The following issues are scheduled for discussion at the Government Presidium meeting on January 27, 2009:
1. Increasing the authorised capital of Rosagroleasing and Rosselkhozbank
The joint stock company Rosagroleasing is a co-contractor for the State Programme for the Development of Agriculture and Regulation of Farm Produce, Raw Materials, and Food Markets from 2008 to 2012 in such spheres as support for livestock pedigree breeding and technical and technological modernisation of agriculture.
As of November 1, 2008, a total of 43.3 billion roubles of federal budget money had been invested in the authorised capital of Rosagroleasing.
The financial resources allocated to Rosagroleasing will enable it to fulfil this year's targets of the State Programme for Support of Livestock Pedigree Breeding and Technical and Technological Modernisation. Due to a credit squeeze, however, there was a drastic increase in requests from farm businesses for material and technical resources on leasing conditions. An analysis of preliminary requests for material and technical resources from Rosagroleasing in 2009 highlighted the need to expand the activities of this state-owned company and include production equipment for the food industry, forestry, and fisheries in its leasing programme.
The Government also charged Rosagroleasing with the task of expanding purchases of Russian-made agricultural machinery, as well as other machines, production equipment, and transport vehicles for Russian consumers. The capacities of Russia's agricultural machinery plants were set to produce the required amounts, with due account taken of equipment currently in their storage yards.
At present, Rosagroleasing's investment scope is practically exhausted.
In light of the above, any expansion of Rosagroleasing's activities is only possible provided the company is additionally capitalised.
To do so, it is necessary to allocate additional sums of money from the federal budget to supplement the authorised capital of Rosagroleasing with an additional 25 billion roubles.
The allocated sum is recommended to be used for the following purposes:
- 12.5 billion roubles: to expand supplies of Russian-made agricultural machinery and pedigree livestock;
- 12.5 billion roubles: to supply Russian-made machinery and equipment for forestry and timber conversion, rural road construction, processing industry, and commercial fish farming.
The joint stock company Rosselkhozbank, in the period when the national priority project Development of the Agro-Industrial Complex (2006-2007) and the State Programme for the Development of Agriculture and Regulation of Farm Produce, Raw Materials, and Food Markets in 2008-2012 were implemented, provided agro-industrial companies and businesses with loans worth more than 300 billion roubles.
With resources becoming scarce and other banks refusing to issue loans to agro-industrial businesses for investment projects (through open credit lines) and to refinance loans for current activity, the main burden of providing financial resources to agro-industrial companies and businesses falls on Rosselkhozbank. To complete the construction and upgrading of 360 large livestock centres with a total estimated value of 223 billion roubles requires 72 billion roubles in credit resources.
A bumper grain crop in Russia and the world, combined with a liquidity squeeze in many countries, has made grain market prices fall.
In the prevailing situation, it is necessary to increase the amounts of interventionist purchases.
To keep up the pace of loan support to the main development areas of the agro-industrial sector and increase the extent of interventionist purchases, it is necessary to increase the authorised capital of Rosselkhozbank by 45 billion roubles, which will give priority to investment loans for large-scale carry-over livestock facilities started as part of the national priority project Development of the Agro-Industrial Sector and the State Programme, to short-term loans for next year's seasonal work, and to maintenance of grain market prices.
2. Amending the Rules for Technological Connection of Energy-Receiving Devices (Power Devices) of Corporate Bodies and Natural Persons to Electrical Networks
The amendments to the Rules for Technological Connection of Energy-Receiving Devices (Power Devices) of Corporate Bodies and Natural Persons to Electrical Networks, as approved by Government Resolution No. 861 of December 27, 2004, provide for:
- a fee of not more than 550 roubles for the technological connection of electric power consumers' energy-receiving devices up to 15 kW in capacity at one point;
- making it possible for small and medium-sized businesses, when connecting energy-receiving devices with a capacity of 15 kW to 100 kW, to spread fee payments for the technological connection over a period of up to three years starting from the connection date indicated in the contract, by making an advance payment of 5% on the technological connection fee without interest and making quarterly payments in equal parts of the total sum in the course of one to three years from the date an act on the technological connection is signed.
