Within the frameworks of the St. Petersburg International Economic Forum, Vladimir Putin, President of the Russian Federation promised cheap long-term financing to speed up growth rates of the Russian economy which is close to the state of stagnation. There May Be No Demand in Investments26 may 2014 At the International Economic Forum in St. Petersburg, Vladimir Putin, President of the Russian Federation declared that capitalization of Russia’s important backbone banking and financial institutions would be increased, including by way of conversion of subordinated loans into preferred stocks which measure would permit banks to extend more loans to the economy and make loans less expensive. The European Union Has Started a Third Dispute Within the Frameworks of the WTO Against the Russian Federation22 may 2014 On May 21, 2014, the European Union has submitted to the WTO's Secretariat a request to hold consultations with the Russian Federation on antidumping duties introduced by the Eurasian Economic Commission on low-tonnage trucks from Germany and Italy. On the Results of the 2011-2013 Privatization Program20 may 2014 A three-year privatization program for the 2011-2013 period – the first program in the latest Russian history – was approved by Resolution No.2102-r of November 27, 2010 of the Government of the Russian Federation.
Economic growth rate is expected to slow down14 may 2014 According to mass media, tomorrow the Ministry of Economic Development will present a new version of the socio-economic projection in the Russian Federation in 2014–2017. The Ministry of Economic Development (MED) recommends, as it did in the previous year, the most conservative scenario as the baseline scenario in the adjusted version of the projection. This scenario shows that Russian GDP will grow 0.5% in 2014, 2% y-o-y in 2015 (comparing to 1.1% and 2.4% respectively, as provided in the previous April version of the projection). Structural constraints dwarf economic growth in Russia14 may 2014 The Ministry of Economic Development (MED) has admitted that national economic development is facing increasingly serious problems, because GDP may have been declining. For example, the MED doesn't rule out a 0-01% decline in GDP in Q2 2014. Two quarters of falling GDP implies a technical recession. A proposal on amending the procedure for taxation of individual’s income fr om disposal of assets12 may 2014 The Ministry of Finance of Russia has published a blueprint of The Guidelines of the Fiscal Policy of the Russian Federation in 2014 and Planning Period of 2015 and 2016 and 2017. Overall, the blueprint contains no proposals which previously were not considered. At the same time, the foregoing document contains a few proposals which may be regarded as material. In particular, it has been suggested that the procedure for taxation of individuals’ income generated from the disposal of assets (property) should be changed. The currently applicable procedure for taxation of individuals’ income generated from the disposal of assets has some weak points. For example, even where a single residential property is owned at the moment of disposal of the living quarters and purchase of a new residential apartment, if the former has been owned for less than three years, the owner as physical body is to pay the tax. In practice, many individuals (physical bodies) tended to understate the value of purchase and sale transaction to avoid taxation and were exposed to the risk of losing their property. The blueprint suggests the income generated from the disposal of residential real property should be exempted from taxation regardless of ownership period, provided that the taxpayer owns no residential real property other than this one. Should the physical body (individual) owns more than one real property at the moment of disposal of the residential real property, the income from the disposal of the same is to be exempted from taxation if the following terms and conditions are met:
It should be noted that if this proposal is introduced in the Customs Union member countries, the terms of taxation of individuals’ income generated from the disposal of assets would look less appealing. In Kazakhstan, income from sold assets are subject to taxation, provided that the real property is owned less than a year, while in Belarus, to the extent that more than one real property of the same type have been sold within 5 years, i.e. the rule doesn’t cover the disposal of a residential apartment or a dacha (country house). This proposal will prevent the usage of tax avoidance schemes where no more than one residential property is owned, however residential apartments may become less appealing in terms of investment while revenues from taxation of individuals’ income generated from the disposal of assets (property) are expected to grow. Elena Velikova, a senior researcher of Gaidar Institute’s Tax System Development Department The Ministry of Finance of Russia has published a blueprint of The Guidelines of the Fiscal Policy of the Russian Federation in 2014 and Planning Period of 2015 and 2016 and 2017. Overall, the blueprint contains no proposals which previously were not considered. At the same time, the foregoing document contains a few proposals which may be regarded as material. In particular, it has been suggested that