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Russian Legal Update 11/2012

21 December 2012

1. PUBLIC ADMINISTRATION

Updates Made to Rules on Urban Planning, Business, and Other Activities in Historic Settlements

The list of powers given to federal and regional authorities responsible for the preservation, use, popularization, and state protection of cultural monuments has been amended to include:

  • Approving the list of federal and regional historic settlements and their protection rules and borders
  • Approving general plan drafts and land use and planning regulations for historical federal and regional areas.

In addition, the definition of a “historic settlement” and the types of activities which may be conducted within them have been changed.

Federal Law No. 179-FZ dated 12.11.2012

Wording in Article on Currency Control and Regulation in Code of Administrative Offenses Updated:

New punishment has been envisaged in the Code of Administrative Offenses for breaches to currency regulation – a fine for citizens, official, and legal entities in the amount of 3/4ths – the full amount of the illegal currency operation.

Federal Law No. 194-FZ dated 12.11.2012

2. TAXATION

Cyprus Removed from “Black List” of Offshore Zones

These changes were entered into the list of states and territories providing preferential tax treatment or which do not require the disclosure and provision of information in relation to financial operations (offshore zones).

Order No. 115n of the Ministry of Finances of Russia dated 21.08.2012 and No. 115n

Tax Inspectors Recommended to Use Police in Certain Cases in Field Tax Audits

  • Under circumstances which show an illegal return or set off of VAT or excise taxes or if there are signs of an illegal claim for returns
  • If tax evasion is discovered
  • In cases of a fraudulent bankruptcy

Letter No. AS-4-2/14007@ of the Federal Tax Service of Russia dated 24.08.2012

Tax Authorities Publish Letter from Ministry of Finances Explaining Method for Notifying Banks on Exemption from Obligations under a Bank Guarantee Issued to a Taxpayer to Apply Self-Reporting Method for Compensation of VAT

The tax authorities are now obligated to send a statement in writing to banks issuing bank guarantees on the discharge of their obligations under bank guarantees within one day after sending the taxpayer giving the bank guarantee a statement on the absence of any breaches of tax law.

Letter No. ED-4-3/18105@ of the Federal Tax Service of Russia dated 25.10.2012

Tax Authorities Give Explanations on Personal Income Tax on Cars for Business Purposes:

  • Compensation for an employee’s use of a vehicle is not subject to personal income tax if he/she owns the vehicle
  • If the vehicle is used by the individual under a power of attorney, personal income tax should be applied as usual.

Letter No. ED-4-2/18123@ of the Federal Tax Service of Russia dated 25.10.2012

List of VAT-Free Equipment upon Import to Russia Expanded

New types of equipment have been added to the list of types of equipment which may be imported into Russia without the obligation to pay value-added tax.

Russian Government Decree No. 1144 dated 08.11.2012

3. EMPLOYMENT

Guarantees Given to Mothers upon Dismissal Apply Partially to Fathers

It is prohibited for an employer to terminate an employment contract with a parent or other legal guardian which is the sole breadwinner for a disabled child (under the age of eighteen) or any child under the age of three in a family of three or more children if the other parent or legal guardian is not employed.

Federal Law No. 188-FZ on Making Amendments to Article 261 of the Labor Code of the Russian Federation dated 12.11.2012

4. COURT PRACTICE

Execution of a License Agreement After the Import of a Good Does Not Exempt an Importer from Liability for the Illegal Use of a Trademark

If the importer does not have documents confirming its right to use a trademark when importing goods, the importer may be held administratively liable even if a license agreement is executed after this time.

Decree No. 3127/12 in Case No. А46-3464/2011 of the Presidium of the Supreme State Commercial (Arbitrazh) Court dated 04.09.2012

VAT is Not Considered When Calculating a Legal Fine for Breaches of Obligations by a Rail Carrier

Decree No. 5328/12 of the Presidium of the Supreme State Commercial (Arbitrazh) Court dated 11.09.2012

Supreme State Commercial (Arbitrazh) Court Interprets Certain Provisions in the Federal Law on Advertising:

  • The name and location of an organization and information for consumers at the location of sale are not considered to be advertisements.
  • The display of information which has a clear connotation with a certain good with the purpose of attracting attention to the item being advertised should be considered as an advertisement.
  • The period of limitations for administrative liability begins when the offense is committed, and not when the competition authorities make a decision regarding a breach of advertising law.
  • Advertisers, makers of advertisements, and disseminators of advertisements may all be held administratively liable for breaches to the Law on Advertisements.
  • There is no burden of proof regarding an advertisement’s breach or possible breach of the rights and legal interests of third parties in order to hold a party liable since a false or misleading advertisement in and of itself already threatens such a breach.
  • It is not only the customer ordering an advertisement which may be held liable for placing an advertisement without the required permit, but also the person physically making/installing the advertisement.
  • If the information required in an advertisement is displayed in such a way that it is not perceived or poorly perceived by the consumer and this results in a distortion of its meaning or in confusion for consumers, the information may be considered to be absent and the advertisement may be considered to be improper since it does not contain the required information.
  • Any use of comparisons with other goods in advertisements (i.e., best, first, number one, etc.) must contain criteria for using the comparison.

Decree No. 58 of the Plenum of the Supreme State Commercial (Arbitrazh) Court on Several Issues on the Practice of Commercial Courts Application of the Federal Law on Advertising dated 08.10.2012

Supreme State Commercial (Arbitrazh) Court Explains Rules on Summary Proceedings (Case Consideration in absentia):

  • Summary proceedings may be used if so determined by law or with the mutual consent of the parties. Judges may also propose that parties review a case through summary proceedings when preparing for court hearings.
  • If a third party files an independent claim to enter the case, the case must be considered according to the general rules for adversary or administrative proceedings.
  • The amounts of fines and interest should be considered when determining whether it is possible to review a claim through summary proceedings. The amount of a claim consisting of several independent claims is determined by the aggregate of all of the claims.
  • The state commercial court notifies the persons participating in the summary proceedings on the acceptance of the statement of claim or application and on the institution of proceedings, but does not notify the participants on the time or place of the court session or on any other individual procedural actions.
  • Settlement agreements must be reviewed in court proceedings within one month after the court receives a motion to approve them.
  • Cases reviewed through summary proceedings are only decided by the court after the expiration of the term set by the commercial court to receive evidence and other documents.
  • Case decisions decided through summary proceedings are published on the internet one day after they are decided.
  • Appeals of decisions made through summary proceedings are reviewed at court hearings set in the decision to accept the appeal for review.
  • Appeals and statements of defense are displayed on the internet.

Decree No. 62 of the Plenum of the Supreme State Commercial (Arbitrazh) Court on Several Issues on the Review by Commercial Courts of Cases Through Summary Proceedings dated 08.10.2012