3. Amending Government Resolution No. 109 of February 26, 2004
The additions to Government Resolution No. 109 of February 26, 2004 On Pricing of Electrical and Thermal Energy in the Russian Federation provide for:
- a procedure for spreading costs incurred in implementing a technological connection of electric power consumers' energy-receiving devices between the technological connection fee and the tariff on electric power transmission services;
- creating a mechanism for compensating the network organisation for missing revenues caused by the use of a technological connection fee not exceeding 550 roubles, an advance payment, and instalment payments for the technological connection.
4. The draft Federal Law On Amending Articles 149 and 162 of Part 2 of the Tax Code
The Federal Law On Amending Articles 149 and 162 of Part 2 of the Tax Code of the Russian Federation was drafted to improve the application of value added tax in relation to works (services) rendered to maintain and repair common property in multi-unit houses, carry out capital repairs, and provide communal services.
The draft law exempts the following from value-added tax:
- communal services rendered by managing organisations, housing partnerships, housing, housing-construction, and other specialised consumer cooperatives set up to satisfy citizens' housing requirements and servicing intra-house engineering systems used to provide communal services, and communal services purchased from communal facilities;
- works (services) to maintain and repair common property in multi-unit houses done by taxpayers concerned, provided the works (services) to maintain and repair common property in multi-unit houses are purchased from organisations and individual businesses that physically fulfil (render) the given works (services).
In addition, the draft law does not recommend that taxpayers include the money they receive to build a reserve for current and capital repairs of common property in multi-unit houses in the tax base of value-added tax.
5. The draft Federal Law On Amending Article 178 of the Criminal Code of the Russian Federation
The underlying idea of the draft Federal Law On Amending Article 178 of the Criminal Code of the Russian Federation is to improve the criminal legislation of the Russian Federation, implement the principle of ineluctability of responsibility for socially dangerous violations of anti-monopoly legislation, and make it feasible for law enforcement bodies to apply this article in practice.
Part One of Article 178 of the Criminal Code of the Russian Federation as proposed by the draft law has been coordinated with the new wording of the Federal Law On Competition Protection, uses the terminology of this law, which is obligatory for any law enforcer, eliminates inadmissible gaps, contradictions, and terminological discrepancies with the existing wording of Part One of Article 178 of the Code, and limits the sphere of application of this article to the most dangerous violations of anti-monopoly legislation, which entail the non-admission, limitation, or elimination of competition and cause serious damages amounting to more than one million roubles or lead to the extraction of large-sized profits amounting to more than five million roubles.
Among such violations of anti-monopoly legislation are violations that restrict access to market, remove other economic entities from it, and abuse one's dominating position, and also violate the curbs clamped by Article 11 of the Federal Law On Competition Protection on competition-restricting agreements between economic entities or agreed actions by economic entities.
Agreements and agreed-on actions by economic entities are banned if their result is the non-admission, restriction, or elimination of competition.
In the part concerned with the abuse by an economic entity of its dominating position, the given wording of Part One of Article 178 of the Code deals with the most dangerous prohibited actions, such as establishment and maintenance of a monopoly high or a monopoly low price of a commodity, restriction of access to the market or removal of other economic entities from it, or unsubstantiated refusal or disinclination to conclude a contract.
The draft law proposes establishing responsibility for breaches of anti-monopoly legislation entailing alternative or simultaneous material effects causing massive damage or producing large-sized profits.
The necessity of including the extraction of large-sized profits among the socially dangerous effects characteristic of this offence is based on a typical criminal motivation of the offender, because his actions are objectively aimed not at inflicting damage on an uncertain number of competitors or consumers, but on obtaining a profit. Considering that as a result of his actions leading to the breach of anti-monopoly legislation, a person failing to obtain a profit might cause damage to citizens, organiыations, or the state, the draft law proposes retaining massive damage as an alternative indication of the crime.
The draft law retains the size of massive damage fixed in the existing wording of Article 178 of the Code. At the same time, the draft law fixes the size of particularly massive damage as damage exceeding three million roubles, an amount having a 3-to-1 ratio to massive damage. This ratio corresponds to ratios already established by the Code for massive damage and particularly massive damage.
