24.06.2016 — Brexit: How Will UK’s Decision to Leave EU Affect Russia?
As a result of the referendum held on June 23, 2016, the majority voted for the UK’s withdrawal from the European Union. Although formally the referendum is not legally binding, it is expected that the UK Government will soon initiate bilateral negotiations with the EU member states regarding the exit conditions. This development will have both political and economic consequences for Russia.
First of all, the results of the referendum have already negatively affected the oil prices and respectively the ruble exchange rate. However, according to the Central Bank of Russia, such reaction to the referendum was quite expected and the volatility is short-term in nature.
The most negative consequence for Russia is probably the increasing instability in Europe. Despite the sanctions, 49% of the Russian commodity turnover accrues to major contractors in the EU. According to Herman Gref, top manager of Sberbank of Russia and a former Minister of Economics and Trade of Russia, Brexit could result in the decrease in the Russian GDP by as much as one percent.
However, there are also positive aspects to Brexit. According to some experts, fragility of such integration project as the EU can draw attention of foreign investors to Russia.
As for political consequences, Russia expects that in view of internal contradictions the EU will become less politicized and will reconsider its foreign policy, in particular with regard to Russia.
23.06.2016 — Russia Ratified Amendments to DTT with Singapore
With a focus on stimulation of capital investments from public funds the Council of Federation ratified the Protocol that amends the Russia-Singapore Double Taxation Treaty. The amendments clarify legal provisions regarding the taxation of interest, provide for the increased monitoring over the tax information exchange, and also simplify some procedures required to maintain self-sustainable business.
In particular, the amendments propose exemption from taxation at the payment source in one contracting state of the interest paid on the credits and loans granted by banks of the other contracting state.
Apart from that, the Article titled “Exchange of information” is amended to fully match the requirements of the Organization for Economic Cooperation and Development, Group 20 and the Global forum for transparency and exchange of tax information.
In addition, the parties established that it will not be necessary to legalize or apostille any documents and information issued and directed by competent authorities of either country for the purposes of executing the agreement.
22.06.2016 — Businessmen Are Granted Option of Opening Banking Account Remotely
The State Duma has approved in the third reading a bill according to which sole entrepreneurs, Russian companies, and also branches of foreign legal entities will be able to open banking accounts on the basis of state registration data and without personal presence of their representatives.
In order to open a banking account remotely, companies will need to provide the banks with their individual taxpayers number (INN), tax registration reason code and the date of registration. Earlier, the Federation Council has approved the bill that simplified the procedure for opening banking accounts, including at the registration of sole entrepreneurs and legal entities.
The Government hopes that implementation of these measures will accelerate the account opening process for sole entrepreneurs and organizations, and consequently help the country to perform better with the World Bank ranking “Doing Business” in its “Companies Registration” section.
21.06.2016 — Civil Code to Be Amended with Regard to Interest Accrual
Starting from August 2016, the statutory interest on late payments (Art. 395 of the Civil Code) will be calculated based on the key rate, while the interest for rightful use of monies (Art. 317.1 of the Civil Code) will no longer be applied “by default”.
The State Duma has passed in the third reading a bill that excludes accrual of interest for rightful use of money (until the payment is delayed), unless otherwise is specified by the agreement of the parties or, in some cases, by law. Thus, in the absence of an interest clause in the contract, no interest will be charged on non-delayed payments “by default”, as it used to be. Advocates of the reform asserted that contracting parties could negotiate interest themselves, and thus its accrual should not be imposed by law.
Art. 395 of the Civil Code was also amended. Statutory interest on late payments of interest for non-performance of a monetary obligation will now be calculated based on the key rate applicable at a given time (currently 10.5%). Previously, this interest was dependent on the average bank deposit rate for individuals in a particular territory, which was subject to criticism due to high differences in the rates among the Russian regions.