PRESS RELEASE*

The following issues are scheduled for discussion at the May 20, 2010 meeting of the Government of the Russian Federation:

1. Draft Programme of the Government of the Russian Federation to Enhance the Effectiveness of Budget Spending in the Period to 2012

The drafts of the Programme of the Government of the Russian Federation to Enhance the Effectiveness of Budget Spending in the Period to 2012 and the plan of activities to implement the Programme of Enhancing the Effectiveness of Budget Spending in 2010 have been submitted by the Finance Ministry of Russia.

The draft programme sets the following main tasks:

● closer tie-in of strategic and budget planning and budget expenditure with monitoring of execution;

● creating conditions for more effective work of public-legal organizations in the delivery of government and municipal services;

● putting in place tools to stimulate the participants in the budgetary process to use budget resources more effectively and implement structural reform;

● greater transparency and accountability in the activities of government and local self-government bodies, including by publishing their performance indicators.

The following measures are proposed to implement the above mentioned tasks:

● introduction of programme-targeted principles in organizing the activities of executive government and local self-government bodies;

● introducing the "programme-oriented" budget;

● reform of state (municipal) financial auditing and development of internal auditing; creating an information environment and technologies for the implementation of managerial decisions and enhancing public control over the activities of government and local self-government bodies.

The items of the programme will be fulfilled in accordance with the plan approved annually. The plan for 2010 includes:

● adoption of basic laws (above all those introducing systemic amendments to the Budget Code of the Russian Federation) for subsequent development of regulatory legal acts and methodological materials;

● the start of formation and analytical presentation of state programmes of the Russian Federation when drafting the Federal Budget;

● development and approval of sectoral (departmental) plans for enhancing effective spending and the quality of financial management.

2. Guidelines of the Tax Policy for 2011 and the Planning Period of 2012 and 2013

The Draft Guidelines of the Tax Policy for 2011 and the Planning Period of 2012 and 2013 prepared with due account of the proposals of the Economic Development Ministry and other executive bodies have been submitted by the Finance Ministry.

The draft reviews the results of the implementation of tax policy guidelines for 2009 and 2010. Most of the decisions have been harmonised with the guidelines of the Programme of the Anti-Crisis Measures of the Government of the Russian Federation and the Guidelines of the Activities of the Government of the Russian Federation in the Period until 2012.

In 2009 laws were adopted aimed at improving the taxation of transactions with securities and term deal financial instruments, including the taxation of the incomes of individuals derived from such transactions; introduction of the procedure whereby applications are to be filed for VAT tax refund, and improvement of the application of that tax to transactions involving the maintenance and repair of the housing stock; broader opportunities for applying a simplified taxation system and a broader range for the transport tax rates. The Unified Social Tax has been abolished because the system of insurance contributions has been reintroduced.

On the whole, tax policy in 2011-2013 will be aimed at counteracting the adverse effect of the economic crisis, creating conditions for resumed economic growth by stimulating innovative activities while maintaining the balance of the budget system.

The following main measures are to be implemented in the tax policy field in 2011 and in the planning period of 2012 and 2013:

1. Stimulating innovative activities:

● reducing the consolidated rate of insurance contributions to 14% within the insured annual earnings (the full rate for these payers will be contributed out of the Federal Budget) before 2015 and for some categories of tax payers before 2020. For mass media organizations a transitional period will be fixed, with the consolidated rate of insurance contributions to reach its highest value (34%) in 2015;

● a change of approach to the classification of basic assets into groups and setting the amortisation rates for these groups;

● reviewing the accounting procedure for spending on research and (or) development (introducing a uniform clear-cut and non-contradictory procedure of tax accounting of R/D spending);

● building up reserves for future R/D expenditure of organizations;

● reducing the list of documents required to prove eligibility for zero value added tax rate in export transactions;

● exemption from property tax for organizations using energy-efficient equipment during their first three years of operation as well as equipment used to produce scientific and technical products;

● creating favourable conditions of tax administration for innovative companies, including the creation of special tax inspectorates and reducing the frequency and duration of inspections;

● delegating the powers to decide on granting an investment tax rebate on profit tax of organizations and the tax on the property of organizations to the constituent entities of the Russian Federation and increasing its size;

● improved taxation of organizations engaged in socially sensitive areas;

● introducing a special tax regime for the organizations participating in the Skolkovo Industrial Park.

