Windfall tax for major companies to be introduced in Russia
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Monitoring of the Federal Legislation dated 20.11.2006
Decision of the Plenum of the Higher Arbitration Court of the Russian Federation No. 53 of October 12, 2006 on the Assessment by Arbitration Courts of the Reasons of Obtaining of Tax Benefits by the Taxpayer
The Plenum of the Higher Arbitration Court of the Russian Federation explains, for the purpose of resolving of tax disputes, which circumstances may certify or, on the contrary, not certify the fact of obtaining unreasonable tax benefits by the taxpayer. The tax benefit is implied to be a reduced amount of tax duty because, in particular, of reduction of the taxable base, obtaining a tax exemption, application of a lower tax rate, as well as obtaining the right for a return (offsetting) or reimbursement of the tax from the budget.
The lack of substantiation of the tax benefit may be certified, in particular, by the following circumstances:
impossibility of implementation by the taxpayer of the mentioned operations taking into account the time, place of location of the property or the volume of material resources necessary economically for production of commodities, carrying out works or rendering services;
absence of necessary conditions to reach the results of appropriate economic activities because of the absence of managerial or technical personnel, fixed assets, production capacities, warehouses, transport vehicles;
registration for taxation purposes of only those economic operations that are directly associated with the tax benefit if the given type of activities requires also other economic operations;
committing operations with commodities that have not been produced or could not be produced in the amount indicated by the taxpayer in the accounting documents.
However, it is necessary to keep in mind that individual circumstances may not serve as grounds to recognise the tax benefit unreasonable. Among them the Higher Arbitration Court emphasised:
creation of the organisation shortly before committing the economic operation;
interdependence of participants of transactions;
erratic nature of economic operations;
violations of the tax legislation in the past;
carrying out a single operation;
carrying out operation at other than the place of location of the taxpayer;
making payments through the same bank;
transit payments between participants of interconnected economic operations;
use of intermediaries in economic operations.
Meanwhile, all these circumstances in aggregate and if interconnected with other circumstances may be qualified as certifying the fact of obtaining an unreasonable tax benefit by the taxpayer.
Recognising the tax benefit as unreasonable by the court implies a refusal to satisfy the taxpayer claims pertaining to it. In this case, one should keep in mind that recognising the tax benefit as unreasonable must not affect other rights of the taxpayer envisaged in the tax legislation.
The lack of substantiation of the tax benefit may be certified, in particular, by the following circumstances:
impossibility of implementation by the taxpayer of the mentioned operations taking into account the time, place of location of the property or the volume of material resources necessary economically for production of commodities, carrying out works or rendering services;
absence of necessary conditions to reach the results of appropriate economic activities because of the absence of managerial or technical personnel, fixed assets, production capacities, warehouses, transport vehicles;
registration for taxation purposes of only those economic operations that are directly associated with the tax benefit if the given type of activities requires also other economic operations;
committing operations with commodities that have not been produced or could not be produced in the amount indicated by the taxpayer in the accounting documents.
However, it is necessary to keep in mind that individual circumstances may not serve as grounds to recognise the tax benefit unreasonable. Among them the Higher Arbitration Court emphasised:
creation of the organisation shortly before committing the economic operation;
interdependence of participants of transactions;
erratic nature of economic operations;
violations of the tax legislation in the past;
carrying out a single operation;
carrying out operation at other than the place of location of the taxpayer;
making payments through the same bank;
transit payments between participants of interconnected economic operations;
use of intermediaries in economic operations.
Meanwhile, all these circumstances in aggregate and if interconnected with other circumstances may be qualified as certifying the fact of obtaining an unreasonable tax benefit by the taxpayer.
Recognising the tax benefit as unreasonable by the court implies a refusal to satisfy the taxpayer claims pertaining to it. In this case, one should keep in mind that recognising the tax benefit as unreasonable must not affect other rights of the taxpayer envisaged in the tax legislation.
Decision of the Government of the Russian Federation No. 689 of November 15, 2006 on the State Land Control
According to the new Regulation, the state land control is vested in the Federal Agency of Cadastre of Objects of Immovable Property, Federal Service of Enforcement in the Sphere of Use of Natural Resources, Federal Service of Veterinary and Phytosanitary Enforcement and its territorial bodies. Earlier, the land control formed part of the functions of the Federal Service of the Land Cadastre of Russia (reorganised in 2004 into the Federal Agency of Cadastre of Objects of Immovable Property) and its territorial bodies, Ministry of Natural Recourses of the Russian Federation, Ministry of Agriculture of the Russian Federation, State Committee of the Russian Federation for Construction and the Housing-and-Communal Complex.
The task of the state land control is providing for observation by organisations regardless of their organisational and legal forms and forms of ownership, their heads, officials, as well as the citizens, of the land legislation, requirements of protection and use of lands.