Large profits specified in the draft law have been determined following an analysis of law enforcement practice and are prompted by the necessity of excluding criminal responsibility for minor offences from application practice.
Thus, a large profit specified by the draft law is one exceeding five million roubles, and a particularly large profit, twenty-five million roubles. The ratio of the large profit to the particularly large-sized profit as fixed by the draft law is 1 to 5.
Part Two of Article 178 of the Code as proposed by the draft law establishes responsibility for deeds listed in Part One of the same Article, given typical indications of a particular crime constituting enhanced danger to the public.
The new wording of Part Two of Article 178 of the Code, as distinct from indications of criminally punishable breaches of anti-monopoly legislation constituting the enhanced danger (deeds committed by a person employing his official status, and deeds committed by a group of persons by preliminary collusion) as used in the existing wording of Part Two of the same Article, adds the indication of particularly massive damage and particularly large profit, as well as an indication moved from Part Three of the existing wording, the indication of a deed that involves injury to or destruction of alien property (in the absence of indications of extortion). Such indications as "committed by a group of individuals by preliminary collusion or committed by an organised group" are excluded from the new wording of Article 178 of the Code.
The underlying idea of Part Three of Article 178 of the Code is that in cases when violence is used or threatened, criminal responsibility occurs for deeds described in Part One or Two of the given Article.
The proposed wording of Part Three of Article 178 of the Code, in the part concerned with a deed perpetrated with violence or a threat of violence reproduces the construction of the existing wording of Part Three of this article.
The method of referring the essential elements of a violent crime that manifests itself only in violence (threat of violence) to encroachments on other social values (i.e. not on the personality) has been used by the legislator to construct the essential elements of crimes involving the abuse of authority by employees of private guard and detective services (Article 203 of the Criminal Code), making threats or committing violent actions in connection with the administration of justice or the conduct of a preliminary investigation (the maximum punishment is between five and ten years of deprivation of freedom), and a number of others.
The draft law stipulates a special rule for relieving from criminal responsibility persons whose actions have facilitated prevention or investigation (including exposure) of a crime on the condition that such actions are free from the essential elements of another crime (note 4). The given institution is widely used in existing criminal legislation, which does not link special conditions for relieving from criminal responsibility with the gravity of a crime (such conditions are applied both to grave and particularly grave crimes and in relation to crimes of small or medium gravity - Parts One and Two of Articles 122 and 204 and Part One of Article 222 of the Criminal Code of Russia, etc.)
6. A procedure for granting subventions from the federal budget to the budgets of Russian Federation regions to issue a single-payment grant to the pregnant wife of a conscripted serviceman or a monthly grant for the child of a conscripted serviceman
The resolution establishes a mechanism for making federal budget funds available to the budgets of the Russian Federation regions and thus completes the work of providing state support for the families (the pregnant wife and/or children) of conscripted servicemen.
Federal Law No. 233-FZ of October 25, 2007 made amendments to Federal Law No. 81-FZ of May 19, 1995 On State Grants to Citizens Having Children, establishing grants for the families of citizens having children ages three and under, or for the wives of citizens expecting a child, in the case of call-up of these citizens for military service. The grants are meant to compensate these families for the shortfall in income in connection with the abolition from January 1, 2008 of recruitment deferrals for citizens on these grounds.
The law establishes a norm for issuing state grants to the families of conscripted servicemen with children ages three and under, and also to the wives of these servicemen expecting the birth of a child, with a pregnancy period of not less than 26 weeks (establishment of a new kind of state grant, the rights of citizens having children to receive one, and the size and duration of the grant). Provision is made for issuing a single-payment grant of 14,000 roubles to pregnant wives and a monthly grant of 6,000 roubles for a child under age three.
At the same time, this norm could not be applied to servicemen who, despite the right of deferral (as citizens having children ages three and under or a pregnant wife with a pregnancy period of not less than 26 weeks) were conscripted for military service before January 1, 2008 when this deferral was abolished. By way of compensation, the Federal Law On Introducing Amendments to the Federal Law On State Grants for Citizens Having Children was promptly adopted, eliminating the existing shortcoming in legislation and extending the right to obtain the above-mentioned grants to servicemen called up before January 1, 2008.
