NOVGOROD REGION

Adopted by regional Duma on December 25, 1997

The present Law is directed to the rise of interest of the regional organizations in increase of production of commodities and provision of services and attraction of foreign and home investments in the economy of Novgorod Oblast, financial support of the particular branches of industry.

1. organizations carrying out production activity and investing own and attracted capital into implementation of concrete investment projects approved by Novgorod Oblast Administration until full compensation of the invested means but not more than calculated pay back time, pointed according to the Rules of Investment Break Even Point Calculation and determination of other peculiarities of application of tax incentives to the organizations, carrying out investment projects in the territory of Novgorod Oblast (Region).

The above-mentioned incentives are granted to the organization if its activity is directed to the implementation of one investment project and profit received from products (work, services) realization is less than 65% of the gross organization’s profit.

Organizations which has the right for the tax incentive must keep separate calculation of the income, expenses and financial results of the project.

Incentives of this particular category are granted within the limit of 8 millions rubles stated by the Regional Budget for 1998.

1. social unions of youth and children, enterprises organized according to the Decree on youth enterprises adopted by Novgorod Oblast Administration # 184 of 14.07.94 “On measures of social youth protection in the sphere of occupation”.
2. organizations of any forms of property if 70% of the total number of employees are invalids, children-invalids, children-orphans and children left without parents’ care.
3. building organizations carrying out works on creation of Pskov district engineering infrastructure in Novgorod.
   Incentives are granted for the profit from execution of this work and assets including vehicles used for building works.

Organizations that have the right for the tax incentive must keep separate calculation of the income, expenses and financial results of the project. Organizations must submit to the tax inspection valid calculation of the taxes' sum and list of the property subject to the privilege in time stated by the legislation of the Russian Federation for the presentation of the quarterly and year accounts.

1. The following organizations are exempt from income taxes for enterprises and organizations included in the Regional Budget:

1. organizations of social being services where 70% of total work realization are life services (including the sale of machines with warranty and realization of own production).
   Profit gained in the result of granted incentives is sent for the reinforcement of circulating capital, development and production’s perfection.
2. organizations of health service with license on medical activity and/or pharmacology, institutions of social protection on condition that profit gained in the result of granted incentives is sent for the development of the material and technical base of the organization.
3. social organizations founded with the aim to protect interests and render assistance to invalids, war veterans, rehabilitated citizens, prisoners under age, children, the poor and trade unions.
   
   Incentives are granted on the profit from keeping money on the deposit bank accounts.
4. organizations carrying out building and restoration works of the historical and cultural monuments of Novgorod and Oblast.
   
   Profit gained in the result of granted incentives is sent for the reinforcement of circulating capital, development and production’s perfection.
5. organizations realizing functions of support and development of small business in the Novgorod region where proceeds from production activity (rendered services to subjects of small business) amount up to 50 % or more of the gross proceeds. Intermediary, marketing, supplying and trade operations and services are eliminated while calculating volume of works and services for the above mentioned organizations.
   
   Profit gained in the result of granted incentives is sent for the development of the production base.
6. social organizations founded with the aim to protect historical and cultural monuments, build memorial plaques for war buries.
7. organizations in which according to the Edict of the President of Russian Federation #199 of February 14, 1996, “On measures of realization of the decision on reverse penalty on the property of organizations” administrative arrest is imposed on the property.
8. banks and credit organizations.
   Profit from crediting of the investment projects approved by Administration is privileged if the volume of the issued credits is less than 20% of the total sum of credits.
   Banks and credit organizations are exempt from profit tax included in the Regional Budget if volume of the credits given for the investment project’s realization is 20% or more.
9. organizations using labor of the convicts or making production orders in the reformatories in the part of the profit gained in the result of the convicts’ labor on the condition of keeping separate balance sheets.
10. funds founded with the aim to teach children the basis of sea professions, develop technical creativity of the youth.
    Profit gained in the result of granted incentives is sent for the mastering of sea professions and development of the technical creativity of the youth.

2. The sum of the profit tax included in the Regional Budget is reduced on 10% of the expenditures on marketing services for organizations that pay for marketing services at the profit’s expense.

3. The sum of the profit tax included in the Regional Budget is reduced on 3% of the expenditures on charity for organizations assigning sum of money to non-commercial organizations with a charitable purpose connected with the help to invalids according to the paragraph 1 “c” of the article 6 of the Law of Russian Federation “On the profit tax for organizations and enterprises”.

