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• Author: International Law Group

As of January 1, 2001, changes in taxes and tariffs affect enterprises doing business in Russia

Several recent changes in Russian taxes and tariffs affect companies doing business in or with the Russian Federation (RF). (1) According to a report of WorldTrade Executive (www.wtexec.com) circulated by the U.S. Department of Commerce, the city of Moscow has exercised its right under Article 8 of the RF Law No. 118-FZ of August 5, 2000, On the Entry into Force of Part II of the Tax Code, and introduced an additional profits tax of 5 percent. According to the new Law No. 33 of the City of Moscow of October 18, 2000, the new profits tax beginning January 1, 2001, will be 32 percent for financial institutions and insurance companies, and 24 percent for other enterprises (including foreign entities). (2) According to another report of the WorldTrade Executive, with an Order dated October 31, 2000, the Russian Ministry of Finance has approved the Chart of Accounts for Business Activity and the Instruction on the Application of the Chart of Accounts, proceeding with its accounting reform program based on international accounting standards. The accounting changes will became effective for companies (except credit and budget institutions) on January 1, 2001. Companies must adopt a new Chart of Accounts during the year 2001 which may affect how they account for assets, liabilities, and their transactions. (3) Based on Government Resolution No. 866, new tariff rates took effect on January 1, 2001. These changes affect the applicable duties on thousands of import items. It standardizes and unifies the rates to four base rates of 5, 10, 15 and 20 percent. It also lowers the maximum duty to 20 percent, except for a few items including foreign cars and poultry for which the duty is 25 percent. The tariff rates are available in...