RS Law digest Main changes in the Law of the Russian Federation from October 01, 2011 to January 24, 2012

Main changes in the Law of the Russian Federation from October 01, 2011 to January 24, 2012

1. Official resource for publishing legislative acts

Beginning with November 10, 2011 the Official website of legal information ( is regarded as an official resource for publishing the texts of federal constitutional laws, federal laws, acts issued by both chambers of the Federal Assembly along with printed resources.

2. A new law “On Accounting" adopted

On January 1, 2013 maintenance of accounting records becomes obligatory for organisations using the simplified taxation system. Beginning with 2013, because of the adoption of the new Federal Law “On Accounting”, the obligation to apply source accounting documents out of unified pro-formas albums is abolished. Branches and representative offices of foreign companies are relieved from the obligation to maintain accounting records upon the condition that they maintain records of income and expenses in accordance with the law on taxes and charges. Source accounting documents pro-formas and accounting registers shall be certified by heads of economic entities upon recommendations of officials who are in charge of maintaining accounting records.

3. Amendments to the Tax Code for Consolidated Taxpayers

On January 1, 2012 Federal Law 321-FZ of 16.11.2011 “On Introduction of Amendments into Part I and II of the Tax Code of the Russian Federation in Relation to Establishing a Consolidated Group of Taxpayers” introduced a procedure for taxpayers consolidation with the purpose of corporate income tax calculation and payment.

A consolidated group of taxpayers is a voluntary association of Russian organisations paying profit taxes on the basis of a relevant agreement, as well as in compliance with the procedure stipulated by the Tax Code of the Russian Federation. Creation of such a group is possible provided one of the organisations is directly or indirectly participating in the authorised (joint-stock) capitals of other organisations who are members of the group, provided the share of such participation in each of them is no less than 90%. Each member shall meet certain requirements concerning, among others: the aggregate amount of taxes paid over the year (VAT, excise taxes, corporate income tax, royalty) — no less than 10 billion rubles; total volume of revenue — no less than 100 billion rubles; the aggregate cost of assets — no less than 300 billion rubles. Entities prohibited from entering into consolidated groups include residents of special economic zones, organisations exercising special tax regimes, gaming business entities, clearing companies. Banks, insurance companies and some other financial organisations may create consolidated groups only with other establishments of the same type.

4. VAT, Personal Income Tax and Corporate Income Tax. Amendments to the Tax Code

Federal Law 330-FZ of 21.11.2011 altered the Tax Code. More specifically:

  • VAT: The list of operations and services provided by organisations performing midstream transportations subject to the 0% VAT rate, has been extended;
  • PIT: the procedure for determination of the tax base under REPO securities transactions has been adjusted; the list of income not subject to personal income tax has been updated (with severance pays having been excluded among other amendments);
  • Corporate Income tax: standardisation costs have been included onto the list of costs taken into account when calculating the income tax.

The amendments take effect on January 1, 2012.

5. Insurance Premiums Reduced

On January 1, 2012 a reduction of insurance rates was introduced along with expansion of the list of small businesses entitle to the rates (Federal Law 379-FZ ‘On amendments made to the laws of the Russian Federation with regard to setting rates for the insurance contributions to be paid to non-budget funds’ of 03.12.2011).

The premium rates will be 30% for payments exceeding 512,000 rubles. According to the Law, the application of reduced rates of insurance premiums will henceforth be extended to include, among others, organisations using the simplified taxation system providing engineering services, as well as organisations whose core activity is retail of pharmaceuticals and medical products, orthopaedic appliances, as well as transport and communications operations. The obligation of employer to pay insurance premiums in respect of employees who are foreign nationals on account of financing the insurance component and the funded component of a labour pension, depending on the birth year of such insured persons, has been introduced (read more on page ХХХ).

