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Monitoring of the Federal Legislation dated 5.06.2006

Letter of the Department of the Tax and Customs Tariff Policy of the Ministry of Finance of the Russian Federation No. 03-03-04/2/112 of April 20, 2006

Explains in detail using examples the procedure of determination of the taxable base for the profit tax for the cases of claims rights cession under credits obtained as a result of the claims rights cession.

According to the Ministry of Finance, in cases of claims right cession under the credit, the income is considered to be the difference between the cost of property due to the taxpayer taking into account the interest accrued before the moment of transfer of claims rights under the credit and the cost of sale. The cost of sale must include all bank expenses suffered at the purchase of the claims right, as well as all subsequent expenses suffered by the bank during the period of possession of the claims right, including the interest accrued in this period. Bank expenses taken into account in cases of claims right cession under credit contracts shall include also amounts of accrued, but not received interest from the borrower.

Letter of the Department of the Tax and Customs Tariff Policy of the Ministry of Finance of the Russian Federation No. 03-03-04/2/111 of April 20, 2006

Explains a number of issues pertaining to taxation of incomes of founders of management obtained in the framework of the contract of trust control of property when the property is united in a single property complex - common bank management fund.

Common bank management funds form a property complex consisting of property handed over in trust control by various persons and united as a common property, as well as purchased by the trustee in the course of trust control. Relations emerging in this case are covered by the provisions of the Civil and Tax Codes on activities of simple partnership.

It is emphasised, in particular, that if, as a result of the reporting (tax) period, there is a profit from activities of the common bank management fund, with incomes and expenses determined as a sum total, it is registered with each participant of the common bank management fund in appropriate portion as non-sales incomes and is subject to taxation according to the commonly accepted rate of 24% regardless of the fact that in the framework of the common bank management fund incomes may be obtained in the form of dividends and interest from state securities of the Russian Federation and municipal securities subject to lower rates.

The Letter also specifies the particulars of taxation procedure if the terms of the common bank management fund envisage intermediate payments of incomes (profit) at the end of any period in the amount equal to the surplus of the cost of share, and when such payments are not envisaged.

The trustee in charge of the trust control of securities in the framework of the common bank management fund shall present to the founders only information on the cost (surplus of cost) of the shares.

Letter of the Department of the Tax and Customs Tariff Policy of the Ministry of Finance of the Russian Federation No. 03-03-04/2/120 of April 25, 2006

Explanation on the issue of recognising as desperate for collection for profit taxation purposes the debt under the credit granted to a natural person by the bank says that the debt in loan failing to meet the requirements of Article 266 of the Tax Code (namely, the period of limitation specified in the Civil Code is not over, the act of the state body of the impossibility of collection of the debt or information on the liquidation of the debtor organisation are not available) may not be recognised as desperate for taxation purposes.

Amounts of the debt earlier written off at the expense of the reserve for possible losses in loans, debts in loans and similar debts not recognised as desperate for collection for taxation purposes must be restored in the tax records while increasing the taxable base for the profit tax. The losses from the writing off of the mentioned debt may not be included in non-sales expenses for taxation purposes before the moment when such debt is recognised as desperate for collection.

Letter of the Department of the Tax and Customs Tariff Policy of the Ministry of Finance of the Russian Federation No. 03-03-04/1/361 of April 20, 2006

Expenses of advertising in the underground cars are included in expenses of advertising on transport vehicles accepted for profit taxation purposes as other expenses in the amount not greater than 1% of the receipts from sale.

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