PRESS RELEASE*
The following issues are scheduled for discussion at the February 2, 2011 Government Presidium meeting.
1. Draft federal law On Introducing Amendments to the Federal Law On the Procedure of Foreign Investments in Business Entities with Strategic Significance for National Defence and State Security
The Federal Anti-Monopoly Service submitted the draft federal law.
The practice of enforcing the federal law On the Procedure of Foreign Investments in Business Entities with Strategic Significance for National Defence and State Security shows that its provisions have some gaps related to the procedures for filing and processing foreign investors’ applications.
Under Article 6 of the federal law, the types of activities of strategic importance for Russia’s defence and security also include activities involving the use of infectious diseases’ causative agents (Section 3, Article 6) and activities involving radiation operating sources (Section 4, Article 6).
In pursuing their core production activities, some business entities hold licenses for activities connected with the use of infectious diseases’ agents (such as cheese and dairy factories) and activities related to radiation operating sources (such as the use of X-ray medical equipment, dental equipment, defectoscopes, and luggage inspection instruments).
To eliminate unnecessary administrative barriers for foreign investors in the food production and services, the draft law proposes amendments to sections 3 and 4 of Article 6 of the federal law. These would exclude activities connected with the use of group IV pathogenic level infectious diseases’ agents and activities related to operating potential risk category 4 radiation sources.
In order to liberalise control in terms of banking activity agents, the draft law proposes amendments to sections 12-14 of Article 6 of the federal law, which exclude banking activities in the cryptography sector from the list of activities with strategic significance for the country’s defence and security, except for banks in whose authorised capital the Russian government holds a share.
Additionally, according to amendments to section 3, part 1, Article 7 and part 3, Article 9 of the federal law, the draft law makes it unnecessary for foreign investors or groups of individuals to secure preliminary approval for transactions to acquire shares (stakes) in a business entity of strategic significance that uses subsoil under federal jurisdiction, including additional emissions as a result of which the share of the foreign investor or group of individuals in the business entity’s authorised capital does not increase.
As the FSB is not authorised to pass its opinion on the emergence of a threat to the country’s defence or the lack of such a threat as a result of a transaction, the draft law would introduce amendments to Article 10 of the federal law that would vest the Ministry of Defence with the power to issue statements on the emergence of a threat to the country’s defence or the absence thereof as a result of a proposed transaction.
The practice of enforcing the federal law attests that the twenty-day period established under the law for the FSB to prepare statements is clearly insufficient. In this regard, the period for the FSB and the Ministry of Defence to prepare statements will be increased from twenty to thirty days without changing the schedule for reviewing applications.
Additionally, amendments are proposed to part 3, Article 12 of the federal law that would increase to thirty days the period for concluding an agreement between the authorised agency and the foreign investor who has filed an application in the event that the government commission decides to approve the transaction on the condition of the corresponding obligations being put forward.
2. Draft federal law On Introducing an Amendment to Article 82 of the Criminal and Procedural Code of the Russian Federation
The Federal Drug Control Service submitted the draft law.
The draft law would allow investigative and inquiry bodies to destroy narcotics, psychotropic substances, plants containing narcotics or psychotropic substances or parts thereof containing narcotics or psychotropic substances deemed to be evidence in criminal cases prior to the court verdict.
Not infrequently, serious difficulties arise and significant costs are incurred in the process of storing seized narcotics. When stored for a protracted period, some narcotics lose their properties. Notably, this applies to narcotics derived from plants that are subject to decay. As a result, a repeat chemical inspection of narcotics is typically impossible.
The country’s legislation has no provisions allowing investigative and inquiry bodies to destroy narcotics deemed to be evidence in criminal cases prior to the court verdict.
At the same time, part 2 of Article 82 of the Criminal and Procedural Code allows for the destruction of evidence in criminal cases prior to the court verdict with regard to perishable and perished goods, ethylated alcohol, alcohol and alcohol-containing products, as well as seized objects whose prolonged storage poses a threat to human life and health.