2. Measures concerning the tax on the profits of organizations:

● reducing room for tax minimisation, in particular, establishing, as of 2011, a special procedure for transferring losses in the event of reorganization that envisages limits on the timeframe and the size of profits used to compensate for the losses of entities being reorganized;

● solving the issue of regulation of referring interest on debt commitments to expenditure taken into account in determining the tax base of the profit tax;

● establishing the procedure of taxing economic benefits when granted soft loans, credits, bills of exchange, etc;

● improving  the mechanism of accounting for the purpose of taxation of the expenditure of organizations on the development of natural resources;

● updating the procedure of taxing the profits of tax payers engaged in activities involving the use of service production facilities;

● increasing from 3 to 10 million roubles the amount of sales proceeds that allow an organization to pay only quarterly (and not monthly) advance payments.

3. With respect to value added tax, the following measures are envisaged:

● updating the procedure of processing invoices, introducing corrections in them and the possibility to process invoices having negative indicators;

● updating the procedure for restoring the sums of the value added tax on building and assembly work carried out at facilities that have come to be used to perform operations that are not taxable and in the event of discarding of goods, including basic assets, unconnected with the sales transactions;

● updating the procedure for the application of a 0% rate when selling goods in accordance with customs goods export and movement regimes in the event the proceeds come from the sale of such goods (stocks) from third persons;

● updating the procedure of value added tax exemption for services of leasing sports facilities for the preparation of sports and entertainment events.

4. Concerning excise:

● a change in the procedure of calculating and paying excise on ethylated alcohol, alcohol and alcohol-containing products;

● updating the indexation for 2011 and 2012, indexation of excise rates for 2013 with due account of the inflation target. The rates of excise on alcohol, alcohol-containing and tobacco products are to be increased faster than for other excisable goods.

5. Concerning the introduction of the real estate tax, the a review of the results of the work of cadastre evaluation of property and the formation of property cadastre for 2010-2012 is to be carried out to prepare amendments to the Tax Code of the Russian Federation that would gradually introduce this tax in place of the current tax on the property of organizations and the land tax as well as the deadlines for such a transition.

6. Concerning the taxation of property (including plots of land) the following measures are envisaged:

● managing companies are to be charged with paying the property tax of organizations and land tax with respect to the property (including plots of land) of a mutual investment fund;

● in the event agricultural land is not used for agriculture, to establish the procedure of calculating the land tax with a coefficient of 4 to the basic rate for such lands;

● reducing the benefits under the above taxes established at the federal level.

7. Concerning the tax on the extraction of minerals (NDPI) that applies to the mining of hydrocarbons (oil and natural gas) and solid minerals:

● assessing the practicability of introducing a zero rate of tax on the extraction of oil for a certain period at the new fields in the north of the Yamalo-Nenets Autonomous Area, similarly to the oilfields in Eastern Siberia;

● changing the procedure of collecting mineral extraction tax for natural gas pumped back into the well to maintain pressure;

● reviewing the practicability of setting downward coefficients for the mineral extraction tax for oil in new areas of the subsoil where reserves are insignificant;

● continued work to create tax incentives for the utilization of associated oil gas and to determine the optimum rate of mineral extraction tax collected when extracting natural gas with due account of the dynamic of gas prices;

● continued development of the mechanism of introducing, in the long term, taxation of the extraction of natural resources based on financial and economic performance (the additional income tax);

● continued work to maximise the use of specific tax rates in the extraction of solid minerals (in the first place coal, peat, salts, etc).

8. Concerning water tax, the rates of tax are to be indexed to keep pace with the significant growth of tariffs for water delivered to consumers.

