16.09.2016 — Offshore Update to Take Place as Planned

By October 1, 2016, the Federal Tax Service (FTS) will have reviewed the existing list of the states and territories that do not support exchange of tax information relating to individuals and legal entities with the Russian Federation. Tax specialists hope that constant update of the offshore zones will prevent controlled foreign companies (CFS) from avoiding or concealing their income taxes.

For instance, South Korea was included in the list of “opaque” states, although Russian businessmen maintain well-established business relations with this state in the East. FTS also proposed to exclude from the list Bermudas and the Cayman Islands, Aruba, the Isle of Man and Guernsey, as well as Hong Kong which has passed all the required procedures for the entry into force of the DTT with Russia.

15.09.2016 — Landmark Case: Russian Citizen vs Foreign State

The amendments introducing limitations in use of jurisdictional immunity, which came into force on January 1, 2016, allowed the former banker and the shareholder of the Lithuanian bank Snoras Vladimir Antonov to initiate a lawsuit against the foreign state represented by the Ministry of Justice of the Republic Lithuania. The case will be considered by the Arbitration Court of the city of Moscow. The initial hearing date has been set for September 22.

In 2011 the government of Lithuania nationalized the Snoras bank, which was part of the Convers Group (68,10% of bank shares belonged to Vladimir Antonov). At this time Mr. Antonov was under investigation and had no opportunity to prove that the nationalization procedure was conducted with violation of the law.

Now, the plaintiff wants to recover over 40 billion dollars from Lithuanian authorities including 20,2 billion dollars as a property damage and 19,9 billion dollars as a compensation for loss of goodwill, inflicted upon Antonov due to the saying of president of Lithuania Dalia Grybauskaite.

In spite of the fact that similar practice exists in other countries, this case is precedential for Russia and will most likely determine the further course of practice for similar cases.

14.09.2016 — Bank of Russia Reduced Its Key Interest Rate to 10,0%

At the regular meeting of the Board of Directors of the Bank of Russia it was decided to reduce the key interest rate by 0,5% - from 10,5% to 10,0%. Despite positive dynamics in the inflation rates the Central Bank plans to keep the key interest rate at this level until the end of 2016 assuming its next reduction only in 2017.

Such decision of the Central Bank is first of all directed towards protection of the financial sector preventing profit losses in the fourth quarter of 2016. Besides, the Bank of Russia seems to be reluctant to further reduction of the rate explaining its diligence with uncertain development of oil prices and obscurity of the budget policy ahead of the 2018 elections.

Lower key interest rate of the Central Bank can have positive influence on Russian economy since it means cheaper credits for legal entities and individuals. On the other hand, such decision can negatively affect the motivation of the market participants to store their money in banks, since deposit rates will fall proportionately.  

13.09.2016 — Ministry for Civil Defense and Emergency Situations to Reduce Administrative Barriers for Small and Medium-Sized Businesses

The Russian government continues to lower the administrative barriers for small and medium-sized businesses committed to fostering an investment-friendly climate in Russia. Thus, the Chief of the Ministry for Emergency Situations of Russia (MES) Vladimir Puchkov has signed the order according to which small and medium-sized enterprises are excluded from the annual inspection schedule.

Be reminded that earlier this year the Russian government prohibited the local authorities to initiate unscheduled fire inspections of small and medium-sized businesses having left this prerogative to the MES. Now the MES will be able to initiate inspections on its own initiative or based on information provided by the organizations, citizens or media only if actual threat for life or health is established.

Likewise, the department determined that generally no scheduled inspections should be conducted. However, not without exceptions. For instance, MES will conduct scheduled inspections of small and medium-sized businesses if their activities involve summer camps, provision of health care and some other cases determined by the governmental decree.

12.09.2016 — Payments for Negative Impact on Environment to Become Lower

The Government of Russia has approved new payment rates for negative impact on the environment and additional factors proposed by the Ministry for Natural Resources. Now the companies are able to adjust independently the payment rates with the expenditures for environmental programs and to apply stimulating payment ratios for waste disposal, for instance, in case of neutralization of waste products or disposal of previously collected waste. According to experts, such benefits for legal entities and organizations can halve the payment as compared to 2015.

Payment rates are determined for each pollutant and also for waste disposal according to its hazard class. The additional factor 2 is established on the territories and objects under protection of federal laws, including reserves and national parks, the Baikal natural area and the Lake Baikal. The factor 0,3, can be applied by payers for waste disposal at company’s own facilities.

Be reminded that the Federal Law No. 219-FZ dated July 21, 2014, amended the rules for calculation and collection of payments for negative impact on the environment, and in particular established such payment rates.