative violations may only be represented by lawyers except for the cases when these functions are fulfilled by staff personnel of the mentioned organisations, bodies of state power and bodies of local government if otherwise is not envisaged in the federal law.

According to the applicants, the above norms unreasonably restrict the freedom of choice for the organisations being the parties in arbitration proceedings, as well as hamper implementation of the rights of these organisations for a quality legal aid, restrict significantly the rights of auditors and persons rendering legal services inasmuch as they pertain to opportunities to represent their clients in arbitration courts forcing them to become lawyers.

The Constitutional Court of the Russian Federation recognised as unconstitutional Part 5 of Article 59 of the Code of Arbitration Procedures of the Russian Federation inasmuch as in combination with Item 4 of Article 2 of the Federal Law on the advocacy in the Russian Federation it excludes opportunities for the persons rendering legal aid and selected by organisations to act as representatives in the court of arbitration if they are not being lawyers or staff employees of these organisations.

The Decision is entered into force immediately after annunciation.

Decree of the President of the Russian Federation No. 910 of July 16, 2004 on the Measures to Improve State Management

Forms the Commission on Improvement of State Management under the auspices of the President of the Russian Federation. The Commission shall handle the issues of optimisation of the structure and adjustment of the functions and authority of the federal bodies of state power, as well as prevention of duplication of the functions and authority of the federal bodies of executive power, bodies of executive power of the subjects of the Russian Federation and bodies of local government. Besides, the tasks of the Commission include restriction of the interference of the state in the economic activities of the subjects of entrepreneurial activities including excessive state regulation.

Three interagency workgroups are created under the auspices of the Commission: in charge of the measures pertaining to state service reforms; in charge of the federal relations and local government; in charge of the system and structure of the federal bodies of executive power.

The Decree is entered into force from the day of its official publication.

Decision of the Government of the Russian Federation No. 354 of July 15, 2004 on the Endorsement of the Rate of the Export Customs Duty for Raw Oil and Raw Oil Products from Bituminous Materials Exported from the Territory of the Russian Federation outside the Member-States of the Customs Union Agreements

From August 1, 2004 increases the rate of the export customs duty for raw oil and raw oil products from bituminous materials (code according to the Foreign-Trade Commodity Nomenclature of Russia 2709 00) from USD 41.6 to USD 69.9 per ton.

Order of the Ministry of Taxation of the Russian Federation No. SAE-3-04/366@ of June 15, 2004 on the Endorsement of the Forms of Declarations for the Income Tax from Natural Persons and Their Filling Instruction

Endorses the forms of the declarations for the income tax from natural persons 3-NDFL and 4-NDFL and their filling instructions. Form 3-NDFL applies to the incomes received by natural persons from January 1, 2004 and Form 4-NDFL, from January 1, 2005.

The declaration is submitted by the taxpayer to the territorial inspection of the Ministry of Taxation of the Russian Federation at the place of his registration (place of residence) no later than April 30 of the year following the reported one.

Registered in the Ministry of Justice of the Russian Federation on July 9, 2004. Reg. No. 5900.

Decision of the Plenum of the Higher Arbitration Court of the Russian Federation No. 10 of June 2, 2004 on Some Issues of the Practice of Examination of Cases of Administrative Violations

Explains individual issues emerging in the judicial practice pertaining to cases of administrative violations.

Since the time limits for examination of the cases of administrative violations are reduced, and it is not always possible to notify the participants of the arbitration process of the time and place of the court session at least fifteen days ahead of it, the courts are recommended to notify or summon the persons participating in the case and other participants of the arbitration process over the phone, with a telegram, by fax or e-mail, or using other means of communication.

If the application of the administrative body calling to administrative responsibility or the protocol of administrative violation contain erroneous qualification of the committed violation, the court may decide to call to administrative responsibly using a proper qualification. However, if the drawing up of the protocol of the committed violation as a result of the case re-qualification is not the sphere of reference of the appealing body, the court may not sew for administrative responsibility. Having revealed a low significance of the violation during the case examination, the court may decide to refuse to satisfy the demand of the administrative body and exempt the violator from administrative responsibility because of the low significance of the violation confining itself to an oral reprimand, which is stated in the resolution. The low significance of the violation is qualified if the protected public relations are not endangered significantly. Such circumstances as the personality and the property status of the sewed person, voluntary elimination of the consequences of the violation, redemption of the incurred damage are not regarded as showing proof of the low significance of the violation.

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