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 19.04.2005

Federal Law No. 34-FZ of April 18, 2005 on the Amendments to Article 85 of the Federal Law on the General Principles of Organisation of Local Government in the Russian Federation

The bodies of state power of the subjects of the Russian Federation may specify before May 31, 2005 the procedure of election of the heads of the newly arranged municipal formations for the first term, as well as the status of the mentioned position in the structure of the bodies of local government, if the structure of the bodies of local Government is not defined at the local referendum (assembly of citizens).

When forming the contest commission for the examination of the candidates for the position of the head of the local administration of the municipal regions (city district), the bodies of state power of the subjects of the Russian Federation may assign the members of the contest commission in the amount equal to the number of members assigned by the representative body of the municipal formation when the contest for the position of the chief of the local administration is arranged by the representative body of the municipal formation of the first convocation.

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

Decision of the Plenum of the Higher Arbitration Court of the Russian Federation No. 11 of March 24, 2005 on Some Issues of Application of the Land Legislation

Legal entities having obtained land plots for permanent (unlimited) use before the entry into force of the Land Code may obtain them on lease terms or on the proprietary basis until January 1, 2006 at their choice regardless of the goal the land plots were granted for.

Non-normative acts of the authorised bodies granting land plots to citizens being independent entrepreneurs issued after the entry into force of the Land Code must be recognised as invalid or contradicting the law.

Independent entrepreneurs and legal entities possessing land plots on the basis of permanent (unlimited) use may not purchase on the proprietary basis free of charge land plots granted for entrepreneurial activities.

The prohibition specified in the law on the privatisation of state and municipal property for the legal entities with the share of the Russian Federation, subjects of the Russian Federation and municipal formations in the registered capital greater than 25% to buy state and municipal property does not apply to the privatisation by the mentioned legal entities of the land plots housing objects of immovable property possessed by them on the proprietary basis.

In case of a disagreement of the owner of the land plot with the decision of the bodies of power on the forced alienation of the land plot, or failure to reach an agreement on the buy-out price, the mentioned bodies may file a lawsuit to the court of arbitration to buy out the land plot no sooner than one year after the moment of receiving by the land owner of the written notification of the adopted decision of withdrawal, however, no later than within two years of the sending of such notification.

Letter of the Ministry of Finance of the Russian Federation No. 03-04-08/60 of March 22, 2005 on the Application of the Value Added Tax to the Services of Transfer of Exclusive Rights

The reward paid out to the holder of rights being a Russian organisation in the form of a lumpsum and periodic (royalty) payments by the user being a foreign company, if the place of its activities is not the territory of the Russian Federation, is not subject to the value added tax.

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