Monitoring of the Federal Legislation dated 3.03.2006

Information Letter of the Presidium of the Higher Arbitration Court of the Russian Federation No. 105 of February 20, 2006 on Some Issues Pertaining to the Entry into Force of the Federal Law No. 137-FZ of November 4, 2005 on the Amendments to Some of the Legislative Acts of the Russian Federation and on Invalidation of Some of Provisions of the Legislative Acts Pertaining to Measures of Improvement of Administrative Procedures of Regulation of Disputes

Works out recommendations on the procedure of application by arbitration courts of the Federal Law No. 137-FZ of November 4, 2005 granting the right from January 1, 2006 to tax bodies and bodies of the Pension Fund to collect independently without applying to court tax sanctions from organisations and independent entrepreneurs.

When the mentioned bodies apply to collect taxes, insurance contributions for obligatory pension insurance and sanctions that must be collected independently to arbitration courts after December 31, 2005, such applications must be returned by the arbitration court. Applications submitted but not processed by the arbitration court before January 1, 2006 must be processed.

Arbitration courts are recommended to keep in mind that the absence of the form of the order to pay arrears in insurance contributions, penalties and fines and the form of the decision to collect arrears in insurance contributions endorsed by the Ministry of Finance of Russia may not serve as grounds for the territorial bodies of the Pension Fund to apply to court to collect arrears in insurance contributions, penalties and fines.

Appealing against the decision to call the taxpayer (another person) to account for a tax violation in the higher tax body (with the higher official) means appealing among other things against the decision to collect the tax sanction and implies an obligatory suspension of execution of the decision to collect the tax sanction.

Letter of the Ministry of Finance of the Russian Federation No. 03-04-15/40 of February 22, 2006

Explains the issue of a documentary confirmation of the legality of application of the 0% VAT rate after January 1, 2006.

The value added tax in the amount of 0% at sale applies to commodities imported in the customs regime of export, as well as commodities placed under the customs regime of free customs zone. The Letter describes which documents must be presented to the tax bodies to confirm the legality of application of the 0% VAT rate with each of these customs regimes.

Letter of the Department of the Tax and Customs Tariff Policy of the Ministry of Finance of the Russian Federation No. 03-05-01-03/18 of February 17, 2006

Severance pay in the amount of the average monthly earnings, as well as secured average monthly earnings for the period until employment paid out at discontinuation of the labour contract because of liquidation of the organisation or staff cuts (Article 178 of the Labour Code of the Russian Federation), as well as the average earnings preserved with the employee for the period until employment if it is impossible to find an appropriate job (position) at the previous place of work after the end of his term in an elected position in a trade-union body (Article 375 of the Labour Code of the Russian Federation and Article 26 of the Federal Law No. 10-FZ of January 12, 1996 on trade-unions, their rights and guarantees of activities), being compensation payments pertaining to dismissal, are exempted from the income tax from natural persons.

Letter of the Ministry of Finance of the Russian Federation No. 03-11-02/41 of February 16, 2006

Organisations and independent entrepreneurs must not register as payers of the uniform imputed income tax for individual types of activities in the tax bodies where they are registered for other reasons.

Taxpayer engaged in entrepreneurial activities transferred to the uniform imputed income tax in various regions of the same urban district served by different tax bodies must register for taxation purposes at the place where he carries out the mentioned activities in one of the tax bodies.