Tax authorities count foreign organizations again
‘Foreign Russian taxpayers’ need new registration certificates

The Ministry of Taxes and Levies has ordered foreign organizations registered with Russian tax authorities to obtain new certificates of registration, reports Rinat Zakirov-Ziev, of Russin & Vecchi’s Moscow office. Under Order No. BG-3-09/426, "foreign Russian taxpayers" must return previously issued registration certificates starting Oct. 1, he notes.

Current certificates will expire Jan. 1. Their renewal will help tax authorities update taxpayers' information for the reference book, "Foreign Organization Codes," they are compiling, Zakirov-Ziev explains..

“One of the possible reasons behind the tax authorities’ new initiative may be to improve their ‘inventory’ through deregistration of inactive foreign organizations,” he observes.

New document retention rules enacted
Requirements apply to all joint-stock companies in Russia

New requirements went into effect Sept. 5 for joint-stock companies in Russia regarding retention and destruction of business documents, reports Zhanna Radmaeva, of Russin & Vecchi’s Vladivostok office. The Russian Federal Commission on Equity Market regulations outline what documents companies must keep, how and how long they must keep them, and what procedures to follow if they want to destroy documents if permitted, she explains.

Ms. Radmaeva reports that companies must keep these documents permanently: charter, including registered amendments and revisions thereto; foundation agreement; decision on separation, allotment or reorganization of a company; documents related to issuance of shares; documents related to meetings of shareholders; annual accounting reports; statutes of a branch or a representative office, etc.

“The rule applies to all close joint-stock companies (ZAO) and open joint-stock companies (OAO) registered in Russia, including joint-stock companies with foreign investments and those that are 100% foreign owned,” she reports. The regulation requires 5-year or 1-year retention periods for different kinds of documents of lesser importance, she adds.

Value-added tax to shrink Jan. 1
New law ends excise duties on natural gas, hikes others

A new tax law adopted in July will change some business taxes in January, reports Natalya Prisekina, of Russin & Vecchi’s Vladivostok office. Federal Law No. 117-FZ will reduce the value added tax to 18% from its current 20%, she notes. The law abolishes the excise duty on natural gas, but raises excise duties for many goods, she reports:

• 10% for automobiles, alcohol and beer;
• 20% for tobacco;
• 18% for strong alcoholic beverages;
• 12% for combustive-lubricating materials.

“The law also establishes a unified tax rate on mining operations for all companies —107 rubles for 1,000 cubic meters,” Prisekina notes. It also makes technical changes in the Tax Code, related to abolition of regional sales taxes as of Jan. 1, and provides the means for compensating regions for the revenue they will lose.

Dec. 7 vote will replace late Sakhalin governor
Businesses’ impact on campaign not yet clear

An election Dec. 7 will determine who will replace the late Sakhalin Gov. Igor Farkhutdinov, who died along with 19 other regional government and business leaders in an Aug. 20 helicopter crash, reports Denis Marchenko, of Russin & Vecchi’s Yuzhno-Sakhalinsk office.

Some commentators have predicted that business interests would play an unusually important role in the election. However, Marchenko points out that it will be hard to determine whether that is true until the election itself on December 7. He adds, “To date it does not appear that any Sakhalin business representatives would be able to compete with acting governor Igor Malakhov, (who had been first vice-governor for the past seven years) or Yuzhno-Sakhalinsk Mayor Fedor Sidorenko, who was a rival of the late governor.”

He further notes that Sakhalin residents’ overall suspicious attitude toward mainland candidates could diminish the influence of large mainland businesses on the Sakhalin campaign. “However, many factors will determine the results of the election — for example, the presence or absence of support from the federal government.”

R&V helps educate investors about Sakhalin
Firm conducts seminar, helps sponsor London conference

Russin & Vecchi continues to help educate investors and companies interested in doing business in Sakhalin. This summer, attorneys from the firm’s Yuzhno-Sakhalinsk office conducted a seminar on "The Legal Environment for Business on Sakhalin" for the several hundred participants in the 8th Annual Russian American Pacific Partnership Conference.

In November, Russin & Vecchi will take part in the 2003 Sakhalin Oil & Gas Conference in London. Nov. 20, the firm will conduct an all-day workshop for conference participants on “Legal Considerations for Operations on Sakhalin” — focusing on practical solutions to issues most frequently confronted by contractors, suppliers and project operators there. For more information on the event, visit the IBC website.

© 2003 Russin & Vecchi, LLP