6. Federal Law “On Central Depository" took effect

The Russian securities market now has a central accounting institution – the central depository. Central depository may only exist in the form of a joint-stock company whose stockholders are Russian legal entities who are managing companies of mutual investment funds, incorporated investment funds and private pension funds, and are professional participants of the securities market, trade organisers and clearing agencies, and other persons, unless this is provided for by the central depository. The status of central depository is assigned by a federal executive authority on financial markets in accordance with the procedure prescribed by the Law (key procedural provisions) and by regulatory legal acts by the Russian Ministry of Finance.

7. Exchange Controls Optimisation

Amendments aiming at optimisation of exchange controls have been introduced into the Federal Law 173-FZ of 10.12.2003 ‘On Currency Exchange Regulation and Control’.

More specifically, the amendments stipulate the following:

  • the requirements for issuing a transaction passport have been specified. A transaction passport shall contain the following: the number and date of issue; information about the resident and the foreign counter agent; general information about foreign-trade contracts (contract date, contract number (if available), total transaction amount (if available) and currency in which the transaction price is stipulated, date of termination of obligation fulfilment under the transaction); information about authorised bank issuing the transaction passport and via accounts through which settlements under the transaction are effected; information about re-issuance and grounds for closing the transaction passport;
  • the principle of one-time document submission by residents and non-residents to the authorities (the Central Bank of the Russian Federation, the federative executive authority (authorities) authorised by the Government of the Russian Federation) and to currency control agents (authorised banks accountable to the Central Bank of the Russian Federation, the state corporation “Bank for Development and Foreign Economic Affairs” (Vnesheconombank), etc. has been introduced;
  • issues related to electronic information exchange between authorities and currencies control agents have been examined.

The amendments (with the exception of certain provisions) take effect on June 05, 2012.

8. IFRS take effect

37 IFRS standards and 26 interpretations to the IFRS were implemented on the territory of the Russian Federation (by virtue of Decree of the Russian Ministry of Finance 160n of 25.11.2011).

The IFRS and interpretations to the IFRS will take effect on the territory of the Russian Federation on the day of their official publication in the Financial Accounting bulletin. Among the IFRS implemented: International Accounting Standard (IAS) 1 “Presentation of Financial Statements”; IFRS: International Accounting Standard (IAS) 2 “Stocks”; IFRS: International Accounting Standard (IAS) 7 “Cash Flow Statements”; International Accounting Standard (IAS) 8 “Accounting Policies, Changes in Accounting Estimates and Errors”; International Accounting Standard (IAS) 10 “Events after the Balance Sheet Date”; International Accounting Standard (IAS) 11 “Construction Contracts”. Furthermore, the following IFRS Interpretations were implemented: Interpretation SIC 25 “Income Taxes — Changes in the Tax Status of an Entity or its Shareholders”; Interpretation SIC 27 “Evaluating the Substance of Transactions Involving the Legal Form of a Lease”; IFRIC Interpretation 10 “Interim Financial Reporting and Impairment”; IFRIC Interpretation 15 “Agreements for the Construction of Real Estate”.

9. Business Partnerships – a new kind of entity in the Russian Federation

On July 1, 2012 a new type of legal entities classified as commercial organisations will emerge in the Russian Federation – business partnerships (pursuant to Federal Law 380-FZ ‘On Business Partnerships’ of 03.12.2011).

Members of business partnerships (the number of which shall be no less than two) must be individuals and (or) legal entities. The federal law may prohibit or restrict participation of specific categories of individuals or legal entities in partnerships.

Creation of business partnerships by way of restructuring existing legal entities is not allowed, whereas a partnership may only be restructured by way of transformation into a joint-stock company. A partnership may not be a founder or a member of other legal entities, except for unions and associations.

A partnership is liable under its obligations with all its assets, members of a partnership do not incur liabilities under its obligations and bear the risk of losses up to the amount of contributions made by them. The Russian government may stipulate capital adequacy criteria for partnerships which will determine certain types of activity.

A partnership may not issue bonds or other issue-grade securities. It is also not allowed to advertise its operations.

