The Ministry of Finance refused to provide information on Russian nationals, who exercised the right to declare they are not Russian tax residents and legally avoid taxes in Russia due to the fact that they were included in the sanction lists. In the view of the Ministry, such information constitutes tax secret.

In the previous newsletter, we informed that the sanctioned businessman have been granted the opportunity to get the tax release in Russia and get their taxes returned as a result of fling the respective application to the Federal Tax Service.

Recently, member of the State Duma Valeriy Oreshkin filed an official request to the Prime Minister Dmitry Medvedev to publish the list of the Russian nationals, who have benefited from these legislative amendments. However, the Ministry of Finance refused to provide information on these persons, stating that this information constitutes tax secret.

In the course of the state control and supervision reform, the Government intends to lower the administrative burden on businesses by implementing the “one in – two out” principle, in accordance with which when one new requirement is imposed, two other requirements have to be abolished.

Currently, the Ministry for the Economic Development is working on the reform of control and supervision. The main goal of the reform is to lower the excessive regulation of business activities. The positive effect of the one in – two out principle is the abolishment of obsolete requirements for the entrepreneurs and the overall administrative burden at the same time when new requirements are imposed. The principle has been declared in the passport of the program for priority reform of state control and supervision (http://minec.government-nnov.ru/?id=87374).

Moreover, the program for the reform provides for lowering the administrative burden for the entrepreneurs by 20% by the end of 2016 and by 50% by the end of 2025.

A recently adopted Government Decree dated 15 May 2017 No. 570 provides that contractors under state construction contracts shall perform at least on their own, without engaging subcontractors, works that amount to at least 15% of the total contract price (25% starting from July 2018). However, the contractor is entitled to choose the works to perform on its own from the relevant list on its own discretion.

In accordance with the Decree, the governmental customers will include into the tender documentation the requirement that the general contractor shall perform certain works on its own, and not through subcontractors. At the same time, the general contractor is entitled to choose the works to perform on its own from the list of the works provided in the tender documentation. This list includes 34 types of works, in particular; preparatory, excavation works, piling works, works with load-bearing elements, roofing and sewage networks, systems of supply of water, gas, heat, estate maintenance works. However, the price of such works chosen by the general contractor for direct performance shall amount to at least 15% of the total price of the contract (from July 2018 – 25%).

The failure to meet the above requirements will result in fines amounting to 5% of the price of such works. It is expected that this Decree will promote from the transparency of the performance of state and municipal contracts and will struggle against the chains of subcontractors.

The Supreme Court prohibited the bank, which was affected by international economic sanctions, from prematurely terminating the lease agreement due to the fundamental change of circumstances (Article 451 of the Russian Civil Code).

A bank’s branch was leasing office premises from a sole entrepreneur. The term of the contract was until 2020, but after the international economic sanctions were imposed on the bank it attempted to terminate it prematurely. The bank believed that the sanctions constituted a fundamental change of circumstances, entitling it to prematurely terminate the contract under Article 451 of the Russian Civil Code. The lower courts of three instances agreed with the claimant and terminated the lease agreement, despite the lessor’s objections (case No. А39-5782/2015).

Still, the Judicial Panel for the Economic Disputes of the Supreme Court refused to terminate the contract and upheld the position of the lessor, who argued that the world economic crisis, the lack of crediting and the lessee’s financial hardship cannot be regarded as a fundamental change of circumstances for the purposes of premature termination of the lease agreement. Consequently, the Supreme Court reversed the decisions of the lower courts and dismissed the bank’s claim.

In one of the recently adjudicated cases, the Moscow City Court was to decide how many administrative decisions on the imposition of administrative liability shall be issued in case of labor law violations, and, consequently, whether the employer should be fined for each affected employee or for one instance of violation. Resolving the issue of revocation of the administrative decisions on the imposition of administrative liability, the Moscow City Court ruled that the fine shall be imposed only once irrespective of the number of employees, in relation to whom the company committed a violation of workplace safety regulations.

In this case, the company violated the legal requirements on the employees’ mandatory medical and psychiatric examination (Articles 212-213 of the Labor Code of the Russian Federation) and the prohibition on allowing employees who have not passed the medical and psychiatric examination to work. During the inspection, the State Labor Inspectorate noted that nine drivers were allowed to work although they have not passed the mandatory psychiatric examination. Consequently, the inspector issued nine administrative decisions on the imposition of administrative liability under Article 5.27 (3) of the Code of Administrative Offences and imposed nine fines, RUB 110,000 each (approximately EUR 1,717).

The company believed that only one fine, and not nine, should have been imposed, and resorted to court. The Moscow City Court ruled in favor of the company saying that the committed violation is one single offence. Moreover, the Moscow City Court pointed out that the fact that the revealed violation concern different employees is not a ground for imposing separate punishments on the company in respect of each employee.

The new approach of the Moscow City Court may help companies to avoid paying multiple fines for the same violation. Besides, at the moment the controlling authorities often are of the opposite opinion, and to revoke the fines the company will need to resort to court.