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19.05.2016 — Council of Federation Enables Regions to Attract Investments for Tax Benefits

Primarily the bill is aimed at further development of the Far East regions and involvement of the Asian companies as investors. The regions will be allowed to reduce income tax rate for investors from 18 to 10 percent in exchange for investments of 50 million RUR in three years.

Please note that initially the bill has been rejected due to a technical mistake in calculations. However the need to attract investments has been growing proportionally to the decrease of European investments in domestic economy. Thus, the Council of Federation hopes that easing tax burden will favorably affect investment climate throughout the country, and will send positive message to the investors interested in developing capital-intensive facilities.

18.05.2016 — Russian Economy Responds Positively to Anti-crisis Measures

According to the head of the Central Bank, Elvira Nabiullina, in 2016 the GDP will decrease by 1,3-1,5%, in 2017 the economy growth will be close to zero, and in 2018 positive rate of GDP growth is expected. However, this development forecast is directly related to oil prices and more negative scenario is possible if oil prices continue to fall.

Nevertheless, Russian economy is responding positively to such tendencies as import substitution and diversification of export nonrelated to raw materials. Annual drops in consumption and investments are slowing down, unemployment remains low. In general, economic activity dynamics in Russia shows recovery despite deterioration of external circumstances.

17.05.2016 — List of Companies Authorised to Employ Turkish Citizens Is Expanded

The official document containing additional 14 companies authorised to employ Turkish citizens was signed by the Prime Minister and published on the National Legal Internet portal.

Be reminded that at the end of last year Russia has imposed economic sanctions on Turkey including in particular the ban to employ Turkish workers since January 1, 2016, as well as the ban or restriction on import of some Turkish goods.

16.05.2016 — Hostels in Residential Buildings to Be Banned

The State Duma has passed in the first reading a bill proposing to ban hostels in premises of the apartment buildings. Authors of the bill refer to part 1 article 17 of the Housing Code of the Russian Federation and article 228 of the Civil Code of the Russian Federation according to which premises have to be used for the designated purpose a priori and not for commercial profit. Thus, if the bill is adopted, before rendering hotel services the apartment owners will have to reclassify its status to a non-residential premise as provided by article 22 of the Housing Code RF.

Please note that the main difference between hostels and regular hotels is relatively low price in hostels what makes them very popular among tourists and business travelers. However renting premises for hostels in commercial buildings deems this type of business unprofitable what consequently will considerably reduce the number of hostels or force the owners to go into hiding.

14.05.2016 — Supreme Court Supported Pledgee Who Prior to Pledge Execution Relied on Data from EGRP

The Supreme Court of the Russian Federation in its ruling N 306-ES15-8369 dated 04.04.2016 protected the interests of a pledgee who relied on the validity and relevance of records in the Unified State Register of Real Estate Rights and Transactions (EGRP) that no other mortgage was agreed upon in respect of the property in question.

The Samara region Arbitrazh court ruled in favour of the bankruptcy supervisor – government corporation “Deposit Insurance Agency” - on the bankruptcy case of the open joint-stock company (OJSC) “Interregional Volga-Kamsky Bank of Reconstruction and Development” who asked to consider debt transfer agreements null and void and to apply implications of invalidated transactions thereto.

Thus, the Court decided that if an entity bona fide relies on credibility of the data available in the EGRP, such entity can rightfully expect to become the only pledgee. Its requirements must be addressed as a matter of priority, even if the former pledge is reinstated.