The Regulation defines the functions of control bodies in the sphere of the state land control depending on the sphere of reference, authority of their officials. Thus, the Federal Agency of Cadastre of Objects of Immovable Property controls the use of the lands for designated purposes (including the lands of the forestry fund), preservation of landmarks of the borders of land plots, prevention of unauthorised capture of lands. The Federal Service of Enforcement in the Sphere of Use of Natural Resources controls implementation of measures of restoration of lands after construction, survey and other works, as well as observation of the regime of use of the land plots in forests in water protection zones and the coastal strips of water objects. The sphere of reference of the Federal Service of Veterinary and Phytosanitary Enforcement includes control of implementation of measures of preservation and reproduction of fertility of lands of agricultural destination.
Officials of the Federal Agency of Cadastre of Objects of Immovable Property and its territorial bodies have the status of state inspectors of the Russian Federation for the use and protection of lands. Earlier, such status was assigned to officials of the Federal Service of the Land Cadastre of Russia.
The state inspectors may request from the bodies of power, organisations and citizens information on the condition, use and protection of lands, including the documents certifying the rights for the land plots and objects located on them. Information on the organisation of the industrial land control are submitted by the persons using the land plots no sooner than once a year.
The pervious Regulation on the state land control endorsed by the Decision of the Government of the Russian Federation No. 833 of November 19, 2002 is invalidated.
The task of the state land control is providing for observation by organisations regardless of their organisational and legal forms and forms of ownership, their heads, officials, as well as the citizens, of the land legislation, requirements of protection and use of lands.
The Regulation defines the functions of control bodies in the sphere of the state land control depending on the sphere of reference, authority of their officials. Thus, the Federal Agency of Cadastre of Objects of Immovable Property controls the use of the lands for designated purposes (including the lands of the forestry fund), preservation of landmarks of the borders of land plots, prevention of unauthorised capture of lands. The Federal Service of Enforcement in the Sphere of Use of Natural Resources controls implementation of measures of restoration of lands after construction, survey and other works, as well as observation of the regime of use of the land plots in forests in water protection zones and the coastal strips of water objects. The sphere of reference of the Federal Service of Veterinary and Phytosanitary Enforcement includes control of implementation of measures of preservation and reproduction of fertility of lands of agricultural destination.
Officials of the Federal Agency of Cadastre of Objects of Immovable Property and its territorial bodies have the status of state inspectors of the Russian Federation for the use and protection of lands. Earlier, such status was assigned to officials of the Federal Service of the Land Cadastre of Russia.
The state inspectors may request from the bodies of power, organisations and citizens information on the condition, use and protection of lands, including the documents certifying the rights for the land plots and objects located on them. Information on the organisation of the industrial land control are submitted by the persons using the land plots no sooner than once a year.
The pervious Regulation on the state land control endorsed by the Decision of the Government of the Russian Federation No. 833 of November 19, 2002 is invalidated.
Decision of the Government of the Russian Federation No. 685 of November 15, 2006 on the Measures to Protect Russian Producers of Large Diameter Pipes
To protect economic interests of Russian producers, introduces a special duty for 3 years in the amount of 8% of the customs cost for pipes of large diameter (with the outer diameter greater than 508 mm) imported to the Russian Federation under the customs regime of release for internal consumption and classified under the headings of the Foreign Trade Commodity Nomenclature of Russia 7304 10 900 2, 7304 10 900 9, 7304 31 990 0, 7304 39 990 0, 7304 59 990 0, 7305 11 000 1, 7305 11 000 2, 7305 11 000 3, 7305 11 000 9, 7305 12 000 1, 7305 12 000 9, 7305 19 000 0, 7305 31 000 0, 7305 39 000 0, 7305 90 000 0.
The special duty does not apply to the import of large diameter pipes originating in the developing countries enjoying the national system of preferences of the Russian Federation.
The Decision is entered into force one month after the day of its official publication.
The special duty does not apply to the import of large diameter pipes originating in the developing countries enjoying the national system of preferences of the Russian Federation.
The Decision is entered into force one month after the day of its official publication.
Decision of the Government of the Russian Federation No. 695 of November 16, 2006 on the Endorsement of the Rates of Export Customs Duties for Raw Oil and Individual Categories of Commodities of Oil Exported from the Territory of the Russian Federation Outside the Member-States of the Customs Union Agreements and on Invalidation of Some of the Acts of the Government of the Russian Federation
From December 1, 2006, reduces the rates of the export customs duties for raw oil and individual categories of commodities of oil exported from the territory of the Russian Federation outside the member-states of the Customs Union agreements.
The rate of the export customs duty for raw oil will make USD 180.7 per ton instead of the present-day USD 237.6.
Export from the Russian Federation of propane, butane, ethylene, propylene, butylenes, butadiene and other liquefied gasses, xylenes, light and medium distillates, gas oils, benzene, toluene will be subject to the rate of USD 134 per ton (at present, USD 172.4).
