07.04.2017 — Outlook for GDP Growth In 2017 is Enhanced From 0,6% To 2%

At the first quarter-end of 2017 the Ministry of Economic Development recognized positive changes in the Russian economy and confirmed that the phase of active economic growth has begun. In this respect the Ministry amended its forecasts for 2017 in relation to the GDP growth (from 0,6% to 2%), the inflation rate (from 4% to 3,8%), the growth of industrial production (from 1,1% to 2%) and investment growth (from -0,5% to 2%).

According to Maxim Oreshkin, the head of the Ministry, the forecast is based on the suggestion that the international sanctions against Russia remain in place. Furthermore, the ministry calculated the parameters based on the oil prices of $40,8-42,4 per barrel and on the condition that the OPEC countries refuse to reduce the oil extraction in July 2017.

06.04.2017 — Federal Antimonopoly Service Suggests to Impose Turnover-Based Fines for Impeding Conduction of Unscheduled Inspections

The Federal Antimonopoly Service suggests that amendments shall be introduced to the Code of the Russian Federation on Administrative Offenses concerning the penalties for the conduction of unscheduled inspections by the antimonopoly authorities. The bill provides for turnover-based fines amounting to 0,5-1% of the company’s revenue.

At the present moment the fine for the companies for impeding the conduction of unscheduled inspection amounts to 5,000-10,000 Russian rubles (Article 19.41 (1) of the Code of the Russian Federation on Administrative Offenses). Such an insignificant amount of liability encourages the company’s violations, since it is more cost-efficient to impede the conduction of the inspections and pay a small fine than to run the risk of being subjected to a turn-over based fine should the cartel agreement be revealed.

Therefore, the Federal Antimonopoly Service insists that the turnover-based fines shall be established for the companies’ impeding the conduction of unscheduled inspections or any obstruction to other legal activities of the officials of the antimonopoly service, aimed at antitrust control. As the head of the Federal Antimonopoly Service said, this legislative initiative had been inspired by the situation with Lenovo, where the company entered into cartel agreement with HP when supplying laptops for state needs for amount of 1 bln. Russian rubles, and resisted to the sudden visit of the officials of the antimonopoly authority.

05.04.2017 — Ministry of Economic Development Suggests Prolonging “Supervisory Vacation”

The Ministry of Economic Development suggests that the “supervisory vacation”, the term for which expires on 31 December 2018, shall be prolonged for an indefinite term in relation to those types of control, where the risk-oriented approach is not introduced.

Let us please remind you that the law providing for the introduction of the risk-oriented approach in the conduction of inspections has been introduced already. According to this law, the companies are classified in accordance with the risk category and the hazard posed by their activities, at that the periodicity and the extent of the inspection will be dependent on the risk category assigned. At the present moment the risk-oriented approach has been introduced in ecological, fire, sanitary and epidemiological supervision and supervision in the sphere of telecommunications. It is planned to introduce the risk-oriented approach also in other thirty-three spheres of control and supervision activities.

In this respect the Ministry of Economic Development suggests that the prolongation of the planned inspections moratorium, established by the Government in respect of the small enterprises till 31 December 2018, shall be linked with the introduction of the risk-oriented approach. Should the risk-oriented approach not be introduced in one or another sphere yet, until it is introduced, the planned inspections shall be forbidden.

Furthermore, the Ministry of Economic Development spoke in favor of prolonging the “supervisory vacation” for an indefinite term, if they prove to be effective and expand them to medium-sized enterprises.

04.04.2017 — Supreme Court Is To Determine Amount of Surety’s Liability for Debts Denominated in Foreign Currency

The Supreme Court has set for hearing a matter concerning the dispute between a bank and a surety in a loan contract, where the main issue is the amount of the surety’s liability when the debtor goes bankrupt and the debt was denominated in foreign currency. Particularly, the Supreme Court is to determine the amount of the surety’s liability when the debt is denominated in foreign currency – whether it shall be limited by (1) the creditor’s total claims to the insolvent debtor denominated in Russian rubles at the currency exchange rate as of the date such claims were included to the register of the creditor’s claims or (2) the total amount of debt converted into Russian rubles at the exchange rates at the moment of payment.

In this case the bank (creditor) claims for the repayment of the debt in Russian Rubles at the current exchange rates, thus as of the moment of payment, arguing that un fact the purpose of the suretyship is the protection of the creditor from the risk of the debtor’s bankruptcy (case No. А40-231538/2015). Therefore the bank bases its claims on the fact that since the credit has been provided in Euro, it shall be repaid by the surety in the total amount (154 thousand Euro) at the current exchange rates, if the payment is made in Rubles.

However, the lower courts rejected the above reasoning, and ruled that taking into account the fact that the debtor became bankrupt and the bank’s claims to the debtor have been included in the register of the creditor’s claims in the amount of 7,1 mln. Russian Rubles, the surety’s liability is also limited by this amount, because the suretyship is accessory to the principal debt. At that due to such a re-calculation of indebtedness the bank lost more than 20% of the amount of debt.

The issue is to be finally resolved by the Supreme Court that will adjudicate that dispute on 13 April.

03.04.2017 — Sanctioned Businessmen Are Released From Taxes In Russia

The sanctioned businessmen have been granted the opportunity to get the tax release in Russia. Even if they reside in Russia for 183 days or longer they are offered the opportunity to declare that they are tax residents of another country by filing the respective application with the Federal Tax Service, what will allow them to legally avoid taxes payable to the Russian budget.

To take advantage of this opportunity businessmen shall file an application with the Federal Tax Service by 1 July 2017. At that to refuse from Russian tax residency they will have to prove that they pay taxes in some other country.

This law shall be applied retrospectively from 1 January 2014, what will allow the applicants to have their taxes re-calculated for the previous several years and get returned the overpaid taxes for the periods 2014-2016, if applicable.