A partnership establishes a sole executive authority (director general, president, etc) who is elected from among the partnership members in accordance with the procedure stipulated by the articles of association or by a unanimous decision of all members for the entire term of operation of the partnership.

The Federal Law ‘On Business Partnerships’ also regulates other matters related to partnership creation, operation details, management, relations between its members, restructuring and liquidation.

10. Law ‘On Investment Partnership’ took effect

On January 1, 2012 Federal Law 335-FZ of 28.11.2011 ‘On Investment Partnership’ regulating the principles of a simple partnership agreement entered into for the purposes of exercising joint investment activities (investment partnership agreement) took effect.

The law regulates the principles of a simple partnership agreement entered into for the purposes of exercising joint investment activities (investment partnership agreement) in acquisition and (or) disposal of shares (stocks) not circulating in the organised stock (share) market, business entities bonds, partnerships, financial instruments under forward contracts, as well as shares in the joint-stock capital of business entities. In an investment partnership two or more persons (partners) undertake to combine their contributions and conduct joint investment activities without establishing a legal entity for the purposes of making profit. Partners participate in the agreement within the limits and to the extent stipulated by the Civil Code of the Russian Federation, this Law and agreement, with only one or several of the partners conducting joint business of the partners on their behalf (managing partners). Each partner is obliged to contribute to the joint cause. An investment partnership agreement is subject to notarial certification.

The law regulates including but not limited to the following:

  • rights and obligations of partners, terms, provisions and duration of the agreement, terms for its amendment and termination at partner’s request;
  • procedure for determining the share of each partner in the partners’ joint assets;
  • conduct of partners’ joint business;
  • liability of partners under joint obligations;
  • the agreement termination procedure.

11. The Labour Code sides with Employed Labour

Amendments regulating the examination and settlement of collective employment disputes have been introduced into the Labour Code of the Russian Federation.

The new version of certain provisions gives a more detailed description of some of the conciliation procedures, as well as established procedural terms more favourable for employees:

  • the term for acceptance and examination of demands received from trade unions and communication of decisions made was reduced from one month to three weeks;
  • an employer is now obliged to inform of the decision made on the basis of examination of employees’ demands within 2 business days from the date of their receipt (the previously stipulated term was 3 business days); the term for examination of a collective employment dispute with the involvement of an intermediary (previously – up to 7 business days from the date of inviting the intermediary) is now up to 3 business days at the local social partnership level, and up to 5 business days at other levels of social partnership.

Furthermore, the legislators have given special attention to the provisions of the law on labour arbitration, as well as to negotiations on refusal by one of the parties from participation in conciliation procedures.

12. Health and Safety can be Profitable

On January 1, 2012 Federal Law of 06.11.2011 300-FZ ‘On Introduction of Amendments to Articles 17 and 22 of the Federal Law “On Obligatory Social Insurance against Employment Injuries and Professional Diseases" took effect.

Economic incentive measures to encourage employers comply with the labour protection requirements were developed. Employers are now obliged to report to the SIF RF about the results of assessment of workplaces with regard to labour conditions and obligatory preliminary and routine medical checks of employees.

Moreover, the discount or surcharge amounts to the insurance rate under obligatory occupational injury and disease insurance will be calculated based on the results of the insured’s work over three years (currently only the preceding year is taken into account for report purposes). It has also been established that no discount is made upon the occurrence of a fatal insured event.

