TAX NEWS - 2010

Russia Tax News

Submission of intermediary accounting reports by insurance organizations in the form of a file set via email

The letter clarifies the conditions for insurance organizations to submit intermediary accounting reports and reports, envisaged by the supervision procedure, in form of a file set via email, and provides control ratios (correlations) for reporting indices.
Federal Service for Insurance Supervision Information Letter No. S-5164/04-01 of 30 June 2010


Standard types of documents to be drafted by regulatory bodies upon auditing legal entities and individual entrepreneurs

The order approves new editions of the standard types of documents to be drafted by controlling bodies when carrying out audits of legal entities and individual entrepreneurs.
Russian Federation Ministry for Economic Development Order No. 199 of 24 May 2010


Official publication of documents

The following regulatory acts have been officially published:

- Federal Service for Alcoholic Beverages Market Regulation No. 38n of 1 June 2010 "On approving the maximum amount of single-bank guarantees, and the total amount of bank guarantees issued by a single guarantor, that can be valid simultaneously"

- Federal Service for Alcoholic Beverages Market Regulation No. 37n of 1 June 2010 "On approving the minimum amount of net assets held by guarantors, with whom territorial bodies of the Federal Service for Alcoholic Beverages Market Regulation conclude guarantee contracts, as well as the procedure for calculating the minimum amount of a guarantor's net assets"


The Customs Code of the Customs Union applies to Russia and Kazakhstan from 1 July 2010, while it will apply to Russia, Kazakhstan, and Belarus from 6 July 2010.

The general concept of the Customs Union is that goods originating in Russia, Belarus and Kazakhstan, along with goods that have been imported into Russia, Belarus and Kazakhstan from other countries and released for free circulation, may be transferred between these three countries without undergoing customs clearance and customs control procedures.

In particular, the Customs Union provides for:

- common regulation of trade with third countries;
- common regulation of customs tariffs (common Commodity Nomenclature of the Foreign Economic Activities of the Customs Union, Unified Customs Tariff (import customs duty rates) and non-tariff regulations (e.g. licensing, quoting));

- common technical regulations (e.g. conformity certification, sanitary measures); and

- a unified procedure of customs regulation, as stipulated by the Customs Code of the Customs Union.

At the same time, declarations of goods should generally be filed with the customs authorities of the member state of the Customs Union, within which the declarant is established, registered, or has its permanent place of residence.

The main principles of levying indirect taxes in the Customs Union are defined in the Convention between Russia, Belarus and Kazakhstan "On the principles of levying indirect taxes on imports and exports of goods, the performance of work and the provision of services in the Customs Union". For the purposes of this Convention, indirect taxes are defined as VAT and excise taxes.

Within the Customs Union, VAT and excise taxes will be levied in accordance with the Protocol "On the procedure for levying indirect taxes on imports and exports of goods in the Customs Union" (hereinafter, "Protocol 1"), along with the Protocol "On the procedure for levying indirect taxes on the performance of work and the provision of services in the Customs Union" (hereinafter, "Protocol 2").

In accordance with Protocol 1, goods exported from one member state of the Customs Union that are destined for another are subject to VAT at the zero rate, and are exempt from excise taxes. In general, the zero rate and exemption must be confirmed by the documents listed in Protocol 1.

VAT and excise taxes related to goods imported into the territory of one member state from the territory of another are levied by the tax authorities of the member state, into which the goods are being imported, except for excise taxes levied on excisable goods marked with excise stamps. With regard to these goods, excise taxes will only be levied by the customs authorities of the member state, into which the goods are being imported if this is provided for by that state's legislation.

Protocol 1 also specifies the taxable base for the importation of goods, and specifies that the tax rates must be the same as those applicable to domestic transactions in the importing member state. VAT and excise taxes, with the except of excise taxes levied on excisable goods marked with excise stamps, must generally be paid by the 20th day of the month, following that in which the imported goods are booked into the importer's accounts. Excise taxes levied on excisable goods marked with excise stamps must be paid within the term established by the legislation of the importing member state.

Protocol 2 sets forth the VAT place-of-supply rules applicable to the performance of work and provision of services between taxpayers from different member states of the Customs Union. The place of supply must be confirmed by the documents listed in the protocol.

It should be noted that, in accordance with Protocol 2, auditing and design services are deemed to be supplied at the place of activity of the recipient of the services, whereas the Tax Code of the Russian Federation contains no rules to this effect.

Under Protocol 2, work on materials that are imported from another member state is subject to the zero rate, if the resulting finished products are then exported outside the territory of the Customs Union. The application of the zero VAT rate to these services must generally be confirmed by the documents listed in Protocol 2.