The rate of the export customs duty for liquid fuels, lubricants, spent oil products, petrolatum, paraffin, gatch, mineral waxes and similar products (other than the raw ones), as well as the oil coke, oil bitumen and other residues of processing of oil and oil products from bituminous materials (other than calcined oil coke), will make USD 72.2 per ton instead of today's USD 92.9.
Decisions of the Government of the Russian Federation introducing or changing the amount of the rates of export customs duties for the mentioned commodities are invalidated.
The rate of the export customs duty for raw oil will make USD 180.7 per ton instead of the present-day USD 237.6.
Export from the Russian Federation of propane, butane, ethylene, propylene, butylenes, butadiene and other liquefied gasses, xylenes, light and medium distillates, gas oils, benzene, toluene will be subject to the rate of USD 134 per ton (at present, USD 172.4).
The rate of the export customs duty for liquid fuels, lubricants, spent oil products, petrolatum, paraffin, gatch, mineral waxes and similar products (other than the raw ones), as well as the oil coke, oil bitumen and other residues of processing of oil and oil products from bituminous materials (other than calcined oil coke), will make USD 72.2 per ton instead of today's USD 92.9.
Decisions of the Government of the Russian Federation introducing or changing the amount of the rates of export customs duties for the mentioned commodities are invalidated.
Order of the Ministry of Economic Development of the Russian Federation, Ministry of the Industry and Power Supplies of the Russian Federation and the Ministry of Finance of the Russian Federation No. 311/250/124n of October 5, 2006 on the Amendments to the Procedure Defining the Notion of "Industrial Assembly" and Specifying Application of the Given Notion to the Import to the Territory of the Russian Federation of Auto Components for Production of Motor Vehicles of Commodity Headings 8701-8705 of the Foreign Trade Commodity Nomenclature, Their Units
To improve the efficiency of industrial production of motor vehicles, their units implemented in compliance with the Decision of the Government of the Russian Federation No. 166 of March 29, 2005, amends the procedure defining the notion of "industrial assembly" and specifying application of the given notion to the import to the territory of the Russian Federation of auto components for production of motor vehicles of commodity Headings 8701-8705 of the Foreign Trade Commodity Nomenclature, their units endorsed by the Order of the Ministry of Economic Development of Russia, Ministry of the Industry and Power Supplies of Russia and the Ministry of Finance of Russia No. 73/81/58n of April 15, 2005.
The auto components imported for the purpose of industrial assembly are subject to the beneficial import rate or duty free.
According to the amendments, individual operations of industrial assembly may be carried out in cooperation with other Russian enterprises.
The Order defines the document confirming execution of the requirements on the stepwise reduction of the import of auto components for industrial assembly of motor vehicles. Such document is the report of the names, quantity and cost of auto components import of which is reduced.
When indicating in the draft agreement on the import by Russian legal entities of commodities intended for industrial assembly of the list of auto components or parts thereof planned for import, it is necessary to include information on the deadlines of carrying out of obligatory technological operations in the production cycle.
After the entry into force of the final agreement, the Ministry of Economic Development of Russia notifies the Federal Customs Service of Russia of the period of validity of the list. The Federal Customs Service of Russia conveys the appropriate notification to the customs bodies in charge of the customs registration of auto components imported to the territory of the Russian Federation.
The Order does not permit to extend the list of the units for motor vehicles as a result of processing of appeals of interested parties to the Ministry of Economic Development of Russia.
The criteria defining the notion of "industrial assembly" of units for motor vehicles includes in addition: drive axles (design capacity with two-shift working regime at least 5,000 pieces a year; presence in the production cycle of obligatory technological operations - mechanical treatment of the crankcase; assembly and control operations); other units of the automotive equipment (presence in the production cycle of obligatory technological operations: processing of parts; assembly and control operations).
There is a requirement on the stepwise reduction of the import of auto components for industrial assembly of units of motor vehicles. No later than 18 months after the date of the entry into force of the agreement, the import must be reduced by at least 10% of the total cost according to the procedure defined in the agreement, followed by subsequent reduction of the import of auto components no later than 30 months after by at least 10% and no later than 40 months after by at least 10% more.
The Order defines the deadlines for conclusion of agreements on the import of parts to the territory of the Russian Federation for industrial assembly of units of motor vehicles. The agreements are concluded: for up to 7 years for organisation of industrial assembly of internal combustion engines, gear boxes and drive axles; for up to 5 years for organisation of industrial assembly of other units of the automotive equipment.
Registered in the Ministry of Justice of the Russian Federation on November 14, 2006. Reg. No. 8471.
The auto components imported for the purpose of industrial assembly are subject to the beneficial import rate or duty free.