9. Concerning special tax regimes:

● improving the simplified taxation system on the basis of patents;

● reducing the application of the single imputed income tax for certain types of activity to avoid competition with the simplified patent-based taxation system.

10. Concerning tax administration:

● improved tax control over the use of transfer prices for the purpose of taxation;

● introducing in the legislation on taxes and levies the institution of consolidated groups of tax payers and the special procedure for calculating tax on the profits of organizations for members of such groups;

● improved procedure of taxpayer registration;

● expanding the use of electronic document exchange in the tax sphere, including the payment of taxes and levies by electronic means, the introduction of the system of electronic invoices, electronic transfer of documents to banks, executive bodies, local administrations and other organizations;

● limiting the benefits under current international treaties on avoiding double taxation;

● simplified administration of taxation with regard to natural persons;

3. Progress of implementation of the Guidelines for the activities of the Government of the Russian Federation in the Period Until 2012

4. Distribution of subsidies to the budgets of constituent entities of the Russian Federation to support measures to balance the budgets of the constituent entities of the Russian Federation in 2010

The draft executive order has been submitted by the Finance Ministry. Under the draft executive order 1 billion roubles are to be distributed in subsidies to the budgets of the constituent entities of the Russian Federation to balance their budgets in order to contribute to and encourage better performance of the executive bodies of the constituent entities of the Russian Federation based on the results of 2008.

Subsidies are to be distributed among 20 entities of the Russian Federation that have the best performing executive bodies based on the results of 2008, in equal portions (to the sum of 50 million roubles for each constituent entity of the Russian Federation).

The executive order is aimed at stimulating better performance of the executive bodies of the constituent entities of the Russian Federation and at improving regional and local management and raising the population's quality of life.

The adoption of the draft executive order will not increase Federal Budget spending.

5. Coordination of measures to use information and communication technologies in the work of Government bodies

6. Introducing amendments to the Federal Targeted Programme Electronic Russia (2002-2010)

7. Draft Federal Constitutional Law on Introducing Amendments to Article 36 of the Federal Constitutional Law On the Government of the Russian Federation and the Draft Federal Law On Introducing Amendments to the Budget Code of the Russian Federation Concerning the Deadlines for the Preparation, Discussion and Approval of Draft Budgets and Reports on their Execution

8. Draft Federal Law On Accounting

The draft federal law has been submitted by the Finance Ministry.

The new edition of the Federal Law On Accounting aims to eliminate outdated norms, provisions and gaps in the current Federal Law. The draft law seeks to harmonise the Federal Law provisions regulating the system of accounting with the changed economic environment in which economic entities operate for the purpose of creating and disclosing reliable and useful information on their financial status and financial performance.

The draft law regulates the legal relations arising in the regulation of accounting and the keeping of accounts by economic agents.

The draft law contains the general norms that determine the purpose of this federal law and its sphere of application; the basic notions used in the federal law; and the place of the federal law in the total body of legislation of the Russian Federation.

The draft law sets down the principles of regulating accounting, the content and requirements to documents pertaining to the organization and keeping of accounts, the scope of authority of regulatory agencies and mechanisms of their interaction, the procedure of developing and approving accounting standards, guaranteed participation of a broad circle of users to the regulation of accounting (financial) reports.

The draft law establishes a new system of regulating accounting that combines the activities of government and non-government bodies, including self-regulating professional organizations of accountants and auditors, entrepreneurs and users of accounting (financial) reports.

The powers of the state accounting regulation bodies include,  among other things, the development of state policy; approval of national and sectoral standards of accounting and the clarification thereof; approval of the programme to develop national accounting standards. The non-government accounting regulators develop draft national standards of accounting, clarify them, study the practice of their application and make proposals on their improvement, and interact with international non-governmental accounting organizations.

To ensure the interaction between the government bodies and the non-government accounting regulating bodies, the draft law envisages such mechanisms as the programme of the development of national accounting standards, the accounting standards council, and a detailed procedure of the development and approval of national standards.  

9. Draft Federal Law On Introducing an Amendment to Article 258, Part 2 of the Tax Code of the Russian Federation

The draft federal law has been submitted by the Finance Ministry. At present putting intangible assets on the balance sheet is greatly impeded by the long amortisation periods.