13. New amendments were made to the RF Code of Administrative Offences

  • Administrative liability for violation of stipulated submission periods for accounting and reporting forms under currency operations has been differentiated depending on the duration of the violation.
    The amendments take effect on November 18, 2011.
  • Beginning with November 28, 2011 the administrative fine for failure by residents to fulfil within stipulated deadline their obligation in transfer of foreign currency and the Russian currency to their bank accounts in exchange for work (services), results of intellectual activity, etc, is in the form of funds in an amount that is a multiple of the Central Bank refinance rate of the amount of funds credited to accounts in authorised bank with violation of the deadline.
  • The list of circumstances remitting administrative liability has been extended to include the following:
    • voluntary cessation of misbehaviour by the person committing such administrative violation;
    • cooperation on the part of the person committing the violation with the authority in charge of conducting proceedings in the framework of such administrative violation as far as establishment of the circumstances of the case are concerned;
    • voluntary compensation by the person committing such violation of the damage caused or voluntary remedy of damage caused.
  • Administrative liability was introduced in respect of failure to submit applications, notices (information), data (information) to a federal executive authority in charge of exercising control over foreign investments in the Russian Federation.
    The amendments took effect on January 07, 2012.
  • The RF Code of Administrative Offences has been supplemented with a new article stipulating the procedure for notification of persons involved in the proceedings in the framework of administrative violation.
    The amendments took effect on January 07, 2012.

14. 5 years imprisonment for setting up one-day firms

Amendments to the Criminal Code of the Russian Federation and Article 151 of the Code of Criminal Procedure of the Russian Federation have taken effect.

Creation, registration or restructuring of legal entities using fake identities (so-called “fly-by-night companies”) is punishable with prison sentences of up to 5 years.

Also, criminal liability was introduced in respect of illegal issue or acquisition of identity documents, as well as use of illegally-obtained personal data, if such acts were committed for the purpose of creating a legal entity with the intention of committing one or several crimes involving financial operations or transactions involving currency or other assets.

15. Basic requirements for the operation of buildings and other amendments to the Urban-Planning Code

Amendments have been introduced into the Urban-Planning Code of the Russian Federation and separate legislative acts of the Russian Federation.

On April 1, 2012 the new norms of the Urban-Planning Code of the Russian Federation specifying the grounds and the procedure for conducting state and non-governmental expertise of project documentation and results of engineering surveys, including accreditation of the right of legal entities to conduct non-governmental expertise, will take effect.

The Urban-Planning Code of the Russian Federation may be supplemented with a chapter taking effect on January 1, 2013, stipulating key requirements to the building and constructions maintenance, including obligations of persons responsible for such maintenance and management.

On July 1, 2013 norms introducing joint and several-basis responsibility in place of subsidiary responsibility of members of self-regulated organisations operating in construction business for damage caused through poor-quality design and construction will take effect.

Some other amendments concerning primarily the list of items organisation and conducting of state expertise of project documentation of which is the responsibility of Russian state authorities was introduced into the Urban-Planning Code of the Russian Federation and a number of legislative acts.

16. The procedure for selling land has been extended

Amendments have been made to articles 2 and 3 of the Federal Law on the Introduction of the Land Code of the Russian Federation and several statutory acts of the Russian Federation.

The current procedure for selling land plots that are state or municipal property to legal entities that own buildings and installations located on the land plots has been extended until July 1st 2012

The procedure that must be followed by legal entities that want to re-register their right to use land indefinitely as a long term lease or buy the land has also been extended until the same date.

The procedure under which citizens and legal entities can be given forested land plots without going through the state cadastre procedure (except for cases where forested land is to be used for recreational purposes) has been extended until January 1st 2015

The application of plans of forested land plots (instead of cadastre plans or passports if no cadastre records were kept of the land before the specified date) has also been extended until January 1st 2015.

Owners of incomplete construction projects whose title to the project was registered before January 2012 are entitled to lease the land plot on which the construction site is located and which is state or municipal property without having to go through a tender selection procedure, following instead the same procedure that is used by owners of buildings and installations.

From April 1st 2012 a new regulation goes into effect that specifies the grounds on which state authorities can unilaterally terminate land lease agreements entered into before January 2011 for the purposes of construction or renovation of real properties in Moscow and Saint Petersburg in the event of significant violations of the lease agreement or significant changes in the circumstances that the parties presumed when entering into the lease agreement. Such significant changes and violations now include failure to adhere to construction deadlines or lack of construction permit after five years have passed from the conclusion of the lease agreement. Special procedures have been established for terminating such lease agreements (and other similar agreements entered into with state or municipal organisations and authorities) and the procedure for compensating construction expenses.

