The report set measures to ensure implementation of the law in question in 2005-2006. In particular, it is noted that a draft federal law has been prepared currently, under which citizens who have the right to receive the government social assistance as a package of social services, may free of charge receive in 2006 (in addition to the pharmacological support) medical items, while the disabled children – specialized clinical nutrition. Also, proposals have been prepared to increase the cost of bed-day of persons, who stay in sanatorium-resort institution and who have the right for the government social assistance. A mechanism has been set for realization of annual money payment to persons awarded by a badge "Honorary donor of Russia" or ""Honorary donor of the USSR".
According to preliminary estimate, the nominal charged average monthly wage of a worker will grow in 2005 (as compared to 2004) by a quarter and will make roughly Rb 8.5 thousand. During it is forecasted an increase of the nominal charged average monthly wage for a worker by 19-20%.
According to the report, the State Duma of the RF adopted in the first reading the draft Federal law "On introducing changes in article 15 of the Federal law "On State allowances to citizens with children ", which provides for an increase of the size of monthly allowance for a period of child care leave until a child’s attaining an age of a year and a half from Rb 500 to Rb 700 and an increase of allowance in a single payment at birth of boys from Rb 6000 to Rb 8000. Additional expenditures on newly assumed responsibilities for 2006 are estimated as Rb 5.3 bn.
In 2006, for funding of monthly payments, including a package of social services, it is planned to allocate from the federal budget as much as Rb 209 399 324.8 thousand. The above figure includes payments at the rate of 166 858 409.9 rubles, as well as the.cost of social services provided to categories of population being recipients of benefits at the rate of Rb 42 540 914.9 thousand. In 2006 the citizens, who have the right voluntarily to receive the government social assistance, may receive a package of social services (fully or partially) or money compensation instead of it. According to the data of Pension Fund of the RF, as of October 1, 2005, as many as 7 837 190 persons reserved the right to receiving a package of social services in 2006, which make 54% of the number of per-sons who had this right in 2005.
An overview of the normative acts concerning taxation issues that were adopted in October – November 1. In Letter of the RF Federal Tax Service (FTS) No MM-8-02/326 of 31 October 2005, the issues of recording, for purposes of taxation, of author’s royalties are explained. While the right to a patent is determined in accordance with Item 2 of Article of the Patent Law of the Russian federation No 35171 of 23 September 1992 (that is, it is to belong to the employer), the author’s royalties being paid by an organization to its employee for intellectual property created within the framework of the employee’s execution of his or her work duties may diminish the tax base of the profits tax within the labor costs, in the event when the said payments (or royalties) are envisaged in the labor contract.
2. In Letter of the RF FTS No ММ-6-02/916 of 31 October 2005, the procedure of making settlements in respect to the profits tax is explained, relating to those instances when several autonomous subdivisions of a taxpayer are located on the territory of one subject of the Federation. Firstly, the taxpayer has the right not to distribute profit among each of the autonomous subdivisions, but instead to select a single one, through which the tax is to be paid to the budget of the Federation’s subject (the responsible autonomous subdivision). Secondly, the taxpayer can make the decision that the payments of the profit tax on organizations on behalf of all its autonomous subdivisions registered with the tax agencies of the same RF subject be transferred through this particular autonomous subdivision.
This procedure is to be extended to the legal relations that will arise from 1 January 2006.
3.By Letter of the RF Central Bank No 135-T of 31 October 2005, it is permitted, when forming mandatory reserves, to diminish the amount of obligations of credit institutions in respect to their issued securities by the amount of investments made by the credit institutions in the bonds of the Bank of Russia. (The amounts of mandatory reserves are to be taken into account when determining the taxable base for the profit tax).
4. In Letter of the RF FTS No 04-2-03/156 of 26 October 2005 the issue concerning the withholding of the income tax from physical persons by the representative of a foreign company, which is not engaged in entrepreneurial activities on the territory of the RF, is explained.
The RF Tax Code is a consolidated document, wherein all terminology is uniform. The definition of a standing representative in Chapter 25 can be applied to formulate the relations arising in respect to other taxes. This standing representative (even if it is not engaged in entrepreneurial activities) should be classified as a tax agent in respect to the personal income tax payable by its employees.
The representative is obliged to transfer the income tax from physical persons to the budget on a timely basis, to keep individual records on each employee of the incomes paid and the taxes transferred to the budget, and to submit to the tax agency at the place of its location the documents necessary for effectuating the supervision over the correctness of calculating, withholding and transferring the tax. If these requirements are complied with by the representative, no claims can be made to the physical persons being employed by the representative for their failure to submit tax declarations.
L. Anisimova An overview of economic legislation introduced in November In November, the following amendments were introduced into existing legislation: the amendments to Part 1 of the RF Tax Code, which consolidated the right of the tax agencies to impose taxes and fines on organizations and individual entrepreneurs in an extrajudicial procedure within the established limits; amendments to the Law “On the customs tariff”, in the part of making more precise the formulation of the fundamental principles for determining the customs value of the commodities imported into the RF’s customs territory; the RF Government approved The Concept of Administrative Reform in the Years 2006-2008; the Tax Service clarified the procedure for the payment of the profit tax on organizations by those organizations which have several autonomous subdivisions on the territory of one RF subject; the deflator coefficient for the year 2006 was established, which is necessary for the indexation of the marginal income level applied for limiting the right to switch over to and (or) to apply the simplified taxation system.