The draft law reduces the period of amortisation of such intangible assets as exclusive rights to inventions, industrial prototypes, useful models, selection breeding results, microchip topologies, computer software, databases as well as know-how.

The amortisation period for such assets is to be determined at the discretion of the taxpayer, but may not be less than two years. As regards such intangible assets as works of science, literature and art, trademarks, company names and service marks as well as any other intellectual property items not connected with innovative or scientific-technical activities, the former procedure for determining their use periods for profit tax purposes is retained.

Allowing the taxpayer to reduce the period of amortisation of intangible assets will bolster their prevalence in the economy.

The adoption of the draft federal law On Introducing an Amendment to Article 258, Part 2 of the Tax Code of the Russian Federation will promote scientific-technical and innovative activities, help to commercialise their results, and promote the acquisition and introduction of new technologies by using intangible assets in the economy.

10. Draft Federal Law On Introducing Amendments to Part 2 of the Tax Code of the Russian Federation Pertaining to the Improvement of Taxation of Non-Commercial Organizations and Charitable Activities

The draft federal law has been submitted by the Finance Ministry. The draft introduces the following main changes in the Tax Code of the Russian Federation.

1. It establishes equal rights for non-commercial organizations, other economic entities and government and municipal institutions in respect of tax on the added value in delivering services provided they are rendered exclusively and strictly within the framework of state or municipal contracts concluded between the executor and the state or municipal customer, in accordance with the laws on the placing of orders for the supply of goods and delivery of services for state and municipal needs:

● for social services to orphans, children left without parental care and children in families whose incomes per capita are on the poverty level; services to support elderly citizens, disabled persons, neglected children and other persons in a difficult circumstances recognised as such under the legislation that regulates the relations in the sphere of social services and as part of activities to prevent children being left without care;

● physical culture and health services rendered to the population, including physical culture and sport classes and sport and health activities;

● professional training, retraining and upgrading of skills services  at the request of employment agencies.

2. It exempts from VAT free services of manufacturing and (or) spreading public service (social) advertising in accordance with the law on advertising.

3. It exempts from individual income tax the sums paid by charitable and religious organizations for the treatment of persons that do not have labour relations with them (in accordance with the lists approved by the Government of the Russian Federation); incomes earned by children left without parental care from charitable and religious organizations; incomes in kind in the shape of food, lodgings and money, incomes in the shape of payment for the cost of travelling to and from the place of charitable activities earned in connection with charitable activities by volunteers engaged in charitable activities on the basis of a civil contract envisaging free rendering of works and services.

4. It lifts the restriction envisaged under Article 219 of the Code whereby individuals are only eligible for a social tax rebate when they contribute part of their income to the statutory activities of organizations partially or fully financed out of the budgets.

5. It allows non-commercial organizations registered under the Federal Law On Non-Commercial Organizations, other than those created in the form of a state corporation, state company, or association of legal entities, to create a reserve against future expenditure in the framework of entrepreneurial activities and subject to profit tax.

The draft will contribute to the development of non-commercial organizations, charitable activities and volunteer activities.

11. Draft Federal Law On Ratification of the Agreement on Encouragement and Mutual Protection of Investment in the Member States of the Eurasian Economic Community

The draft federal law has been submitted by the Foreign Ministry and the Economic Development Ministry.

The implementation of the Agreement would create for investors a durable, stable and predictable legal environment and stimulate investment cooperation between the member states of the Eurasian Economic Community (EurAsEC). The agreement would grant investors and investor activities the most favoured regime whereby investments are allowed into the territory of a EurAsEC member state under the laws of that state and investors of other EurAsEC member states are granted a regime no less favourable than that granted to national investors or investors of any third state, whichever regime, in the investor's opinion, is the most favourable.

None of the contracting parties are obliged to apply to the investors of other EurAsEC member states the advantages they grant to investors from any other third state on the basis of taxation agreements and in connection with their being members of a free trade zone, a customs or currency union, a common market and similar economic integration entities.

