As the new classifier has been adopted with certain deviations from the established procedure, the Federal Tax Service once again emphasizes that, for purposes of state registration of juridical persons, individual entrepreneurs and peasant holdings (or farms), the ARCTEA OK 029-2001 (SCEA, version 1), i.e., the old version of the classifier should be applied.
12. Letter of the RF Ministry of Finance and the RF Federal Tax Service of 25 September 2008, No ShT-6-3/670@, clarifies the issue of taxation of subsidies provided for purposes of acquiring or constructing a dwelling.
Previously (before 1 January 2008), a housing construction and acquisition grant provided at the expense of budgets of the RF budgetary system to citizens, including to young families for the purpose of acquiring a dwelling, was not classed with tax-exempt payments.
However, when calculating the amount of personal income tax imposed on housing construction and acquisition grants, a taxpayer was granted a property tax deduction in the amount of the actual expenses, but not in excess of 1,000,000 rubles. The benefit being introduced with regard to the housing construction and acquisition grant is extended to those legal relations that have emerged since January 2005, but cannot be applied to persons who received the grant before 01 January 2008 and materialized their right to the property tax deduction.
An overview of budget legislation M. Goldin In October 2008, there were the following developments in the sphere of budget legislation: by the RF Government’s Decrees the rules for making agreements between the federal body of executive authority and the supreme executive body of state authority of a subject of the Russian Federation concerning the allocation of subsidies to the federal budget from a regional budget were approved;
changes were introduced in the procedure for placing the resources of the National Welfare Fund;
the Ministry of Finance of Russia approved the accounting procedure for recording the receipt of revenues in the RF budget system and their distribution between the budgets of different levels..
By Decree of the RF Government of 13 October 2008, No 752, “The Rules for making agreements between the federal body of executive authority and the supreme executive body of state authority of a subject of the Russian Federation concerning the granting of subsidies to the federal budget from the budget of the Russian Federation’s subject” were approved. These Rules determine the procedure for making agreements concerning the granting of subsidies to the federal budget from the budget of a RF subject. Subsidies are to be granted for the purpose of co-financing the fulfillment of the Russian Federation’s spending obligations arising during the execution of powers delegated to the federal bodies of executive authority in instances determined by federal laws. An agreement concerning the granting of subsidies, made between the federal body of executive authority and the supreme executive body of state authority of a RF subject must contain, in particular, the terms for granting and spending a subsidy, the volume of budget allocations, the schedule of payment transfers, and the time frames and procedure for submitting the reports on the execution of the federal budget expenditures to be covered by subsidy.
Decree of the RF Government of 15 October 2008, No 766, introduced certain alterations into Decree of the RF Government of 19 January 2008, No 18, concerning the procedure for the placement of the resources of the National Welfare Fund. In accordance with these alterations, the National Welfare Fund’s resources can be invested not only in the debt obligations of foreign states, foreign state agencies and central banks, international financial institutions, or placed with foreign banks and credit institutions, but also with Russian banks and credit institutions, as well as with the state corporation “Bank for Development and Foreign Trade” (Vneshekonombank); besides, they can be invested in debt obligations and shares issued by juridical persons, or in stakes in investment funds. The Decree also established the maximum shares of the aforesaid assets in the total bulk of the Fund’s resources and the requirements to these assets (rating of the issuers, issue volumes of the debt obligations in circulation), as well as the requirements to be complied with when placing the Fund’s resources with Vneshekonombank.
By Order of the Ministry of Finance of Russia of 5 September 2008, No 92n, the procedure for recording, by the Federal Treasury, of the receipts of the budget system of the Russian Federation and their distribution between the budgets of the RF budgetary system. The new procedure is to come into force from 1 January 2009.
The Procedure is augmented by provisions concerning the posting and recording the transactions with oil and gas revenues (or transfers). Thus, in particular, the list of documents needed for properly entering in records the receipts is supplemented by the accounting documents and payment orders of issued by banks in regard of partial payments under collection instructions (attached to the statement of the Federal Treasury’s account), which provide the foundation for recording oil and gas revenues (or transfers). The order of priority is established for the actions to be undertaken by the Federal Treasury in order to enter such receipts into records, as well as the reporting form for recording the oil and gas revenues and transfers.
By Order of the Ministry of Finance of Russia of 30 September 2008, No 104n, “On the procedure for achieving the budget allocations and budget obligation limits when organizing the execution of the federal budget by items of expenditure and sources of financing to cover federal budget deficit and assignment of budget allocations, and the budget obligation limits when reorganizing the participants in the budgeting process at the federal level”, from 1 January 2009 a new procedure is established for regulating the interaction between the participants in the budgeting process during the transfer of budget data (on budget allocations and budget obligation limits).
The new procedure determines the rules for the interaction between the participants in the budgeting process (the Ministry of Finance of Russia, the Federal Treasury and its territorial agencies, the principal managers and principal administrators of the sources of financing used to cover the federal budget deficit, and managers and recipients of federal budget resources). The document also contains recommendations concerning the filling up of the documents applied in the process of interaction between the participants in the budgeting process during the transfer of budget data, with the relevant documentation forms attached to the document.