I. FEDERAL LAWS of the Russian Federation 1. “ON MAKING AMENDMENTS TO SOME LEGISLATIVE ACTS OF THE RUSSIAN FEDERATION, AND ON RECOGNIZING AS NULL AND VOID SOME PROVISIONS OF THE LEGISLATIVE ACTS OF THE RUSSIAN FEDERATION, IN CONNECTION WITH THE INTRODUCTION OF MEASURES DESIGNED TO IMPROVE THE ADMINISTRATIVE PROCEDURES FOR DISPUTE SETTLEMENT”, No 137-FZ of 4 November To come into force from 1 January 2006.
Amendments were made to Part 1 of the RF Tax Code (TC). The new version contains articles concerning the recovery of a tax, a levy, as well as penalties and fines, from the money funds kept on the accounts with banks of a taxpayer - organization, an individual entrepreneur or a tax agent - organization, an individual entrepreneur, from other property of a taxpayer - organization, an individual entrepreneur; from property of a taxpayer – physical person who is not an individual entrepreneur. Thus, the procedure for recovering arrears of payments and penalties, as well as tax duties and taxes, which is currently being applied to organizations, has been extended also to individual entrepreneurs.
Part 1 of the RF TC is augmented by the new Article 103-1, which consolidates the right of the tax agencies on their own, without appealing to a court of justice, to impose tax sanctions on organizations and individual entrepreneurs in the event when the amount of a fine imposed on individual entrepreneurs is not in excess of 5000 roubles on each tax during a tax period, and in respect to organizations – 50000 roubles on each tax during a tax period. When an appeal is launched against a decision concerning the imposition of a sanction to a superior tax agency, the execution of the decision is to be automatically suspended. In the event when an appeal against the decision is submitted to an arbitration court, its execution can be suspended in accordance with the procedure established by legislation on arbitration procedure.
Also, amendments were made to Federal Law No 167-FZ of 15 December 12 2001 “On mandatory pension insurance in the Russian Federation”. The right to recover arrears of insurance contributions in the event when the amount of the insurance contributions due to be paid, in the instance of individual entrepreneurs, in not in excess of 5000 roubles, and in the instance of juridical persons – of roubles, is granted to the territorial agencies of the Pension Fund, on the basis of a decision made by these agencies. In the event when the amount due is in excess of the said amounts, the recovery of the arrears is to be effectuated by the territorial agencies of the Pension Fund in a judicial proceeding.
2. “ON MAKING AMENDMENTS TO LAW OF THE RUSSIAN FEDERATION “ON THE CUSTOMS TARIFF” NO 144-FZ OF 8 NOVEMBER To come into force from 1 July 2006.
The amendments made to the Law are concerned with the basic notions applied in the Law, as well as the fundamental principles for determining the customs value of commodities being imported onto the customs territory of the Russian Federation. The new version contains some articles concerning the characteristics of the methods to be applied when determining the customs value of commodities. Besides, the Law is augmented by the new Article 19.1, which regulates the procedure of making additional surcharges on the price actually paid or to be paid.
Section V of the Law, entitled “Determination of the country of a commodity’s origin”, is recognized as null and void, because from January 2004 all issues pertaining to determining the origin country of the commodities being carried over the customs border have been subject to regulation by Paragraph 1 of Article 6 of the RF Tax Code.
II. REGULATIONS of the Government of the Russian Federation 1. “ON THE CONCEPT OF ADMINISTRATIVE REFORM IN THE RUSSIAN FEDERATION IN THE YEARS 2006 – 2008” No 1789-R of 25 October The RF Government approved The Concept of Administrative Reform in the Russian Federation in the Years 2006-2008. The decisions made concerning the implementation of administrative reform in 2003-2005 are analyzed. The reform’s main directions in 2006-2008 are determined.
The goals of administrative reform in the Russian Federation set for the years 2006 - 2008 are as follows: the improvement of quality and availability of public services; restrictions on the State’s interference with the economic activity of subjects of entrepreneurship, including the discontinuation of excessive state regulation; the improvement of the efficiency of bodies of executive authority in their activity.
The target indices set for estimating the achievement of administrative reform’s goals (the estimation, by citizens, of the activity of bodies of executive authority pertaining to the provision of public services; the level of costs borne by businesses when overcoming the administrative barriers; the Russian Federation’s place in the international ratings of the quality of state administration).
In order to achieve these goals, it is suggested that the following tasks are to be performed: to implement, in the practice of bodies of executive authority, performance-based principles and management procedures; to develop and implement standards for the public services rendered by bodies of executive authority, as well as administrative regulations in bodies of executive authority; to optimize the functioning of bodies of executive authority, and to introduce mechanisms for eliminating corruption in the said bodies’ spheres of activity; to improve the efficiency of interaction between bodies of executive authority and civil society, as well as to increase transparency of the activity of bodies of executive authority; to modernize the system of information support for bodies of executive authority;
to provide the necessary organizational, informational, resource and manpower backing to administrative reform; to improve the mechanisms for sharing successful experience achieved in government administration.
The plan of measures designed to implement this reform, with a specified schedule for introducing the said measures, and the nomination of responsible executives.
III. DECREES of the Government of the Russian Federation 1. “ON THE INVESTMENT FUND OF THE RUSSIAN FEDERATION” No 694 of 23 November To come into force from 1 January 2006.
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