On the strength of the above, the draft law proposes to introduce the corresponding amendments to Article 82 of the Criminal and Procedural Code. The draft law would establish that a specimen of the seized narcotic sufficient for comparative examination be attached to the criminal case’s materials to make it possible to conduct a repeat or additional forensic examination.
3. Signing an agreement between the Russian government and the United Arab Emirates’ government on taxing income from contracting parties’ investments and their financial and investment institutions
The Ministry of Finance submitted the draft executive order on the issue.
At present, the UAE has considerable resources concentrated in investment funds, banks and similar financial institutions wholly owned by the state, which exhibit an interest in investing capital in various sectors of the Russian economy. The UAE virtually has no tax on the profits of organisations and the incomes of private individuals, which makes it impossible to conclude a standard agreement on the avoidance of double taxation between Russia and the UAE because there is no double taxation in principle in the financial and economic relations between Russia and the Emirates.
On the strength of the above, the parties have reached the conclusion that a special agreement needs to be signed establishing the most favourable terms of taxing the income from investments made by institutions belonging to contracting states, in order to stimulate bilateral investments. As the tax procedure regarding the income from investments by both states’ private sector organisations and individuals remains outside the framework of such an agreement, the risk of its application by the said organisations and individuals to minimise their taxes is ruled out.
The agreement is subject to ratification under Section 1, Article 15 of the Federal Law of the Russian Federation On International Treaties of the Russian Federation.
4. Submitting the Treaty on the Procedure of Cash and (or) Cash Instruments Movement by Private Individuals Across the Customs Border of the Customs Union to the Russian president for subsequent ratification
A draft resolution on the issue has been submitted by the Ministry of Foreign Affairs and the Federal Customs Service.
The treaty on the procedure of the transfer of cash and (or) cash instruments by private individuals across the Customs Union’s customs border was signed on July 5, 2010 in the city of Astana.
The treaty’s aim is to create a uniform procedure for moving cash and (or) monetary instruments across the Customs Union’s customs border.
The treaty cancels the restrictions imposed by the Russian Federation’s currency legislation on taking more than $10,000 in cash out of the Customs Union’s customs territory.
Under the treaty, an individual may bring in cash and cash instruments other than traveller’s checks on the condition that he or she submits a passenger’s customs declaration. No written customs declaration is required when a person takes out cash and (or) traveller’s checks not exceeding in the total amount of $10,000 or an equivalent sum in other currencies.
In addition, in order to fight money laundering and the financing of terrorism, the treaty stipulates that when individuals take cash and (or) cash instruments subject to mandatory written declaration across the Customs Union’s customs border, the passenger’s customs declaration must additionally contain the following data: the date and place of birth of the person, information on the monetary instruments, information on cash and/or monetary instruments source, and information on the transportation route and method (type of transport) for the cash and (or) monetary instruments.
The treaty is subject to ratification under the federal law On International Treaties of the Russian Federation.
5. The provision of gratuitous technical assistance to the Republic of Namibia
The Ministry of Education and Science submitted the draft executive order on the issue.
The draft aims to implement agreements achieved during Russian-Namibian top-level negotiations in Windhoek (Namibia) in June 2009 on free Russian technical assistance to the Republic of Namibia, and stipulates the allocation of up to 50,000,000 roubles to the Russian Ministry of Education and Science for these purposes.
The draft executive order authorises the conclusion of a state contract to supply teaching and laboratory equipment, reagents and materials and the delivery of services with the Vneshtekhnika Federal State Unitary Enterprise, which has years of experience delivering such supplies.
6. Budget allocations to the government of the Republic of Sakha (Yakutia) from the Russian government’s Reserve Fund for the Prevention and Liquidation of Emergency Situations and the Aftermath of Natural Disasters to liquidate the results of the flooding in spring 2010
7. Relief to citizens who were injured and the family members of those who were killed in the terrorist attack in Khasavyurt, the Republic of Dagestan, on January 26, 2011
Moscow, February 1, 2011
* Press releases by the Department of Press Service and Information are based on the materials submitted by the executive federal bodies for discussion by the Government Presidium
