1. Russia & USA: New & Possible Income Tax Changes Nancy MacEntee Director, Human Capital 6 October 2010

2. Presentation titlePage 2 What’s going on in Russia?

3. Presentation titlePage 3 Highly Qualified Specialist (HQS) Tax Regime ► Application of 13% tax rate: from when and to what income? ► Local payroll only? ► All earnings received by HQS? ► If employed by several companies operating in Russia and HQS in only one company? ► Possibility of refund if initially withheld at 30%? ► Can the 13% rate apply retroactively?

4. Presentation titlePage 4 HQS Tax Regime – tax planning opportunities ► More flexibility in timing of assignments ► Review of employment and split payroll structures ► Consider changing corporate presence in Russia from RO to branch

5. Presentation titlePage 5 What’s going on in the USA?

6. Presentation titlePage 6 Many tax cuts enacted under the Bush Administration are set to expire at year-end ► Congress has until December 31, 2010 to extend the 2001 and 2003 tax cuts or let them expire ► President Obama’s budget proposal would extend the tax cuts for low- and middle-income taxpayers, but not for those with incomes above $250,000 for joint filers, and $200,000 for individuals ► For high-income individuals and certain types of businesses, the impact of the scheduled rate change can be dramatic

7. Presentation titlePage 7 Scheduled tax rate changes DescriptionCurrent rates Scheduled rates for 2011 Obama’s FY2011 budget proposal Individual income tax rates 10%; 25%; 28%; 33%; 36% 15%; 28%; 31%; 36%; 39.6% Reinstate personal exemption phase-out (PEP) and limitation on itemized deductions 36% and 39.6% top rate for high-income filers Itemized deductions capped at 28% on high-income filers; reinstate PEP and limitation for those taxpayers Qualified dividends 0%; 15%Individual income tax rate, with top rate of 39.6% 20% for high-income filers Long-term capital gains 0%; 15%20%20% for high-income filers Estate tax055% top rate; $1 million exemption 45% top rate; $3.5 million exemption

8. Presentation titlePage 8 Additional tax increases on higher-income individuals ► Under health care reform legislation, beginning in 2013, joint filers with income exceeding $250,000 and individuals with income exceeding $200,000 face Medicare tax increases of: ► 0.9% on wages (on amounts exceeding threshold) and ► 3.8% on the lesser of: ► Net investment income (e.g., interest, dividends, capital gains) or ► Excess of modified AGI on amounts over the $250,000/$200,000 threshold

9. Presentation titlePage 9 ► Companies and individuals should act now to examine potential scenarios, weigh the complexities and potential tax impact of those options, and plan accordingly ► Timing of compensation ► Accelerating deferred compensation ► Timing of itemized deductions ► Acceleration of anticipated capital gains and deferral of losses ► Alternative Minimum Tax ► Accruals and hypothetical tax calculations may also change Planning opportunities – US taxpayers

10. Contact details: Nancy MacEntee Director Human Capital +7 495 705-9725 Nancy.MacEntee @ru.ey.com@ru.ey.com