Investments and investors' incomes are protected from forcible seizure through nationalisation, expropriation or other measures that have similar consequences, except when such measures are taken in the public interests in accordance with the procedure established under the laws of the EurAsEC member states.

The right of investors to adequate compensation for damage to their investments and incomes, notably due to civil unrest or military actions, is established.

The mechanisms of protecting investments and compensating for damages are spelled out. Free transfer of incomes and other payments in connection with investments is guaranteed, after investors have met all their tax obligations.

The law envisages judicial remedied for protecting the rights of investors, the investment dispute resolution procedures, including international arbitration, as well as methods of regulating disputes between the parties over the interpretation and application of the provisions of the Agreement, including by taking the dispute before the EurAsEC Court. The Agreement is subject to ratification in accordance with Article 15 of the Federal Law On International Treaties of the Russian Federation.

12. Draft Interstate Targeted Programme of the Eurasian Economic Community Innovative Biotechnologies for 2011-2015

The draft executive order has been submitted by the Education and Science Ministry.

The programme contains a range of scientific-technical and organizational measures of scientific and technical support for the development of biotechnology in the EurAsEC member states.

Successful implementation of the programme will help to organize the production of various types of competitive biotechnology products, including biofuel, and save currency due to import replacement; to increase the productivity of agricultural crops and animals, their resistance to disease, pests and human-induced stresses; to improve the quality of food through the use of environmentally safe means of protection and fertilizer in plant growing and livestock breeding; and to enhance the environmental and biological security of the EurAsEC member states.

The implementation of the executive order on the draft interstate targeted EurAsEC programme Innovative Biotechnologies envisages a significant amount of work in the field of problem-oriented research, the preparation of scientific and technical publications of scientific and practical interest for scientists and specialists in the field of biotechnology, the creation of new technological processes for use in industrial production in various sectors of the economy.

13. Submitting to the President of the Russian Federation the Anti-Terrorism Convention of the Shanghai Cooperation Organization for the Purpose of Introducing for Ratification

The proposal to approve and submit to the President of the Russian Federation for the purpose of introducing for ratification the Anti-Terrorist Convention of the Shanghai Cooperation Organization has been submitted jointly by the Foreign Ministry and the Federal Security Service of Russia. The Convention was signed at a meeting of the Council of the Heads of State of the Shanghai Cooperation Organization in Yekaterinburg on June 16, 2009.

The Convention is a new anti-terrorist international legal document in the framework of the SCO whose adoption has been prompted by the changes in the content of terrorism, the scale and character of terrorist activities, the growing influence of terrorist ideology in the contemporary world and the need for new international legal instruments to counteract terrorism.

The Shanghai Convention Against Terrorism, Separatism and Extremism of June 15, 2001 seems to provide a narrow interpretation of terrorism and terrorist acts that does not meet the current interests of the fight against terror and does not correspond to the national legislations of the SCO member states.

The Convention responds to the call of the UN Security Council on the states to cooperate to prevent and stop terrorist attacks, incitement to terrorist acts and attempts to justify or glorify (apologia) terrorism that encourage fresh terrorist acts and to take measures against those who commit such deeds, above all, in the framework of bilateral and multilateral mechanisms and agreements, as well as to other UN requirements aimed at combating terrorism.

Mindful of the requirements of the UN Security Council Resolution and Clause B, Part 3, Article 19 of the 1966 International Covenant on Civil and Political Rights, the Convention provides a social and political definition of terrorism as an ideology of violence and the practice of influencing decision-making by government bodies or international organizations by perpetrating or threatening violent and/ or other criminal actions involving intimidation of the population and aimed at causing damage to the individual, society and the state.

The social-political interpretation of terrorism makes it possible to concentrate on one of the key causes of terrorism, i.e. the ideology that justifies and considers necessary the use of violence and other intimidating actions to achieve political, social and other goals.

