On the basis of the amended profits tax law (Federal Law of 10 January 1997 No. 13-FZ, entered into force 21 January 1997, see our Tax Alert 2/97 of 30 January 1997), positive exchange rate differences again constitute non-realisational income (hence are taxable), whilst negative exchange rate differences are now again considered as non-realisational expenditure (hence are tax deductible). The new law implies this treatment of exchange gains and losses, but this has now been explicitly confirmed by an amendment to Government Regulation No. 552 of 5 August 1992. Exchange rate differences may occur as a consequence of revaluation of foreign currency bank deposits, or revaluation or redemption of liabilities or receivables in foreign currency. From 5 December 1994 to 21 January 1997, the profits tax law did not allow deductibility of exchange losses and exchange gains were not taxable. Exchange gains and losses should be distinguished from sum differences which may occur if invoices are payable in roubles but denominated in foreign currency (see TNR of 19 February 1997).
Government Regulation of 11 March 1997 No. 273
VAT EXEMPTION/ CHARTER CAPITAL CONTRIBUTION
The VAT exemption applicable for contributions to charter capital is now consistent with the restrictions of the customs legislation introduced by Governmental Regulation No.883. According to Article 5 (y) of the VAT Law and Article 37 of the Law on Customs Tariff, goods imported as a contribution to the charter capital of Russian companies with foreign investment are exempt both from VAT and customs duty. The exemption is restricted to production assets which are not subject to excise duties and are included in "main production funds". In order to meet this last requirement, the assets must appear in the All-Russian Classifier of Main Production Funds (OK-94).
Federal Law of 17 March 1997 No. 54-FZ
VAT/ 10% RATE FOR FOOD PRODUCTS
A number of wild species of fruits and nuts have been added to the list of food products which are subject to 10% VAT. Amongst the newly privileged products are the cranberry, the wild strawberry and the wild pear.
Government Regulation of 11 March 1997 No. 276
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
For further information contact Alla Shaulina on tel: +7 503 232 5511 fax: +7 503 232 5522 or e-mail directly: Alla_Shaulina@ru.coopers.com or enter a text search 'Coopers & Lybrand' and 'Business Monitor'.
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