Monitoring of the Federal Legislation dated 23.05.2006

Decision of the Government of the Russian Federation No. 296 of May 18, 2006 on the Amendments to the Customs Tariff of the Russian Federation Pertaining to Drilling, Casing and Pumping Pipes

According to the amendments introduced in the Foreign Trade Commodity Nomenclature of the Russian Federation, individual subheadings shall apply to other types of commodities as compared to what was envisaged before. Subheading 7304 21 000 1 shall apply to drilling pipes of steel with the yield point at least 724 MPa and greater (earlier, to drilling pipes of steel with strength group 105 and greater); 7304 21 000 2 - to drilling pipes intended for works in the medium containing hydrogen sulphide (H2S) of steel with the minimum yield strength of 655 MPa and greater (earlier, to similar pipes of steel with strength group 95 and greater, with air-tight gas threaded interlocks); 7304 29 110 1 - to casing and pumping pipes of steel with a minimum yield strength of 758 MPa and greater, with outer diameter not greater than 406.4 mm (earlier, to similar pipes of steel of strength groups 110 and greater); 7304 29 110 2 - to casing and pumping pipes intended for works in the medium containing hydrogen sulphide (H2S), with the outer diameter of 406.4 mm of steel with the minimum yield strength of 517 MPa and greater, with air-tight gas threaded interlocks (earlier, to similar pipes of steel of strength groups 75 and greater).

The rates of the import customs duties for the listed types of commodities are fixed in the amount of 5% of the customs cots.

The Decision is entered into force two months after the day of its official publication.

Letter of the Department of the Tax and Customs Tariff Policy of the Ministry of Finance of the Russian Federation No. 03-03-04/1/343 of April 17, 2006

A doubtful debt is recognised to be any indebtness to the taxpayer having occurred in the sale of commodities, carrying out works, rendering services if it is not redeemed within time limits specified in the contract and not secured with a pledge, guarantee.

A service for taxation purpose is recognised to be activities the results of which do not have a material expression, are sold and consumed in the process of such activities.

Agent activities to fulfil the order of the principal is a service for taxation purposes, therefore, the principal indebtness to pay out the remuneration to the agent for the services rendered under the agentship contract unredeemed within the time limits specified in the agentship contract and not secured with a pledge, guarantee, is taken into account in the forming of the reserve for doubtful debts.

Before January 1, 2005, a doubtful debt was recognised to be any indebtness to taxpayer if unredeemed within the time limits specified in the contract and not secured with a pledge, guarantee. If the agentship contract specified the time limit for the principal to redeem the debt in reimbursement of expenses pertaining to the agentship order, the mentioned indebtness unredeemed within specified time limits may be recognised as a doubtful debt for taxation purposes with the agent taxpayer.

Letter of the Department of the Tax and Customs Tariff Policy of the Ministry of Finance of the Russian Federation No. 03-02-07/1-80 of April 4, 2006

According to the Tax Code of the Russian Federation, amount of excessive paid tax must be offset as taxpayer advance payments for the given or other taxes, redemption of arrears or must be returned to the taxpayer. The offsetting of the amount of excessively paid tax as advance payments is arranged on the basis of a written application of the taxpayer at the decision of the tax body.

According to the explanation, if there is a court ruling obliging the tax body to offset the excessively paid amounts of the tax as advance payments for the tax, the given offsetting must be carried out by the tax body in execution of the mentioned court ruling having entered in legal force.