Changes in the terms on which foreign citizens may stay in Russia Pepeliaev Group advises on the entry into force of Federal Law No. 385 “On amending certain laws of the Russian Federation”on 15 February 2011. The new provisions concern the terms on which foreign citizens may stay in Russia.

On liberalising procedures connected with issuing a transaction passport and providing supporting documents Pepeliaev Group highlights that the Russian Central Bank's Instruction No. 2557-U dated 25 December 2010 amended the Bank of Russia’s Regulation No. 117-I dated 15 June 2004 “On the procedure for residents and non-residents to provide authorised banks with documents and information when carrying out foreign currency transactions, and the procedure for authorised banks to keep records of foreign currency transactions and to issue transaction passports”.

Russia streamlines customs procedures for goods originating and imported into Russia from Turkey Pepeliaev Group advises that Federal Customs Service Order No. 2171 dated 18 November 2010 enacted the Instruction on the Specifics of Certain Procedures Performed by Customs Officers with respect to Goods Originating and Imported into the Russian Federation from the Republic of Turkey.

Russian Court decision on permanent establishments On December 8, 2010, the Moscow State Commercial Court issued its decision in a case involving an analysis of whether the collection of information can constitute a permanent establishment (PE) under domestic law and the double tax treaty between Russia and USA dated June 17, 1992.

The customs authorities receive additional powers for control at Russian state border checkpoints Pepeliaev Group advises that Federal Law No. 394-FZ dated 28 December 2010 introduces amendments to some Russian laws whereby the responsibility to perform certain types of state control is transferred to the Russian customs authorities.

Planned amendments to civil legislation on intellectual property issues Pepeliaev Group notes that it is intended to amend, in the near future, the Russian Civil Code’s provisions on intellectual property issues.

Amendments to the Russian Tax Code to support investment activity and innovation

30 December 2010 saw the publication of Federal Law No. 395-FZ dated 28 December 2010 “On amending the second part of the Tax Code of the Russian Federation and specific laws of the Russian Federation”. These amendments touch on different tax issues, among the most interesting of which are a company being able not to pay profit tax (or individual being able not to pay income tax) on transactions involving securities or participation interests the taxpayer has owned in Russian companies for a protracted time; taxpayers having wider possibilities in terms of determining the service life of non-tangible assets; and eliminating the uncertainty in converting advance payments received in foreign currency when calculating profit tax.

New ground for exemption from profits tax in an amicable increase of net assets Federal Law No. 409-FZ dated 28 December 2010 has brought in a new ground for exemption from profits tax in an amicable increase of net assets. This law mainly deals with the regulation of relations between companies and their shareholders relating to profit distributed but not claimed (i.e. unclaimed dividends). However, some of the amendments brought in by the law go beyond the scope of this issue.

Amending Code of Administrative Offences to establish liability for a breach of the Law on Trade Pepeliaev Group advises that, on 1 January 2011, Federal Law No. 411-FZ “On amending the Code of Administrative Offences of the Russian Federation” dated 28 December 2011actually came into force. The Law contains amendments to the Code of Administrative Offences (the “CoAO”) establishing a fine of up to 5 million roubles for a breach of the compulsory requirements of Federal Law No. 381-FZ “On the fundamentals of state regulation of trade in the Russian Federation” dated 28 December 2009.

Compliance with requirements of law on personal data in respect of information systems postponed by a further six month Pepeliaev Group notes that Federal Law No. 152-FZ “On personal data” dated 27 July 2006 has been amended so as to extend to 1 July 2011 the deadline for making personal data information systems comply with the Law’s requirements.

Taxation of a unit investment trust’s property – the rules have changed Pepeliaev Group notes that Federal Law No. 308-FZ dated 27 November 2010 has amended the chapter of the Russian Tax Code dealing with property tax and land tax. In particular, these amendments make property tax and land tax applicable to the property and land plots of unit investment trusts. The law comes into force on 1 January 2011.

Types of work and services liable to VAT at zero rate On 27 November 2010, Federal Law No. 309-FZ “On amending chapter 21 of the second part of the Russian Tax Code” was adopted. It significantly amends and adds to the series of provisions of the Tax Code governing the application of zero rate VAT to work and services connected with the export of goods (articles 153, 164 165 and 167 of the Tax Code). The new law will come into force on 1 January 2011.