The Convention elaborates the relevant provisions of the Shanghai  Convention on Combatting Terrorism, Separatism and Extremism of June 15, 2001 and accords with the Concept of Cooperation among SCO member states in the fight against terrorism, separatism and extremism approved by decision of the Council of SCO Heads of State whereby the development of additional mechanisms of international cooperation in combating terrorism must contribute to effective use of new opportunities to counteract the new challenges and threats.

The Convention takes into account the specifics of the legislation of SCO member states, including the responsibility of legal persons, the body of "terrorist crimes" and the civil, criminal and criminal-procedural confiscation of property.

By "terrorist act," the Convention means a deed perpetrated to intimidate the population and threaten the life and health of an individual aimed at causing substantial damage to property or bringing about an environmental catastrophe or other dire consequences as well as the threat to perpetrate the said actions to achieve political, religious, ideological and other goals by influencing the decisions of the government bodies or international organizations.

This approach would make international anti-terrorist cooperation more effective and bring the definition of a terrorist act in line with the national legislations of the SCO member states.

Practice has shown that in present-day conditions terrorist acts are impossible without a material and technical basis. Accordingly, the international community recognises that depriving terrorism of its material basis is an effective means of counteracting it. The Convention reaffirms the provisions on cooperation of states in arresting and confiscating property gained as a result of at least one of the crimes covered by the Convention as well as the property meant to be used as an instrument of perpetrating at least one of the crimes covered by the Convention or to finance an organized criminal group or one of the crimes covered by the draft Convention.

The Convention is subject to ratification pursuant to its Clause 2, Article 31 as well as Clause 2, Article 15 of the Federal Law on the International Treaties of the Russian Federation.

14. Introducing an Amendment to Subclause 5. 2. 25²⁴ of the Statute on the Agriculture Ministry of the Russian Federation

The draft resolution has been submitted for the purpose of implementing the Federal Law On the Private Subsidiary Plot whereby the form and procedure of keeping household books in order to register private household-run farms is established by the federal executive body authorised by the Government of the Russian Federation.

At present, in accordance with the Statute on the Agriculture Ministry of the Russian Federation, determining the procedure of keeping household books is the prerogative of the Agriculture Ministry (Clause 5.2.25²⁴).

No federal executive body has been empowered to determine the form of household books. Considering the need to follow the federal law and to have a uniform format of the household book, the draft resolution vests the Agriculture Ministry with the authority to determine the form of the household book.

The adoption of the draft resolution would implement the provision of the Federal Law and name the Agriculture Ministry as the federal executive body authorised to determine the form of the household book.

15. Signing of the Protocol on Introducing Amendments to the Customs Union Agreement on Veterinary-Sanitary Measures of December 11, 2009

The draft executive order of the Government of the Russian Federation has been submitted by the Agriculture Ministry.

The introduction of the changes under the Protocol is aimed at improving the regulation in the veterinary sphere and creating a single legal framework for the member states of the Customs Union, to wit:

● defines more clearly the object of joint inspections by authorised bodies of the member states of the Customs Union of organizations and persons who produce, process and (or) store the goods subject to control entering the customs territory of the Customs Union as well as moved from the territory of the state of one Party to the territory of the state of another Party;

● allows the issue of veterinary certificates not only by the authorised bodies of the member states of the Customs Union but by other persons, for example, accredited organizations.

The adoption of the Protocol will enable the member states of the Customs Union to pursue a coordinated policy of veterinary-sanitary control. On the one hand, it protects animal products from quarantine objects on the territory of the Customs Union member states and ensures that these states meet their international obligations in the veterinary field. On the other hand, it creates conditions for the free movement of goods on the territory of the Customs Union and further development of trade and economic cooperation.

16. Signing the Protocol on Introducing Amendments to the Agreement on Plant Quarantine of December 11, 2009

The draft executive order has been submitted by the Agriculture Ministry. The introduction of the amendments under the Protocol is aimed at improving legal regulation in the sphere of plant quarantine and at creating a uniform legal basis for the member states of the Customs Union.

The proposed changes take into account measures envisaged by the Russian Federation for the purpose of optimising control and supervisory (permissive) functions.