1. The following organizations are exempt from the assets tax included in the Regional Budget:

1. organizations of health service with license on medical activity and/or pharmacology on the condition that profit gained in the result of granted incentives is sent exclusively for the development of the material and technical base of the organization.
2. trade and social nutrition organizations in which commodity circulation of the services of rural population is not less than 50% from the total volume of the commodity circulation.
   
   Profit gained in the result of granted incentives is sent for the reinforcement of circulating capital, development and production’s perfection.
3. organizations of social being services where 70% of total work’s realization are life services (including the sale of machines with warranty and realization of own production).While calculating the property tax the value of the buildings on the balance is excluded from the taxable base.
   
   Organizations of social being services that have the right for above mentioned incentives should present to the tax inspection quarter balance sheet together with document about balance account 01 “Basic assets”.
   
   Profit gained in the result of granted incentives is sent for the development and production’s perfection.
4. organizations realizing functions of support and development of small business in the Novgorod region where proceeds from production activity (rendered services to subjects of small business) amount up to 50 % or more of the gross proceeds.
   Intermediary, marketing, supplying and trade operations and services are eliminated while calculating volume of works and services for the above mentioned organizations.
   Profit gained in the result of granted incentives is sent for the development of production base motor transport organizations with transport of the army type.
   Profit gained in the result of granted incentives is sent for the purchase of the automobiles and their application to the transport of the army type.
5. Motor transport organizations that have the right for above mentioned privilege accomplish separate bookkeeping on balance account 01 ‘’Basic means’’ in the part of the transport of the army type, organizations supplying agricultural manufacturers with spare parts, machines and equipment; carrying out agrochemical service and provision of fertilizers and means of chemical protection of the plants where proceeds from production activity (rendered services to agricultural manufacturers) amount up to 70 % or more of the gross proceeds.
   Profit gained in the result of granted incentives is sent for the development and production’s perfection.
6. state and municipal organizations of the municipal services in the part of the fuel used for heating.
   State and municipal organizations of the municipal services granted with the incentive mentioned above should submit to the tax inspections materials on the balance account 10 “Materials”.
7. organizations of the consumer cooperation.
   Profit gained in the result of granted incentives is sent for the development and production’s perfection.
8. funds founded with the aim to teach children basis of the sea professions, develop technical creativity of the youth.
   Profit gained in the result of granted incentives is sent for mastering of the sea professions and development of the technical creativity of the youth.

The following organizations are exempt from transport purchase tax included in the motor road fund:

a) budget organizations;

1. organizations and farms producing agricultural products where 50% and more of gross income is profit from realizations of agricultural production.

Incentives are giving in the part of working type transport;

1. state and municipal organizations of municipal services;
2. transport organizations in the part of taxies purchase;
3. religious organizations;
4. transport organizations in the part of army type transport;
5. administrative and executive departments of Inner Affairs Department;
6. organizations producing equipment for movie-making;
7. editorial stuff of the newspapers that were founded by state and local branches of authorities;
8. organizations of social being services where 70% of total work’s realization are life services (including the sale of machines with warranty and realization of own production).While calculating the property tax the value of the buildings on the balance is excluded from the taxable base;
9. leasing companies that have license of the Ministry of Economy of the Russian Federation to carry out leasing activity and give support to the subjects of small business and other types of enterpreneurship of the region.

The following organizations are exempt from transport means tax included in the motor road fund:

1. specialized organization using labor of invalids and organizations manufacturing orthopedic articles, preparing and repairing special transport means for invalids.
   Profit gained in the result of granted incentives is sent for the development of production base
2. all departments of Inner Affairs Department.
   Profit gained in the result of granted incentives is sent for strengthening of material and technical base;
3. religious organizations;
4. educational institutions;
5. transport organizations in the part of army type transport;
6. special representative state departments of the Department of Forest Economy of Russian Federation.
7. organizations of social being services where 70% of total work’s realization are life services (including the sale of machines with warranty and realization of own production).
   Profit gained in the result of granted incentives is sent for the reinforcement of circulating capital, development and production’s perfection.
8. organizations producing equipment for movie-making.
9. organizations in the part of arrested and sold transport according to the Edict of President of Russian Federation #199 from February 14, 1996 ‘’On measures on realization of decisions about reverse penalty on the property of the organizations’’.
10. municipal and regional institutions of culture and art.

The incentive can be granted since January 1, 1997.

Extra tax incentives are given to individual categories of payers for 1998 year only as an exception on the condition that expenses on particular articles of Regional Budget and budget of motor road fund will be reduced.

The present Decree will comes into force since January 1, 1998.