the procedure for taxation of individuals’ income generated from the disposal of assets (property) should be changed. The currently applicable procedure for taxation of individuals’ income generated from the disposal of assets has some weak points. For example, even wh ere a single residential property is owned at the moment of disposal of the living quarters and purchase of a new residential apartment, if the former has been owned for less than three years, the owner as physical body is to pay the tax. In practice, many individuals (physical bodies) tended to understate the value of purchase and sale transaction to avoid taxation and were exposed to the risk of losing their property. The blueprint suggests the income generated from the disposal of residential real property should be exempted from taxation regardless of ownership period, provided that the taxpayer owns no residential real property other than this one. Should the physical body (individual) owns more than one real property at the moment of disposal of the residential real property, the income from the disposal of the same is to be exempted from taxation if the following terms and conditions are met:
It should be noted that if this proposal is introduced in the Customs Union member countries, the terms of taxation of individuals’ income generated from the disposal of assets would look less appealing. In Kazakhstan, income from sold assets are subject to taxation, provided that the real property is owned less than a year, while in Belarus, to the extent that more than one real property of the same type have been sold within 5 years, i.e. the rule doesn’t cover the disposal of a residential apartment or a dacha (country house). This proposal will prevent the usage of tax avoidance schemes where no more than one residential property is owned, however residential apartments may become less appealing in terms of investment while revenues from taxation of individuals’ income generated from the disposal of assets (property) are expected to grow. Elena Velikova, a senior researcher of Gaidar Institute’s Tax System Development Department IMF has good reasons for announcing that Russian economy is facing the onset of a recession06 may 2014 Late in April 2014, Head of International Monetary Fund in Russia Antonio Spilimbergo officially announced that the Russian economy had entered a recession phase. Lifting interest rates to have an adverse effect on investment activity28 april 2014 On April 25, 2014, the Bank of Russia desided to lift by 0.5 p. p. the key interest rate to 7.5% from 7% p. a., as well as the entire spectrum of interest rates on instruments designed provide and absorb liquidity. Ranking goes down in expectation of more sanctions against Russia25 april 2014 Standard & Poor’s has downgraded Russia’s long-term foreign exchange ranking on liabilities denominated in foreign currency to BBB- from ВВВ, which a forecast ranking being “negative”. The long-term ranking denominated in the national currency was downgraded to BBB from ВВВ+, with a forecast ranking being “negative” too. About simplifying tax accounting25 april 2014 The Federal Law of 20.04.2014, No. 81-FZ On the Amendments to the Second Part of the Tax Code of the Russian Federation makes certain amendments aimed at simplifying tax accounting by approximating the same to bookkeeping. Q1 2014 results: playing with statistics for political reasons17 april 2014 Minister of Economic Development Alexey Ulyukayev has presented the results achieved in Q1 2014 result, showing that GDP increased 0.8% comparing to the corresponding period in 2013. However, the first quarter saw a decline of 0.5% due to a seasonal factor. Russia’s economy yet has no potential for a 10% annual growth16 april 2014 On April 15, 2014, The Ministry of Economic Development of Russia presented its so-called draft version of a mid-term projection of the economic development in Russia including forecast parameters for the implementation until 2017 of the Presidential Decrees issued in May 2014. World military expenditure, 201315 april 2014 Stockholm International Peace Research Institute (SIPRI) published its review (Trends in World Military Expenditure, 2013) on April 14, 2014. No reason for easing the budgetary rule14 april 2014 The Ministry of Economic Development of Russia has prepared a baseline scenario of macroeconomic projection for 2014–2016 which provides for easing the budgetary rule in 2014, which is determined by growth in budget expenditures in response to the accession of the Crimea as a constituent entity of the Russian Federation. Minfin starts buying foreign currency to replenish the Reserve Fund11 april 2014 According to the data provided by the Bank of Russia, the Ministry of Finance and the Federal Treasury of Russia are to resume on April 14, 2014 foreign exchange transactions associated with transferring to the Reserve Fund extra oil and gas federal budget revenues generated at the 2013 year end. Therefore, on April 11, 2014 the Bank of Russia will resume its operations (with the maturity date falling on the following business day) in the foreign exchange market based on the amount of foreign exchange the Federal Treasury plans to buy. |
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As a Result, Accumulated Reserves Will Be Squandered
26 may 2014