The amendments to the Agreement envisage:

● narrowing the application of the Agreement and its relevance to quarantine-eligible products subject to quarantine phyto-sanitary control (supervision) on the customs border of the Customs Union only to instances when such products are imported and are on the customs territory of the Customs Union.  It is specified, meanwhile, that in the event of the export of quarantine-eligible products from the customs territory of the Customs Union, its control (supervision) must comply with the international obligations and the laws of the states of the Parties;

● the need to display official information on phyto-sanitary requirements to imported quarantine-eligible products on the official sites of the authorised bodies of the Parties and in the Information System of the EurAsEC in the field of technical regulation, sanitary and phyto-sanitary measures and in the Integrated Information System of the External and Mutual Trade of the Customs Union;

● restricting the list of quarantine-eligible  products subject to certification: only those quarantine products that are referred under the List of Quarantine Products to the group of high phyto-sanitary risk quarantine products are to be certified.

The amendments stipulated under the draft protocol will contribute to increased trade and to compliance by the Customs Union member states with the international obligations in the field of phyto-sanitary security on the customs territory of the Customs Union.

The adoption of the draft executive order will not entail additional federal budget outlays.

17. Signing a Protocol on Introducing Amendments to the Customs Union Agreement on Sanitary Measures of December 11, 2009

The draft executive order has been submitted by the Healthcare and Social Development Ministry. The Customs Union Agreement on Sanitary Measures of December 11, 2009 regulates coordinated policy in ensuring the sanitary and epidemiological security of the population in the member states of the Customs Union.

Considering the need to adopt new forms of assessing the compliance of goods with the health safety standards, amendments are proposed to the Agreement by signing the Protocol on Introducing Amendments to the Customs Union Agreement on Sanitary Measures of December 11, 2009. The amendments introduced in the Agreement under the draft protocol envisage the requirement of compliance of products crossing the customs border of the Customs Union and brought into the customs territory of the Customs Union not only with the Uniform Sanitary Requirements, but also with the technical regulations of EurAsEC.

Under the draft Protocol, the document confirming the safety of the products (goods) subject to sanitary-epidemiological supervision (control) is the State Registration Certificate. The Sanitary-Epidemiological Statement envisaged by the Agreement is dropped.

The introduction of the amendments envisaged by the draft protocol is aimed at improving the legal regulation in the sphere of ensuring sanitary-epidemiological security of the population and creating a uniform legal basis of the Customs Union member states. The above changes have been prepared in accordance with the measures to improve the control and supervisory and permissive functions and to optimise the delivery of state services in the field of healthcare, social development, sanitary-epidemiological security and the consumer market.

The amendments stipulated under the draft protocol will help to remove administrative barriers and thus increase trade while simultaneously ensuring the compliance of the Customs Union member states with their international obligations to ensure sanitary epidemiological security of the population on the customs territory of the Customs Union.

18. Additional support of the constituent entities of the Russian Federation which have mono-cities on their territories

The draft resolution has been submitted by the Regional Development Ministry.

Under the draft resolution 5 billion roubles earmarked in accordance with part 5, Article 24 of the Federal Law On the Federal Budget for 2010 and for the Planning Period of 2011 and 2012 as the property contribution of the Russian Federation to the state corporation Housing and Utilities Reform Fund will be used to increase the Fund's financial support for the constituent entities of the Russian Federation on whose territories mono-cities are located. Under the Federal Law On Introducing Amendments to the Federal Law On the Housing and Utilities Reform Fund the sums referred to will be used for capital repair of blocks of flats and for relocating citizens from decrepit housing on the territories of such municipal entities.

The draft resolution also approves the Rules for increasing the quotas of financial support out of the Fund to the entities of the Russian Federation on whose territories mono-cities are located (hereinafter the Rules).

