In January 2004 the Russian government issued a number of regulations clarifying the application of certain tax exemptions under the Production Sharing Agreements (PSA) regime. In particular, the government approved the list of documents that a PSA investor is required to file with the customs office in order to obtain customs exemptions and with the tax authorities to obtain property and transport tax exemptions. Although these exemptions originally provided for in Charter 26(4) of the Tax Code, their practical implementation to date was not possible as it was contingent upon further regulatory acts of the government.
Article 346.35 of the Tax Code sets a list of taxes payable by a PSA investor and further provides that a PSA investor is exempt from paying customs duties, property and transport tax. However, the Tax Code did not provide what documents would be necessary for a PSA to qualify for these exemptions. Only in January 2004 did the government issue Decree No 14, Decree No 15 and Decree No 25, which approved the List of Documents for Transport Tax Exemption, the List of Documents for Property Tax Exemption and List of Documents for Customs Exemptions, respectively. From now on a PSA investor would be able to use the exemptions if it submitted to the tax authorities: (i) the application; (ii) a power of attorney; (iii) a register of its vehicles along with corresponding accounting documents; (iv) its annual work programme and budget; or, with respect to the property tax exemption, instead of items (iii) and (iv), the register of fixed assets, intangible assets and inventory used under the PSA.
To obtain the customs exemption a PSA investor is required to file the following documents with the customs bodies: (i) the application; (ii) the annual work programme and budget; (iii) the import contract; (iv) bills of loading; (v) and a confirmation from the government that the exported mineral were produced under the PSA.
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