1. YOUR RELIABLE PARTNER

2. CHANGES IN RUSSIAN TAX LEGISLATION REACTING TO CURRENT ECONOMIC CONDITIONS

3. Value added tax 1. Value added tax 1.1. The taxation of imported technological equipment has changed Earlier: the importation of process equipment, components and spare parts thereto imported as a contribution to authorized (pooled) capitals of organizations was VAT exempt Now: imported technological equipment, components and spare parts are exempt from VAT only if no analogous equipment is produced in Russia

4. Value added tax 1. Value added tax 1.2. The term of submission of the documents for confirmation of justifiable application of the 0% tax rate has been increased up to 270 days Earlier: the documents should have been submitted by the taxpayers no later than within 180 calendar days beginning from the date of the placement of goods under the customs regimes of export, international customs transit, a free customs zone, the movement of provisions Now: this term has been increased up to 270 calendar days

5. 1. Value added tax 1.3. VAT credit is available on advance payments Earlier: subjects of deductions were amounts of tax calculated by the suppliers from amounts of payment or partial payment for goods (works, services) after delivery of goods, provision of works, services only Now: VAT paid to a supplier as a part of advance payment for future deliveries is tax deductible

6. Value added tax 1. Value added tax 1.4. VAT cash payments on barter have been abolished Earlier: the tax amount presented by the taxpayer to the buyer of goods (works, services and property rights) was to be paid to the taxpayer on commodity exchange operations, the clearing of mutual claims and on use in payments for securities Now: barter operations no longer require VAT to be transferred to the contactor

7. Value added tax 1. Value added tax 1.5. Payment of VAT by instalments Earlier: the payment of tax should have been made not later than on the 20th day of the month following the lapsed tax period (quarter) Now: the payment of tax should be made in equal proportions not later than on the 20th day of the every of three months following the lapsed tax period

8. 2. CORPORATE PROFIT TAX 2.1. A procedure of advance profit tax payments in the 4 quarter of 2008 has been changed Taxpayers calculate their monthly advance payments in accordance with actually derived profit. The tax amount shall be accrued in the period from the beginning of tax period to the end of the month forgoing the month of advance payment, with the tax amounts paid earlier being taken into account

9. 2. CORPORATE PROFIT TAX 2.2. Interest deductibility thresholds are going up Earlier: if there are no debt obligations issued in the same quarter on comparable terms, and also - at the taxpayer's discretion - the maximum rate of interest recognized as an expense was to be assumed to be equal to the Central Bank of Russia refinancing rate increased by 110%, if the debt obligation is drawn up in roubles, and by 15%, for debt obligations drawn up in a foreign currency Now: the maximum threshold on interest deductibility has been temporarily increased from 110% to 150% of the Central Bank of Russia refinancing rate on rouble loans and from 15% to 22% on loans in foreign currency

10. 2. CORPORATE PROFIT TAX 2.3. Depreciation premium increased Earlier: the taxpayer was entitled to include into the expenses as a lump sum (so called the depreciation premium) expenses incurred as investment in an amount not exceeding 10% of the initial value of the fixed asset items and/or expenses incurred in the event of an additional construction, additional equipping, reconstructing, upgrading, technical refurbishing, or a partial liquidation of fixed asset items Now: the depreciation premium has increased from 10% to 30% for assets with the depreciation period more than 3 years but not exceeding 20 years. The depreciation premium will apply only if respective fixed assets are not transferred to third parties within 5 years from the moment they are put into operation

11. 2. CORPORATE PROFIT TAX 2.4. Corporate profits tax rate has been reduced from 24% to 20%

12. 3. PERSONAL INCOME TAX 3.1. Housing relief increased Earlier: the total amount of property tax deduction provided could not exceed 1 000,000 roubles disregarding amounts used to repay interest on the purposive loans (credits) received by the taxpayer from credit and other organisations of the Russian Federation and actually spent by him/ her on the new construction or on the purchase of an apartment house, flat, room or a share (shares) in them on the territory of the Russian Federation Now: the law extends the amount of the personal income tax relief available on the purchase and building of apartments and houses from 1,000,000 roubles to 2,000,000 roubles

13. 4. GENERAL PROVISIONS 4.1. An additional possibility to get the allowance for tax deferment or payment of tax by instalments A decision to allow a tax deferment or payment by instalments is taken by the Minister of finance of RF A concerned person may be allowed to defer tax or fee by instalments if the amount of arrears on the 1st day of the month of applying exceeds 10 billion roubles and its lump-sum payment creates a threat of negative social and economic effect

14. 5. CUSTOMS LEGISLATION 5.1. Import duties have been changed Decreased:Increased: - civil aircrafts with capacity not more than 50 passengers – 0% (earlier 20%) - iron roll stocks – 15% (earlier 5%) - vans for railway trains with maximum speed not less than 250 km/h – 0% (earlier 10%) - pipes made of ferrous metals – 15-20% (earlier 5%) - automobiles (3 years old and older) – 15% but not less than 120 euro for 1 kW of engine power (earlier 70 euro for 1 kW of engine power)

15. 6. EMPLOYING FOREIGNERS 6.1. Annual quotas have been changed Quota for the number of invitations from the host companies for the purpose of employment in 2009: Russia – 1 250 769 (1 140 633 in 2008); Moscow – 184 507 Quota for the number of work permits in 2009: Russia – 3 976 747 (3 384 129 in 2008); Moscow – 392 157, including: directors of organizations – 67 993; engineers – 7 483; etc.

16. 7. CIVIL LEGISLATION 7.1. New restrictions for the pledge The penalty can not be turned onto the object of pledge if the amount of the obligation, which has not been discharged, is less than 5% of the appraisal cost of the the object of pledge or if payment delay is less than 3 months

17. 7. CIVIL LEGISLATION 7.2. Measures against raider despoliation for limited liability companies Contract of transfer of share in charter capital should be notarially certified

18. 8. SUPPORT FOR SMALL BUSINESSES Regional authorities are entitled to reduce tax rate under the simplified tax system from 15% to 5% for taxpayers using the "income less expenses" method A reduction of inspections of state authorities A reduction of lease payments (more than by factor of 4) Free consulting and information services provision

19. CONTACT INFORMATION: 3, bld. 1, Krivokolenny side-street, Moscow, Russia Tel.: + 7 (495) 628-55-60, 621-10-15 Fax: +7 (495) 621-56-87 www.mkpcn.ru office@mkpcn.ru