Detailed rules have been introduced for the state registration of title to real properties created under a contract with a state authority, local self government body, state or municipal authority or a unitary company before January 1st 2011 under which some real property located on a land plot that is state or municipal property was to be construction or renovated using off-budged financing with the floor area of the property then being distributed among the parties to the contract. Now state registration after the completion of the construction or renovation of the real property may only take place if the Parties sign a document confirming performance of their contractual obligations and only in accordance with the distribution of the floor area of the property specified in said document.

17. Security is a tight rope

Amendments were made to certain legislative acts of the Russian Federation insofar as the upgrading the procedure for pledged property recovery (Federal Law 405-FZ of 06.12.2011 “On introduction of amendments into legislative acts of the Russian Federation with regard to the procedure of enforced pledged property recovery").

The collateral agreement may contain a provision on the procedure for selling pledged property pursuant to a decision of the court and (or) on possibility of extrajudicial enforcement.

In line with other amendments introduced into the Civil Code of the Russian Federation, it has been established that the debtor and the pledger acting as a third party may at any time terminate prior to the realisation of the collateral, discharging the collaterised liability or the part thereof the enforcement of which was delayed. It was also stipulated that an agreement restricting this right is void; with the debtor and pledger being obliged to compensate expenses sustained by the pledge holder in connection with the enforcement of collateral.

Other amendments concerning the procedures for application of recovery of pledged security have been introduced into various legislative acts, including those a) regulating in detail the procedures for forwarding by the parties of a collateral agreement of various notices and claims, 2) those clarifying the procedure for out-of-court recovery of pledged property (enforcement inscription by a notary included), the procedure for disposal of pledged property (bidding, commission contracts), 3) those defining details of state registration of a title when the title is transferred as a result of recovery, etc.

The amendments are to take effect on March 7, 2012 (with the exception of certain provisions).

18. Intellectual Property Court

A specialised court authorised to examine cases related to intellectual property rights shall be established within the system of arbitration courts by February 1, 2013 – Intellectual Property Court.

The Intellectual Property Court will be authorised to examine, within the scope of its competence, disputes related to protection of intellectual property rights as a court of first instance and a cassation instance.

19. Technical regulations can wait

The effect of the Technical regulations on equipment safety during operation in explosive environments, approved by Decree of the Russian government N 86, of February 24, 2010, has been suspended until January 1, 2014.

20. List of hazardous facilities + Insurance regulations

On January 1, 2012 the Regulations on Compulsory Insurance of Civil Liability of Owners of Hazardous Facilities for Damage caused as a result of Emergency at Hazardous Facilities (Decree by the Russian Government No 916 of 03.11.2011 “On Approval of the Regulations on Compulsory Insurance of Civil Liability of Owners of Hazardous Facilities for Damage caused as a result of Emergency at Hazardous Facilities”).

In accordance with the approved Regulations, the Insurer undertakes to pay insurance compensation to injured persons - in exchange for the payment stipulated by the compulsory insurance agreement - upon the occurrence of an insured event for the purposes of compensating damage to their life, health or property within the limits of the insurance amount stipulated in the agreement.

Compulsory insurance is applicable to the risk of civil liability borne by the owner of a hazardous facility located on the territory of the Russian Federation and subject to registration in the state register, as provided for by the law on industrial safety of hazardous production facilities, or to entering into the Russian Register of Hydro-technical construction. The Regulations contain a list of such hazardous facilities.

The provisions contained in the Regulations concerning the procedure for determining the insurance compensation amount (fixed insurance compensation amount, additional fixed insurance compensation amount) insofar as related to compensation of damage to the health of the injured person, and the procedure for payment of such compensation, take effect on January 1, 2013.

21. Drivers under control

Beginning with January 29, 2012 vehicles performing commercial transportation of passengers and goods shall be equipped with technical control devices monitoring the compliance by drivers with the traffic, labour and recreation regulations.