According to the amendments, individual operations of industrial assembly may be carried out in cooperation with other Russian enterprises.
The Order defines the document confirming execution of the requirements on the stepwise reduction of the import of auto components for industrial assembly of motor vehicles. Such document is the report of the names, quantity and cost of auto components import of which is reduced.
When indicating in the draft agreement on the import by Russian legal entities of commodities intended for industrial assembly of the list of auto components or parts thereof planned for import, it is necessary to include information on the deadlines of carrying out of obligatory technological operations in the production cycle.
After the entry into force of the final agreement, the Ministry of Economic Development of Russia notifies the Federal Customs Service of Russia of the period of validity of the list. The Federal Customs Service of Russia conveys the appropriate notification to the customs bodies in charge of the customs registration of auto components imported to the territory of the Russian Federation.
The Order does not permit to extend the list of the units for motor vehicles as a result of processing of appeals of interested parties to the Ministry of Economic Development of Russia.
The criteria defining the notion of "industrial assembly" of units for motor vehicles includes in addition: drive axles (design capacity with two-shift working regime at least 5,000 pieces a year; presence in the production cycle of obligatory technological operations - mechanical treatment of the crankcase; assembly and control operations); other units of the automotive equipment (presence in the production cycle of obligatory technological operations: processing of parts; assembly and control operations).
There is a requirement on the stepwise reduction of the import of auto components for industrial assembly of units of motor vehicles. No later than 18 months after the date of the entry into force of the agreement, the import must be reduced by at least 10% of the total cost according to the procedure defined in the agreement, followed by subsequent reduction of the import of auto components no later than 30 months after by at least 10% and no later than 40 months after by at least 10% more.
The Order defines the deadlines for conclusion of agreements on the import of parts to the territory of the Russian Federation for industrial assembly of units of motor vehicles. The agreements are concluded: for up to 7 years for organisation of industrial assembly of internal combustion engines, gear boxes and drive axles; for up to 5 years for organisation of industrial assembly of other units of the automotive equipment.
Registered in the Ministry of Justice of the Russian Federation on November 14, 2006. Reg. No. 8471.
Order of the Ministry of Economic Development and Trade of the Russian Federation No. 359 of November 3, 2006 on the Deflator Coefficient K_1 for the Year 2007
In 2007, the deflator coefficient K_1 necessary for the calculation of the taxable base for the uniform imputed income tax in compliance with Chapter 26.3 of the Tax Code of the Russian Federation is fixed in the amount of 1.096.
K1 is the deflator coefficient specified for the calendar year taking account of the change of consumer prices for commodities (works, services) in the Russian Federation in the previous period.
In 2006, the given deflator coefficient according to the Order of the Ministry of Economic Development of Russia No. 277 of October 27, 2005 amounted to 1.132.
Registered in the Ministry of Justice of the Russian Federation on November 17, 2006. Reg. No. 8492.
K1 is the deflator coefficient specified for the calendar year taking account of the change of consumer prices for commodities (works, services) in the Russian Federation in the previous period.
In 2006, the given deflator coefficient according to the Order of the Ministry of Economic Development of Russia No. 277 of October 27, 2005 amounted to 1.132.
Registered in the Ministry of Justice of the Russian Federation on November 17, 2006. Reg. No. 8492.
Order of the Ministry of Economic Development and Trade of the Russian Federation No. 360 of November 3, 2006 on the Deflator Coefficient for the Purposes of Chapter 26.2 of the Tax Code of the Russian Federation "Simplified System of Taxation" for the Year 2007
For the purposes of Chapter 26.2 of the Tax Code of the Russian Federation "Simplified System of Taxation", specifies the limiting amount of incomes of the organisation restricting its right to switchover to the simplified system of taxation.
The amount of the mentioned incomes is subject to indexing using the deflator coefficient specified on the annual basis for each subsequent calendar year and taking account of the change of consumer prices for commodities (works, services) in the Russian Federation in the previous calendar year.
In 2007, the deflator coefficient necessary for the indexing of the limiting amount of incomes restricting the right to switchover and/or apply the simplified system of taxation in compliance with Chapter 26.2 of the Tax Code of the Russian Federation is fixed in the amount of 1.241.
Registered in the Ministry of Justice of the Russian Federation on November 17, 2006. Reg. No. 8494.
The amount of the mentioned incomes is subject to indexing using the deflator coefficient specified on the annual basis for each subsequent calendar year and taking account of the change of consumer prices for commodities (works, services) in the Russian Federation in the previous calendar year.
In 2007, the deflator coefficient necessary for the indexing of the limiting amount of incomes restricting the right to switchover and/or apply the simplified system of taxation in compliance with Chapter 26.2 of the Tax Code of the Russian Federation is fixed in the amount of 1.241.
Registered in the Ministry of Justice of the Russian Federation on November 17, 2006. Reg. No. 8494.
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