Under the Federal Law On the Federal Budget for 2009 and the Planning Period of 2010-2011, the Ministry for Healthcare and Social Development is to receive budget allocations for granting subventions totalling 1,725,352,800 roubles in 2009, 1,846,127,500 roubles in 2010, and 1,971,664,100 roubles in 2011.
7. Granting subsidies to commercial fishing organisations and individual entrepreneurs to compensate some of their expenses paid as interest on loans obtained from Russian lending institutions in 2009 to secure material and technical supplies and gear and to build and upgrade vessels of the fishing fleet and fish-processing plants
The draft Government executive order provides for the following budget allocations in 2009:
- subsidies to commercial fishing organisations and individual entrepreneurs to compensate some of their expenses paid as interest on loans obtained from Russian lending institutions in 2009 to secure material and technical supplies and gear - for a period of one year, totalling 817,000,000 roubles;
- subsidies to commercial fishing organisations and individual entrepreneurs to compensate some of their expenses paid as interest on investment loans obtained from Russian lending institutions in 2009 to build and upgrade vessels of the fishing fleet - for a period of five years, totalling 130,000,000 roubles;
- subsidies to commercial fishing organisations and individual entrepreneurs to compensate some of their expenses paid as interest on investment loans obtained from Russian lending institutions in 2009 to build and upgrade fish processing plants - for a period of five years, totalling 123,000,000 roubles.
The adoption of this Government executive order will require additional spending from the federal budget totalling 1.07 billion roubles.
8. Approving export customs duties rates for individual types of fertilisers exported outside the boundaries of Customs Union signatory countries
The draft Government resolution provides for the abolition of existing export duties on mineral fertilisers as laid down in the resolution On Establishing Customs Duties on Individual Types of Fertilisers Exported Outside the Boundaries of Customs Unions Signatory Countries.
Export duties were introduced on a temporary basis (until April 30, 2009) by Government Resolution No. 159 of March 11, 2008, and were set at 8.5% for nitrogenous and multiple fertilisers and 5% for potassium fertilisers. These measures were taken to stabilise the price situation and ensure the growth of fertiliser supplies on the domestic market. In October and November of last year, the export of mineral fertilisers dropped by 16.3% in real terms. Supplies to the domestic market in November shrank by 36%, year-on-year. Manufacturers of all types of mineral fertilisers announced cuts in production. In 2008, more than 30 workshops were totally shut down throughout Russia.
Today, Russian fertiliser producers are less competitive than many foreign producers. The positions gained by Russian manufacturers on world markets will be impossible to maintain without considerable investment in the modernisation of existing and construction of new competitive production capacities. As a result of the global financial crisis, some investment projects could be halted.
Russia, which is one of the major world exporters of mineral fertilisers, is currently losing its standing on foreign markets, in particular on the Indian market, which accounts for 10% of Russia's total fertiliser exports.
Under the existing economic conditions, the abolition of export duties on mineral fertilisers should be viewed not as a measure of customs and tariff regulation of foreign trade, but as a measure of state support for the branch that produces mineral fertilisers.
Mineral fertiliser producers can now redirect their financial resources to complete their ongoing investment programmes. In addition, the measure, aided by a proper pricing policy, will strengthen the positions of Russian mineral fertiliser producers on the foreign markets.
9. The Government Commission on the Development of the Metallurgical Complex
The Russian Government instructed the Ministry of Industry and Trade, together with federal executive bodies and organisations concerned, to draft and submit to the Government proposals for the establishment of a Government Commission on the Development of the Metallurgical Complex of Russia.
The Commission will coordinate the efforts of federal executive bodies, executive bodies in Russian Federation regions, and other organisations in implementing state policy on the metals complex, including its mining sector, creating conditions for its development and functioning, and supplying the domestic market with metal products.
The Commission is to be formed from the heads of federal executive bodies or their deputies. The Commission may also include presidential envoys to the federal districts or their deputies, top ranking officials from Russian Federation regions, and also representatives from organisations and associations in accordance with the established procedure.