The 2008 financial crisis: a new round of state expansion A. Radygin The author makes an attempt at preliminary estimating the 2008 financial crisis’ contribution to the development of a new round of state expansion in the property sphere. Special attention is given to the issues of state companies’ external debt and to the institutional contest of the anti-crisis measures that are currently being implemented.
Even superficial observations have made it absolutely clear that the 2008 financial crisis has been leading to a considerable intensification of at least two interconnected processes in the sphere of property relations.
Firstly, a new impetus is being given to the general process of property redistribution throughout the Russian economy as a whole – as it already happened once, after the 1997-98 crisis. Although no statistical data are available (due to the “confidential” nature of such information), enforced sales of securities used as collateral for bank credits (margin calls) of many Russian companies have already become an important channel for redistribution of assets (including foreign assets). It is also apparent that in a situation of the general slump on the market of mergers and takeovers, which is occurring against the background of financial crisis, this channel remains open first of all for those economic subjects who has managed to hold on to their liquid assets and this make use of this fact in order to acquire the assets rapidly falling in price (between May and October 2008, the capitalization of the Russian stock market fell by 60%).
Secondly, the specific feature of the current crisis (in contradistinction to the 1997-98 one) is the active participation of the State and the state-controlled economic subjects in the process of property redistribution. Moreover, the present situation is becoming, in fact, a mirror image of the “legendary” period of pledge auctions (November – December 1995), when the government, in order to replenish the budget and to meet its obligations, was borrowing funds from private sources against the collateral of shares in 12 big (strategic) Russian enterprises, including “Ukos”, “LUKoil”, “Noril’skii nikel’”, “Novolipetskii metallurgicheskii kombinat”, etc. None of those pseudo-credits were repaid, which meant that those blocks of shares were actually privatized. According to the absolute majority of estimates, this was done at prices that were greatly underestimated.
In autumn 2008, the roles were completely reversed: for the publicly proclaimed reasons of “economic security”, the State expressed its readiness to refinance the external debts of state companies in those cases when a failure to repay liabilities could have resulted in a loss of national control (on the part of the State or national capital) over strategic assets. This means, in particular, that the objects of potential actual nationalization could become not only the securities of the companies belonging to the state sector in the strict sense of the word (when the State’s stake exceeds 50%), but also the stra tegic companies – however vague this term might be in Russian legal relations – belonging to the private sector.
As early as 2006, it was pointed out in IET’s publications21 that further prospects for the development of companies with state stakes, which had become the spearhead of state expansion, would be determined, among other things, by their ability to repay the credits granted to them, which in turn depended on the level of international prices of energy carriers. The most pessimistic forecast was based on a significant drop in energy carriers’ prices, which greatly influenced the business of the biggest state debtor companies. It was noted that a fall in oil prices would lead to a diminished availability of financial resources for the purpose of refinancing the accumulated outstanding debt; as a result, the price of servicing the attracted credits would go up. It was forecasted that in this situation there would be an outflow of short – term foreign capital and a contraction of the stock market, while the stock market would experience severe problems associated with shortage of liquid assets.
In 2000-05, the external debt of Russian state companies increased manifold - from 570 million USD in 2000 to 12 billion USD in 2005, which accounted, according to estimates, for 30 to 40% of the total volume of Russia’s external corporate indebtedness. In particular, in 2005 the external loans of Sberbank, Vneshtorgbank, Vneshekonombank and Rossel’khozbank amounted to approximately 6.billion USD (which accounted for about 36% of funds attracted by the Russian banking sector). The total volume of loans made by “Gazprom”, “Rosneft”, “Svkomflot”, OJSC “RZhD”, “Transneft” and “Alros” amounted to 28.2 billion USD. The year 2006 saw a new round of growth in indebtedness: the external debts of oil companies and commercial banks amounted to 135.4 and 78.5 billion USD respectively (according to estimates, state companies accounted for over 50% of Russian external corporate indebtedness).
According to the Bank of Russia, by 1 July 2008, the joint external debt of Russian companies, banks and bodies of state administration had climbed to 527.1 billion USD (its rise over Q2 alone amounted to almost 50 billion USD). The external debt of financial institutions amounted to 191.3 billion USD (in Q2 it rose by more than 21 billion USD). The indebtedness of oil companies, not counting their liabilities to direct investors, amounted to 263 billion USD (it Q 2 it grew by almost 21 billion USD). At the same time, as of 1 July 2008, Russia’s external national debt amounted to almost 41 billion USD. According to estimates, at the present time the debts of state companies and banks (for example, “Gazprom” owes about 60 billion USD, “Rosneft” – about 26 billion, and Vneshtorgbank – 11.4 billion) account for approximately 50 – 60% of Russia’s total corporate indebtedness 22.
By the adopted formal characteristics (the ratio between the volume of debt and the current profit of a company), the biggest Russian debtor companies have not reached the critical “threshold” as yet.
See The Russian Economy in 2005. Trends and Prospects. Moscow: IET. 2006; Interview with Ye. T. Gaidar / Ekspert. 2006, No 3, p. 6.