Windfall tax for major companies to be introduced in Russia

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Daily Monitoring of the Legislation

Monitoring of the Federal Legislation dated 21.07.2004

Ruling of the Constitutional Court of the Russian Federation No. 169-O of April 8, 2004 on the Refusal to Accept for Processing of the Appeal of the Limited-Liability Company PromLine against Violation of the Constitutional Rights and Freedoms by the Provision of Item 2 of Article 171 of the Tax Code of the Russian Federation

The applicant challenged the constitutionality of Item 2 of Article 171 of the Tax Code of the Russian Federation stating that exemption applies to VAT amounts put out to the taxpayer and paid by him when buying commodities (works, services) on the territory of the Russian Federation. According to the applicant, the given provision does not permit to accept for exemption VAT amounts paid to the supplier when offsetting mutual claims if the claim right put out to the supplier by the taxpayer is not paid to the previous creditor.

Earlier, arbitration courts opted to decide in favour of the tax bodies having called the applicant to responsibility for the incomplete VAT payment.

The Constitutional Court of the Russian Federation emphasised that the challenged norm itself permitting to accept for exemption only the actually paid to suppliers tax amounts when calculating the final VAT amount due for payment to the budget by the taxpayer does not restrict constitutional rights and freedoms of citizens. Earlier, the Constitutional Court of the Russian Federation expressed the legal position stating that the payment by contracting parties in a transaction in the form without the flow of monetary resources (a cashless form of payment) does not exempt taxpayers from the duty to enter in the budget the same amount of taxes as when the payment is made in the monetary form. Only if the taxpayer fulfils such obligatory conditions as the payment to the previous creditor for the claim right to supplier obtained from him, the offsetting of the counterclaims may be recognised as implying real taxpayer expenses for the accrued tax amounts with him, with the tax amounts themselves being actually paid by the taxpayer, therefore, subject to exemption.

In view of the above, the Constitutional Court of the Russian Federation refused to accept for processing applicant appeals.

Ruling of the Presidium of the Supreme Court of the Russian Federation No. 5pv-04 of May 19, 2004

As an enforcement measure, revokes the Ruling of the Judicial Board on Civil Cases of the Supreme Court of the Russian Federation of February 13, 2003 having satisfied the appeal on the application of the land tax exemption in the amount of 3% of this tax rate. Thus, the actions of the tax body having collected the land tax in the amount of 100% of the tax rate are recognised as legal. The exemption specified in Part 5 of Article 8 of the Law of the Russian Federation of October 11, 1991 on the payment for the land applies to the lands occupied by the housing fund. In the applicant's case, such exemption may not apply, since the building located on his land plot is not finished after construction, the property right for it has not been registered, it has not been included in the housing fund by the bodies of technical registration.

Decree of the President of the Russian Federation No. 928 of July 19, 2004 "Issues of the Federal Migration Service"

Judicial functions and the functions of control, enforcement and rendering of state services in the sphere of migration are vested in the Federal Migration Service. Before the completion of the building of the territorial bodies of the Service, the mentioned functions will be fulfilled by the ministries of internal affairs, directorates, departments of internal affairs of the subjects of the Russian Federation, departments (sections) of internal affairs of the regions, cities and other municipal formations, departments (sections) of internal affairs in the closed administrative territorial formations, at the specially important and regime objects.

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

Decision of the Government of the Russian Federation No. 363 of July 21, 2004 on the Fixing of the Amounts of the Basic Parts of Labour Pensions and Endorsement of the Indexing Factor from August 1, 2004 of the Insured Part of the Labour Pension

From August 1, 2004, the amounts of the basic parts of the labour old-age pension, disability labour pension and the lost-breadwinner labour pension are calculated proceeding from the indexed taking into account the growth of inflation basic part of the labour old-age pension defined as Rbl 660 per month. Earlier (from April 1, 2004), the basic part of the labour old-age pension was defined in the amount of Rbl 621. The indexing factor of the insured part of the labour pension is fixed in the amount of 1.0628.

Order of the Ministry of Finance of the Russian Federation and the Ministry of Internal Affairs of the Russian Federation No. 53n/405 of June 28, 2004 on the Endorsement of the Procedure of Endorsement and Conveying the Limits of Budget Obligations for the Year 2004

Defines the rules of endorsement and conveying the limits of budget obligations to the Ministry of Internal Affairs for the maintenance of divisions of the bodies of internal affairs of the Russian Federation providing for the guarding of the property of legal entities and natural persons and providing other services pertaining to citizens' guarding and security on contractual basis.

Registered in the Ministry of Justice of the Russian Federation on July 16, 2004. Reg. No. 5919.

Order of the Ministry of the Industry and Power Supplies of the Russian Federation No. 21 of June 22, 2004 on the Average Market Cost of 1 Square Meter of the Total Housing Space for the III Quarter of 2004 to Estimate the Amounts of Free Subsidies and Loans for the Purchase of Housing Space by All Categories of Citizens at the Expense of the Resources of the Federal Budget

Defines the average market cost of 1 square meter of the total housing space (in roubles) to estimate the amounts of free subsidies and loans allocated to all categories of citizens at the expense of the resources of the federal budget for the purchase of the housing space.

Registered in the Ministry of Justice of the Russian Federation on July 15, 2004. Reg. No. 5915.

Operative Direction of the Central Bank of Russia No. 82-T of July 16, 2004 on the Procedure of Calculation of the Amount of Interest under Attracted Deposit of a Credit Organisation

Specifies the rules of calculation of the amounts of interest under the deposits of credit organisations attracted by the Bank of Russia in compliance with the Regulation of the Bank of Russia No. 203-P of November 5, 2002 on the procedure of carrying out of deposit operations with credit organisations in the currency of the Russian Federation by the Central Bank of the Russian Federation.

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