10. The draft Federal Law On Ratification of the Agreement between the Government of the Russian Federation and the Government of the Federative Republic of Brazil on the Mutual Protection of Technologies Related to Cooperation in the Exploration and Use of Outer Space for Peaceful Purposes
The purpose of the Agreement is to establish cooperative relations with Brazil and reach mutual understanding on the protection of technologies used in space cooperation in a number of high-tech and scientific areas (including rockets) that are beneficial for the Russian Federation.
The Agreement guarantees the safe-keeping, safety, and prevention of misuse by the end-user of moved (exported) Russian protected products and technologies. The Agreement will apply to any type of cooperative space activity providing for the movement of protected products from the territory of one state to the territory of the other.
The Agreement extends immunity to protected products against arrest and executory process on the territory of the importing state. The major provisions of the Agreement are as follows:
- both parties shall make mandatory plans for safeguarding technologies subject to endorsement by state bodies;
- protected products shall be guaranteed their return in case export licences are revoked;
- the importing party shall issue certificates with an obligation to prevent any activity related to protected products, including their re-export, which has not been authorised by the exporting party;
- representatives from the importing party shall have limited access to protected products and technologies.
This Agreement fully secures the national interest of Russia in long-term cooperation with Brazil in high-tech space and rocket technologies and meets the requirements of a technological alliance between the two countries, of which the task for forming was set by the Presidents of the Russian Federation and of the Federative Republic of Brazil.
Implementation of the Agreement will not entail additional costs for the federal budget.
11. Signing the Agreement between the Government of the Russian Federation and the Government of the Republic of Namibia to Protect and Encourage Mutual Investment
The major provisions of the draft Agreement are as follows:
- Investments by investors from the state of one contracting party shall be allowed on the territory of the state of the other contracting party in keeping with the legislation of the state of the host contracting party.
- Each contracting party shall give investments by investors from the state of the other contracting party a no less favourable regime than the one given to investments by its own investors or investments by investors from any third-party state.
- Each contracting party shall keep the right to introduce and apply, in keeping with the legislation of its state, exceptions from the national regime related to investments by investors from the state of the other contracting party on the condition that such exceptions shall not be introduced or applied on a discriminatory basis compared with the regime introduced or applied in relation to investments by investors from any third-party state.
In addition, under the Agreement none of the contracting parties shall be obliged to extend to investments by investors from the state of the other contracting party the benefits it grants to investments by investors from any third-party state owing to participation in a free trade zone, a customs or a monetary union, a common market, or any similar economic integrative formation or any international agreement leading to the establishment of such unions or formations, and also on the basis of agreements on avoidance of dual taxation or other agreements on taxation.
- Investments and revenues of investors shall be guaranteed against compulsory seizure - nationalisation, expropriation, or other measures having similar effects, with the exception of cases when such measures are taken in the public interest, in accordance with the legislation of the state of the host contracting party and on a non-discriminatory basis, and involve the payment of a quick, adequate, and effective compensation. In addition, investors shall be guaranteed the right to obtain compensation in the event of harm or damage done to their investments and revenues, in particular as a result of war, armed conflicts, or civil disturbances.
- Revenues and other payments on investments shall be guaranteed free transfer abroad after investors have fulfilled all their tax and debt obligations and on the condition that they inform competent bodies of the state of the host contracting party of the transfer of their foreign currency assets.
- The rights of investors shall be given proper legal defence by using modern methods of settling disputes between one contracting party and an investor of the state of the other contracting party, and methods of settling disputes between the contracting parties related to the interpretation and application of the provisions of this Agreement.
The provisions of the draft Agreement conform to the norms of international law and are not contrary to the international commitments of the Russian Federation. In case of signature, the Agreement shall be subject to ratification. Implementation of the Agreement will ensure long-term stability and predictability of the legal environment for investors and will promote investment, trade, and economic cooperation between the Russian Federation and the Republic of Namibia.
January 26, 2009
Moscow
* Press releases by the Department of Press Service and Information contain the materials submitted by the executive federal bodies for discussion by the Presidium of the Government of the Russian Federation.