NOVGOROD REGION

Additional reasons for exemption of separate categories of the earth bowels users from payment are the following ones:

1. Attraction of own means into realization of the concrete investment projects approved be Oblast Administration up to full pay back period but not more than estimated pay back time calculated according to the rules of investment break even point calculation, estimated pay back time and other peculiarities of provision of benefits to the organizations carrying out investment projects in the Novgorod region.
2. If 70% of the stuff are invalids, children-invalids, children-orphans and children left without parents’ care in the organizations of any form of property.

The giving regional Law comes into force since the day of its official publication.

According to the Civil Code of the Russian Federation, Law “On the foreign investments in the Russian Federation”, Statutes about the order of the state registration of the subjects of employer’s activity confirmed by the edict of the President of Russian Federation #1482 of July 8, 1994, Decree of the Government of the Russian Federation #26 of November 28, 1991 “On the registration of enterprises with foreign investments”

DECREE:

1. To confirm Decree on registration order of the organizations with foreign investments.
2. To entrust Regional Economic Committee of the Novgorod region to accomplish the registration of the organizations with foreign investments in the territory of the region.
3. To give the right to sign documents on registration of the organizations with foreign investments upon V. I. Trofimov, Deputy Head of the Novgorod Region Administration.
4. To consider Ordinance of the Novgorod Region Administration “On registration order of the organizations with foreign investments and their branch offices” # 144 of May 22, 1995 and “On changes in the ordinance On registration order of the organizations with foreign investments and their branch offices” # 205 of July 7, 1995 invalid.
5. To publish the present Ordinance in the newspaper “Novgorodskie vedomosty”.

On registration order of the organizations

with foreign investments and their branch offices

1. Economic Committee of the Novgorod region registers organization with foreign investments with the volume of foreign capital less than 1000 millions rubbles except oil and gas-mining branches of industry, oil and gas-processing branch, coal-mining branch of industry.
   According to the legislation of the Russian Federation the following organizations can be established and function:
   organizations with partial share of foreign investments;
   organizations with full share of foreign investments.
2. The following documents should be submitted to the Economic Committee of the Novgorod region:

1. announcement about registration of the organization signed by the founders of the organization;
2. statutes of the organization confirmed by its founders and two copies witnessed by the notary;
3. decision of the establishment of the organization or treaty of the founders and two copies witnessed by the notary;
4. For Russian juridical persons - copy of the decision of the property’s owner to establish an organization witnessed by the notary or copy of the decision from the representative body, also copies of the statutory documents witnessed by the notary for every Russian juridical person who participates in the establishment of the organization with foreign investments;
5. documents about paying capacity of the foreign investor from his bank or another financial institution (translated into Russian language);
6. extract from trading register from the birth country of the foreign investor or another equivalent proof of the juridical position according to the Legislation of the country of his location, citizenship or his permanent residence (translated into Russian language);
7. documents confirming payment of more than a half of the organization’s capital indicated in the decision of the organization’s establishment or founder’s treaty;
8. receipt of the payment of the registration fee;
9. infer of the consultant’s investigation in cases foreseen by the legislation.

1. announcement about registration of the organization signed by the founders of the organization;
2. statutes of the organization confirmed by its founders and two copies witnessed by the notary;
3. decision of the establishment of the organization or treaty of the founders and two copies witnessed by the notary;
4. documents about paying capacity of the foreign investor from his bank or another financial institution (translated into Russian language);
5. extract from trading register from the birth country of the foreign investor or another equivalent proof of the juridical position according to the Legislation of the country of his location, citizenship or his permanent residence (translated into Russian language);
6. documents confirming payment of more than a half of the organization’s capital indicated in the decision of the organization’s establishment or founder’s treaty;
7. receipt of the payment of the registration fee;
8. infer of the consultant’s investigation in cases foreseen by the legislation.

1. Statutory documents of the organization should be submitted by its founders or founder’s representatives to the registration body or sent by registered letter with description of the contents.
   
   The date when the documents are offered for registration is considered to be the date when the documents were presented or sent with the date indicated in the receipt of the mail dispatch with description of the contents.
2. According to the legislation of the Russian Federation the following requirements to the statutory documents should be observed before registration:

1. Statutes should contain material about:
   organization and legal form of the organization, its name, location, size of the statutory capital, staff;
   subject and aims of the activity;
   order of establishment and competence of the bodies of administrations and control;
   order of taking decisions;
   list of the questions that should be unanimous;
   order of profit distribution and formation of the organization’s funds;
   order and conditions of the organization’s reorganization and liquidation;
2. the founder’s treaty should contain material about:
   names and juridical positions of the founders, their location (places of residence);
   state registration for juridical persons or individual (personal particulars) - for physical persons;
   size of the statutory capital of the organization;
   parts of participation (number of shares) possessed by every founder;
   size, order and types of deposits (payment for shares);
3. the size of the statutory capital of the organization with foreign investments should not be less than it is stated by the legislation of the Russian Federation by the day of submitting statutory documents for registration;
4. in cases stated by the law of the Russian Federation “On the competition and limits of the monopolistic activity at the trade markets” art. 17, Ordinance on order of presentation to the anti-monopolistic bodies solicitations and notifications according to the art. 17 and 18 of the law of the Russian Federation “On the competition and limits of the monopolistic activity at the trade markets” confirmed by the order of the State Committee on anti-monopolistic policy of Russia #145 of November 13, 1995, the founder is obliged to present the document from the anti-monopolistic committee with agreement for the reorganization of the juridical person, acquisition of shares’
5. statutory documents should correspond to the active legislation.

1. The organization is registered by the Economic Committee of the Novgorod region in the course of 3 days beginning from the date of presentation of the documents or in the course of 30 calendar days of the date of the mail dispatch indicated in the receipt.
   
   The organization is registered by Economic Committee of the Novgorod region in the following way: it is given the particular number in the registration journal. A special inscription is put on the front page of the statutes of the organization, seal of the Regional Administration with number and date, witnessed by the signature of the functionary. The giving certificate with the date, number and code is signed by the functionary and sealed.
   
   Material about registration of the organization that include shares of the juridical persons and holds a share of the state property, is sent by the Economic Committee of the Novgorod region to the Regional State Property Committee in order to include the organization to the List of the state property.
2. The registration fee is sent to the budget on the juridical address of the organization indicated in the statutory documents.
3. The Economic Committee can refuse to register the organization in cases when presented documents and materials do not correspond to the requirements of the Ordinance.
   
   The notification about the refusal in registration is sent in the course of 3 days beginning from the date when the documents were presented for the registration or sent by mail, the notification is sent in the written form, signed by the functionary of the regional Economic Committee and contains the list of the documents and materials that were presented by the applicant.
4. In case any discrepancy was found the regional Economic Committee must inform the organization in the course of 21 days about the necessity of changes in the statutory documents.
   
   Organization in the course of 7 days beginning from the date of receiving the notification must introduce changes in the statutory documents and submit them to the regional Economic Committee.
5. In cases when necessary changes were not made by the organization the regional Economic Committee must begin a case against the organization in the arbitrary court claiming the statutory documents invalid.
6. The court or the arbitrary court can nullify the registration of the organization.
   
   Any interested person in the course of 6 months beginning from the date of the registration can hand an application to the arbitrary court claiming to nullify the registration of the organization and (or) its statutory documents.
   
   Regional economic Committee nullifies the registration in the course of 7 days beginning from the day when the court made a decision, and in the course of 3 days beginning from the date of nullification the notification is sent to the organization.
7. All changes and alterations in the statutory documents of the organization with foreign investment should be registered according to the article of 3,5 of the giving Ordinance.
   
   Notary witnessed copy of the competent body’s decision about necessity of changes and alterations should be submitted to the regional Economic Committee in the course of 30 days together with declaration about registration and receipt of registration fee payment.
   
   If changes and alterations in the statutory documents of the organization with foreign investments affect interests of the State, the regional Economic Committee send a notification to the regional State Property Committee.
8. Refusal in the registration of the organization and evasion from registration can be appealed in the court.

In order to ensure favorable conditions for attraction and accommodation of domestic and foreign capital, economic and social development and establishment of the market infrastructure

1. To establish areas of most favorable economic conditions in Batetskiy, Volotovskiy, Marevskiy and Poddorskiy regions.
2. To confirm the enclosed statutes about areas of most favorable economic conditions in the territory of Batetskiy, Volotovskiy, Marevskiy and Poddorskiy regions.
3. To publish the given Ordinance in the newspaper ‘’Novgorodskie vedomosty’’.

Chairman of Oblast Duma A. A. Boitsev.

DM

# 338-PD

1. To confirm the enclosed explanations on the usage of Ordinance on areas of most favorable economic conditions in the territory of Batetskiy, Volotovskiy, Marevskiy and Poddorskiy regions approved by Ordinance of Oblast Duma # 472-OD of December 27, 1996.
2. To determine that all explanations on the usage of the Ordinance will be worked out and confirmed by Novgorod Oblast Administration with agreement of State Tax Inspection of the Novgorod oblast.
3. The giving Ordinance comes into force since the day of its adoption.
4. To publish the given Ordinance in the newspaper ‘’Novgorodskie vedomosty’’.

arpin@telecom.nov.ru