Under the Rules, the quotas for granting financial assistance out of the Fund to support mono-cities are increased within the overall volume of financing the measures of the comprehensive investment plan of modernisation of the mono-city concerned approved by the Government Commission for Economic Development and Integration or established by the Government of the Russian Federation. Under the Rules, the management of the Fund considers an application of the constituent entity of the Russian Federation for financial support out of the Fund within the approved financing quotas, and if the application complies with the requirements of the Federal Law On the Housing and Utilities Reform Fund and the decisions of the Government Commission for Economic Development and Integration, submits the relevant proposals to the Fund's supervisory board. The decision of the Fund's management to grant such financial support to a constituent entity of the Russian Federation is taken after a relevant decision of the Fund's supervisory board.

The draft resolution is aimed at rendering state support to the implementation of comprehensive investment plans for modernisation of mono-cities which would create conditions for stabilising the social and economic situation in mono-cities which are in a crisis situation and ensure their long-term development.

19. State support of measures of the comprehensive investment plan in the modernisation of the city of Nizhniy Tagil, Sverdlovsk Region in 2010

The draft resolution has been submitted by the Regional Development Ministry.

For the purpose of rendering government support in 2010 for implementing the measures under the comprehensive investment plan of modernisation of the city of Nizhniy Tagil, Sverdlovsk Region, the draft resolution would grant the budget of the Sverdlovsk Region:

● subsidies for the support of measures to ensure balanced budgets of the constituent entities of the Russian Federation to the sum of 281,100,000 roubles;

● subsidies for measures to develop and support small and medium-sized enterprises to the sum of 210,900,000 roubles.

The draft resolution sets the quota of additional financial support to the Sverdlovsk Region out of the resources of the state corporation - Housing and Utilities Reform Fund, to the sum of 700,000,000 roubles for the capital repair of blocks of flats located in the city of Nizhniy Tagil.

In addition, the draft resolution recommends the government of the Sverdlovsk Region to submit to the Finance Ministry of the Russian Federation under established procedure the materials required to obtain a budget loan for the implementation of an investment project to overhaul the transport infrastructure for the purpose of creating a logistical centre integrated into the comprehensive investment plan of modernisation of the city of Nizhniy Tagil, Sverdlovsk Region.

20. State support of measures of the comprehensive investment plan in the modernisation of the city of Sokol, Vologda Region in 2010

The draft resolution has been submitted by the Regional Development Ministry of Russia.

For the purpose of rendering government support in 2010 for implementing the measures under the comprehensive investment plan of modernisation of the city of Sokol, Vologda Region, the draft resolution would grant the budget of the Vologda Region:

● subsidies for the support of measures to ensure balanced budgets of the constituent entities of the Russian Federation to the sum of 642,100,000 roubles;

● subsidies for measures to develop and support small and medium-sized enterprises to the sum of 38,200,000 roubles.

The draft resolution sets the quota of additional financial support to the Vologda Region out of the resources of the state corporation - Housing and Utilities Reform Fund, to the sum of 63,500,000 roubles for the capital repair of blocks of flats located in the city of Sokol.

In addition the draft resolution recommends the government of the Vologda Region to submit to the Finance Ministry of the Russian Federation under established procedure the materials required to obtain a budget loan for the implementation of an investment project to overhaul of the utilities infrastructure for the purpose of implementing stage 1 of the creation of the Sokol industrial park to the sum of up to 109,200,000 roubles. 

21. State support of measures of the comprehensive investment plan in the modernisation of the municipal district of Togliatti, Samara Region in 2010-2020

The draft resolution has been submitted by the Regional Development Ministry.

For the purpose of rendering government support in 2010 for the implementation of the comprehensive investment plan to modernise the city of Togliatti, Samara Region, the draft resolution would grant the budget of the Samara Region subsidies for the support of measures to ensure balanced budgets of the constituent entities of the Russian Federation to the sum of 600,000,000 roubles.

In addition, the draft resolution sets a quota for the Samara Region for additional financial support out of the resources of the state corporation - Housing and Utilities Reform Fund - to the sum of 822,500,000 roubles for the capital repair of blocks of flats located in Togliatti.

Moscow,

May 19, 2010

* Press releases by the Department of Press Service and Information contain the materials submitted by the executive federal bodies for discussion by the Government of the Russian Federation