Windfall tax for major companies to be introduced in Russia

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Monitoring of the Federal Legislation dated 14.08.2006

Decision of the Government of the Russian Federation No. 479 of August 10, 2006 on Amending the Regulations on the Federal Tax Service

The scope of duties of the Federal Tax Service now encompasses the running of a comprehensive state automated information system intended to record the output and circulation volumes of ethyl alcohol, alcoholic products and alcohol-containing products. Accordingly, the Service now has broader powers in the field of control and supervision over the filing of declarations of output and circulation volumes of ethyl alcohol, alcoholic products, alcohol-containing food products, alcohol-containing non-food products with ethyl-alcohol content of over 40% of finished product volume and the ethyl alcohol volumes used to produce alcoholic products, alcohol-containing products as well as the actual output and circulation volumes of ethyl alcohol, alcoholic products and alcohol-containing products.For the purpose of exercising the powers vested therein, the Federal Tax Service carries outs inspections of the organisations engaged in the production of, and trading in, ethyl alcohol, alcoholic products and alcohol-containing products to verify their compliance with the licensing standards set by the legislation on the state regulation of the production and circulation of ethyl alcohol, alcoholic products and alcohol-containing products.

Letter of the Department of Taxation and Customs Tariff Policies of the Ministry of Finance of the Russian Federation No. 03-03-04/2/188 of August 3, 2006

Banks are entitled to include the following in the costs deemed deductibles in the calculation of organisation's profit tax: VAT amounts paid to suppliers on goods (works and services) acquired. All economically-substantiated costs incurred by the bank's employees abroad are written off as expenses in a tax base calculation according to taxation record data on the basis of source documents appropriately drawn up. If, upon the expiry of a certain period of time, foreign tax bodies demand source documents for the purpose of refunding a VAT amount levied earlier the bank has the right to send the originals thereof to them. Here, Russia's tax bodies must accept copies of the said source documents attested by a notary, as substantiation documents.The VAT amounts presented by suppliers on services acquired by the bank must be taken into account in the tax (accounting) period in which the duty to pay VAT emerged according to the date of drawing up the source documents (the date of settlements of accounts according to contracts concluded), with no regard to the date of actual payment of the tax. When VAT is refunded by foreign tax bodies the tax return for the purposes of profit tax on the profit of the accounting period in which the said expenses (including VAT) have been taken into account in the tax base calculation has to be adjusted accordingly.

Letter of the Department of Taxation and Customs Tariff Policies of the Ministry of Finance of the Russian Federation No. 03-06-01-04/151 of August 3, 2006

If a construction project whose initial value is assessed as of the date of transfer of documents for the purpose of state registration of rights of ownership has been delivered under a certificate of acceptance for commissioning and an organisation is actually pursuing an economic activity on it, this facility has all the features of a fixed asset established by the Accounting Regulations "Fixed Assets Bookkeeping" (PBU 6/01). Such facility is also classified as a fixed asset and a decision as to its inclusion in bookkeeping account 01 "Fixed Assets" and in the taxable object for the purposes of organisation's property tax must not depend on the taxpayer's will but is rather determined by the economic essence of the facility.While selling immovable property items a seller cannot write a facility off the balance sheet and recognise proceeds from the sale thereof for bookkeeping purposes before the transfer of the rights in the facility, and therefore the fact of state registration of rights is deemed ground for putting the facility into the group of immovable property items, given the availability of an initial fixed asset value formally recognised. The transfer of the facility into the fixed assets group is deemed ground for deeming it a taxable object for the purposes of organisation's property tax.

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