Legislative acts regulating investment activity

Legislative acts regulating investment activity

Following legislative acts regulate investment activity in the Krasnoyarsk Krai:
• Constitution of Russian Federation;
• Civil Code of Russian Federation;
• Investment Activity Act;
• Investment Activity in Form of Capital Investments Act;
• Foreign Investments in the Russian Federation Act;
• Leasing Act
• The law of the Krasnoyarsk Krai “On state support of investment activity in the Krasnoyarsk Krai”.

The law “On state support of investment activity in the Krasnoyarsk Krai” is directed at the development of investment activity in the region, creation of the most favorable conditions for the investors and establishes additional guarantees of investment activity which are carried out in the form of capital investments in the Krasnoyarsk Krai.

General principles of state support of investment activity in the Krasnoyarsk Krai are:
1. Objectivity and economic validity of the accepted decisions.
2. Transparency and availability of information necessaryfor realization of investment projects for investors.
3. Target character of regional budget distribution.
4. Efficiency and economy of using the regionalbudget.
5. Diversification of risks between investors connected with realization of the investment projects.
6. Equality of investors and unifying of public procedures.
7. Mutual responsibility of territorial state authority bodies and investors.
8. Equation of state interests and interests of the investors.

The basic form of state support of investment activity is the regime of creating the most favorable conditions for stimulating investment activity of investors, which is carried out by granting to the investors:
1. Tax benefits.
2. State guarantees of the Krai.
3. Budget investments into the authorized capital of legal persons.
4. Budget credits. 
5. Investment tax credits.
6. Privileges on rent of immovable property.
7. Subsidies for compensation of a part of expenses on payment credit interests at Russian crediting organizations for realization of the investment projects or leasing payments paid to Russian leasing companies for the property got under the leasing contracts for investment project realization.
8. Other financial and non-financial forms of support, including rendering the information and consulting assistance to the investors within the limits of power given to the territorial state authorities by the current legislation.

Activity of investors at mineral raw-material complex is regulated by Earth bowels Federal Legislative Act and Federal Legislative Act: Concession Agreement Act. At the present time the most expedient at mineral resources processing is an entrepreneurial mechanism, based on tax schemes, which has much in common with Agreements on product sharing. That would let to achieve a long-term compromise between the State and an investor.

The Agreement on product sharing is a development contract for mineral resources searching, prospecting and extraction on a fixed period.

The Agreements on product sharing are signed by the government with competition or auction winner realized inthe course of statutory legislation and coordinated terms, but not later than one year from the day of declaration of the results of the competition or the auction.

Deposit can be included in a field’s exploitation list if it has substantiations of the Government of Russia for inclusion that’s deposits in mentioned lists. Development of minerals is allowed at 30 percent interest of explored and accounting reserves by the State. The investors can be legal persons or created on the basis of the contract associations of legal persons. License for right of development is given to investors by the terms of the Agreement.

Production is subject to division between the State and investor in accordance with the terms of the Agreement in following way:
• fixing general quantum of output and production value;
• fixing of quantum part of output, which is passed to investor for compensation of its expenditure on execution phase by the Agreement (compensatory production). The maximum level of compensatory production must not overdraw 75 % and 90 % on the assumption of mining on the continental shelf of Russian Federation — 90 % total volume of the production output. The structure of costs for compensation to the investor at the cost of compensatory production find it’s position in the legislation of Russian Federation (Clause 8 FS Devision of Production);
• division profitable production (produced production) between state and investor produced during realization of the agreement (Clause 8 FS Devision of Production), except for the part of that production exploitable for discharge of natural resources for using (Clause 8 FS Devision of Production) the bowels of the earth in accordance with the legislation of Russian Federation and compensatory production;• transfer the state-owned part of produced production or its cost equivalent according to the terms of the Agreement;
• delivery of the produced production belonged to the investor according to the terms of the Agreement.

According to legislation of Russia the investor exempts of taxes, duties and excises, except for three following taxes:
1. Profits tax:
• Taxable base is the produced production belonged to the investor according to the terms of the Agreement. Tax rate is fixed by the Agreement. At calculation of the profit tax the rate acting on date of signing of the agreement is applied. As agreed the profit tax is paid by the investor in natural or value form.
2. Natural resources use duty:
• non-recurring payments (bonuses) are paid when the Agreement is signed or when outcome obtains fixed result;
• annual payments for searching and prospecting works defined for a square unit of subsurface area under usage versus economical-geographical conditions, size of subsurface area, type of mineral, duration of the noticed works and geological exploration degree of subsurface area and risk degree;
• regular payments (royalty), fixed in percentage wise from volume of mineral resources output or from produced production cost and paid by investor in money or as a part of extracted minerals.
3. Value added tax (VAT).
4. United social tax passing to Russian Pension Fund, Russian Social Insurance Fund, Russian Medical Insurance Fund.

Investors are free of other obligations of resources usage payments. The payment for using the ground and other natural resources is carried out by the investor on a contractual basis according to the legislation of the Russian Federation. The investor has the right to transfer in full or in part the rights and duties under the Agreement to any physical or legal person only with the consent of the state.

According to the active legislation in conformity with the Federal Act “Foreign investments in RF” of July, 9 1999 № 160-FA in the Krasnoyarsk Krai can be established and act:
• commercial organizations with foreign investments (joint ventures), their branches and representations, which can be established in the following legal forms: joint-stock companies, limited partnerships, general partnerships, individual private companies;
• commercial organizations completely owned by foreign investors (100 % of foreign capital), their branches and representations entitled to elect: unincorporated representation without right for independent economic activities; branch with the right for independent economic activities, but without incorporation; joint-stock company with all the rights of juridical person.

The procedure for registration of commercial organizations with foreign investments, branches and representatives of foreign legal entities

Nowadays according to the Federal Low “On state corporate registration” dated 8.08.2001 the new procedure of legal entities registration has been adopted since 01.06.2002.

The authorized federal state body is Federal Tax Service. The state registration is to be legalized:
• in 5 working days since the date of documents presenting;
• On the location specified by founders in the application for the state registration of constantly operating agency, in case of absence of such agency — on the location of other body or the person, having the right to operate on behalf of the legal person without the
power of attorney.

Registration of establishing legal unit

List of the documents liable for submission to the Territorial Administration for registration:

• the Founders’ application made in writing with a request to register the organization;
• a certified copy of the decision of the owner of the property to establish the organization, or copies of the appropriate decision made by the body authorized by the owner;
• certified foundation documents;
• an extract from the trade register of the country of origin or other equivalent document confirming the legal status of the foreign investor in accordance with the legislation of the country of its location (its translation into Russian must be notarized and attached);
• document confirming payment of State duty.

One of the factors that contribute to the investment attractiveness of the region is the Russia’s integration into the system of international law that regulates cooperation in investment sphere. Some of the steps done in this direction are:
• conclusion of 33 intergovernmental agreements about mutual protection and stimulation of investments;
• accession to two international conventions, namely, Washington convention on the procedure of settling investment disputes between governments and foreign investors (1965) and Seoul convention on establishment of the Multilateral agency for investment
guarantees (1985);
• conclusion of the agreement with the European energy charter;
• accession to the International Monetary Fund and International Bank for Reconstruction and Development.

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