1. YOUR RELIABLE PARTNER

2. HAPPY & PROSPEROUS NEW 2008 YEAR!

3. Year of foundation – December 1992, now one of the TOP 20 leading Russian independent audit firms 11 Partners & Staff – near 190 persons Services:   Audit   Tax & accounting consulting   Legal consulting & legal support   Foreign representative offices’ support   Management consulting   Due diligence, others

4. TAX SYSTEM in the Russian Federation NEXIA International European Tax Meeting 8 February, 2008 Monaco

6.   value added tax (VAT)   tax on profit (income) of organizations   unified social tax (UST)   personal income tax   excise duties   tax on mining operations   water tax   fee for the right of use of fauna   state due Federal Taxes  tax on property of organizations  transport tax  tax on gambling business  land tax  individual property tax Regional Taxes Local Taxes Basic System of Taxation

7. Structure of Tax Revenues to Federal Budget, January-November 2007

8. VALUE-ADDED TAX (VAT) Rates:  0% (export goods, works and services related to export, provided in cosmic space, international transportation, goods for diplomatic representations)  10% (foodstuffs and children's goods, periodicals (except for advertising and erotic materials), some medical goods)  18 % (other goods) Some goods, works and services are exempt from the VAT:  rent of premises for foreign citizens and organizations accredited in Russia  some medical goods and services  insurance  financial services and other

9. VALUE-ADDED TAX (VAT) Taxpayers:  Russian and foreign companies  individual entrepreneurs There is no special registration as a VAT – payer

10. VALUE-ADDED TAX (VAT) Objects of taxation and tax bases:  goods, works or services realized on the Russian territory. Cost of goods is included into the taxable base on the date which is the first in time: the date of receiving payment from the customer or the date when the goods are dispatched  goods having been brought into the Russian custom territory  fulfillment of building and assembly works for organization’s own consumption

11. VALUE-ADDED TAX (VAT) Goods, works or services considered to be realized in the Russian Federation, if:  goods are located on the Russian territory at the moment of beginning of the shipment  works and services - according to the special rules established by the Tax Code The Russian territory shall be considered the place of rendering a service (fulfillment of work) if The Russian territory shall be considered the place of rendering a service (fulfillment of work) if  it bears relation to any property which is placed on the Russian territory  cultural, educational, tourist or sport services take place in the RF  the consumer of the services operates on the Russian territory and these are services in granting patent or license rights, author’s rights, in design of software programs, or consulting, legal, accounting, advertising, information and some other services  the executor of other kinds of services and works performs operation in the RF

12. Tax On Organizations’ Profit Taxpayers:  Russian organizations  foreign organizations carrying out their activity in the Russian Federation through their permanent representations and/or receiving incomes from sources situated in the RF Tax on foreign organizations’ income which do not have a permanent representative office in Russia is withheld by the tax agent who is a source of income payment. Tax on foreign organizations’ income which do not have a permanent representative office in Russia is withheld by the tax agent who is a source of income payment.

13. Tax On Organizations’ Profit Tax rates:  for Russian organizations and foreign representative offices - 24% basic rate - 15% for interest on government securities - 9% for dividends (only for Russian companies) and on some kinds of government securities  for foreign companies receiving incomes from sources situated in RF: - 9% for interest on some kinds of government securities - 10% for freight of ships, planes and other means of transport - 15% for dividends received from participation in Russian organizations and interest on certain kinds of government securities - 20% for other kinds of income

14. Tax On Organizations’ Profit Object of Taxation:  for Russian organizations and foreign representative offices - incomes decreased by the amount of expenditures. There is a complete list of incomes that are not levied by the tax on organizations’ profit  for foreign organizations - income

15. Tax On Organizations’ Profit Expenditures shall be justified by pertinent documentation and economically substantiated. There are special norms for certain groups of expenditures:  some kinds of advertising  entertainment expenses  for staff training  interests on loans  some other Expenditures connected with the fixed assets and intangible assets reduce the taxable amount in the form of depreciation.

16. Tax On Property of Organizations Taxpayers: Russian legal entities, foreign companies’ representative offices, foreign legal entities possessing real estate in Russia. The object of taxation: for both Russian companies and foreign firms’ representations - the net book value of movable and immovable property (fixed assets). The tax rate - established by laws of subjects of the Russia but cannot exceed 2,2% of the net book value of the property.

17. Unified Social tax The taxpayers: legal entities and natural persons making disbursements for the benefit of natural persons. The object of taxation - remunerations accrued by taxpayers for the benefit of natural persons under labor and civil legal contracts the subject matter of which is performance of works or provision of services. The tax rate is deemed to be regressive:  if the taxable amount is smaller than 280,000 rubles (about 8,000 euro) - 26%  if the taxable amount ranges from 280,000 to 600,000 rubles (8,000 - 17,150 euro) - 10%  if the taxable amount exceeds 600,000 rubles (17,150 euro) - 2%

18. Personal Income Tax Taxpayers - natural persons, tax residents and non tax residents of Russia. A tax resident - a person who is staying on the Russian territory for not less than 183 days within 12 months that go one after another. There are 4 kinds of tax deductions:  standard  social  property  professional ResidentsNon-residents Tax rates  13% (basic rate)  9% (for dividends)  35% for certain kinds of income (e.g. the cost of prizes gained in competitions aimed at advertising goods)  30% for any income Object of taxation any income (from sources in the RF and outside it) only income obtained from sources in the RF

19. Special Tax Regimes  taxation system for agricultural producers. The tax rate - 6% of the difference between income and expenditures.  simplified taxation system. Tax rate - either 6% of the total revenue or 15% of the difference between receipts and expenditures  unified tax on imputed income. Tax rate - 15 % of the imputed income amount.  taxation system, when implementing production sharing agreements

20. Contact information 3, bld. 1, Krivokolenny side-street, Moscow, Russia Tel.: + 7 (495) 628 5560, 621 1015 Fax: +7 (495) 621 5687 www.mkpcn.ru mkpcn@mkpcn.ru