Information for tacis contractors in russia

Subject: Tax/customs exemptions for goods, works and services purchased in Russia by contractors within EC-financed projects - General information

Tax and customs duties cannot be financed out of Tacis funds^¹. This means that the European Commission will not reimburse any taxes or customs duty paid from Tacis grants.

The Russian Law on Gratuitous Aid, No.95-FZ of May 1999 establishes a procedure for tax and customs exemptions for international technical assistance projects, including Tacis projects. In order to obtain a tax/customs duty exemption, a contractor of a Tacis project should apply the following procedure:

^ Project registration Commission for International Humanitarian and Technical Assistance (CIHTA) – in order to obtain a tax/customs duty exemption a Tacis project needs to be registered at the Commission for International Humanitarian and Technical Assistance at the Ministry of Economic Development and Trade in Moscow;
Certificate of the Commission of International Humanitarian and Technical Assistance - Upon registration, the beneficiary of the project can apply to the CIHTA to obtain a certificate for tax/customs exemptions. The certificate is sent by the CIHTA to the Tax and Customs authorities within three days after issuance.^²
(Tax/customs exemption from the relevant tax or customs authorities - If required)

Important: Please note, that registration with the CIHTA is free of charge. Services proposed by third parties to enable or speed up the process do not have any legal basis.
^ 1. Registration procedure
The Russian Law on Gratuitous Aid provides for a number of tax and customs exemptions for technical assistance projects, including Tacis projects, but requires such projects to be registered with the Commission for International Humanitarian and Technical Assistance (hereinafter CIHTA) at the Government of the Russian Federation in Moscow in order to benefit from these exemptions. Upon registration of the Tacis project the recipient of the project is entitled to apply to the CIHTA for the issuance of a certificate confirming goods, works and services enjoying the status of technical assistance. This certificate forms the basis for obtaining tax and customs exemptions established by law. On the basis of this certificate the relevant tax or customs authorities will grant the actual tax or customs exemption.
It should be noted that the registration at the CIHTA is not introduced as a mandatory requirement for the provision of gratuitous aid, but only as a pre-condition for obtaining relevant tax and customs exemptions. Tacis projects that are not registered in accordance with the Law on Gratuitous Aid are simply not deemed technical assistance as defined by Russian legislation and therefore not entitled to the preferential treatment as noted above.

^ Collective registration of Tacis and EIDHR projects
The precondition for an individual project to register with the CIHTA – and thus to obtain a certificate for tax/customs exemption – is that the relevant Action Programme is registered as a whole. The Action programme receives a registration number which is used as a reference for all subsequent steps.
The EC Delegation has collectively registered all Tacis projects of Tacis Action Programmes (AP) 1998, 1999, 2000, 2001 and 2002 under one umbrella registration. In addition, the CBC, Baltic Region Programmes of 2001 and the European Initiative of Democracy and Human Rights (EIDHR) of 2002, 2003 and 2004, and Nuclear Safety Programmes are registered as well. This collective registration replaces the previous procedure of individual registration.
In the application form for tax exemption please refer to the relevant ^ Tacis registration number of your project. The collective registration numbers refer to projects of:
▪ Tacis Russia Action Programme 1998 = Reg.nr. EU-004-000
▪ Tacis Russia Action Programme 1999 = Reg.nr. EU-005-000
▪ Tacis Russia Action Programme 2000 = Reg.nr. EU-006-000
▪ Tacis Russia Action Programme 2001 = Reg.nr. EU 009-000
▪ Tacis Programme 2001 for Cross-Border-Cooperation (CBC) = Reg.nr. EU 010-000
▪ Tacis Programme 2001 for Cooperation in the Baltic Sea Region = Reg.nr. EU 011-000
▪ Micro projects and Macro projects of the European Initiative for

Democracy and Human Rights (EIDHR) for implementation in

2002 and 2003 = Reg.nr. EU 012-000
▪ Tacis Programme 2002 for Cross-Border-Cooperation (CBC) = Reg.nr. EU 013-000
▪ Tacis Programme 2002 for Cooperation in the Baltic Sea Region = Reg.nr. EU 014-000
▪ Tacis Action Programme 2002 = Reg.nr. EU-0000 86
▪ Tacis Nuclear Safety Action Programme 2002* = Reg.nr. EU-0000 87
▪ Tacis Programme 2003 for Cross-Border-Cooperation (CBC) = Reg.nr. EU 017-000
▪ Tacis Action Programme 2003 (incl. IBPP)= Reg.nr. EU-018-000
▪ Tacis Regional Programme 2003= Reg.nr. EU-019-000
▪ Tacis Nuclear Safety Action Programme 2003 = Reg.nr. EU-020-000
▪ Tacis Programme 2003 for Cooperation in the Baltic Sea Region = Reg.nr. EU 021-000
▪ Tacis Action Programme 2004 (incl. IBPP) = Reg.nr. EU-024-000
▪ Tacis Nuclear Safety Action Programme 2004 = Reg.nr. EU-023-000
▪ Tacis Cross Border Cooperation Programme 2004 = Reg.nr. EU-025-000
▪ Tacis Regional Programme 2004 = Reg.nr. EU-026-000
* For the individual registration numbers of the Nuclear Safety programmes, please contact Stefanie.Harter@cec.eu.int.

Please note that projects that have already been individually registered will not be affected by the general Tacis registration, i.e. their individual registration number will stay valid.

^ 2. Issuance of Certificates
According to the Decision of the RF Government No. 1046 of 17 September 1999 (with Ammendments of 6 September 2000, 25 April 2003 and 19 August 2004), the following list of documents must be submitted by the recipient of the technical assistance for the application of a certificate (as stated in the Registration Procedure), in Russian or with a Russian translation:

An application letter which includes the following details:

Name and address of the beneficiary
Donor Organisation
Name and address of the contractor
Name of the project
Action programme/Registration number
Number of the contract
Volume
Duration of the project

A written pledge by a municipal body or administrative body on the territory where the beneficiary of the project is located, or an appropriate federal executive body to exercise control over the use of technical assistance in accordance with its purposes (e.g. letter signed by the deputy governor of the local administration)

(also required if the beneficiary is a government body or representative of local governmental authorities. In this case, such a pledge may take the form of a statement included in the application letter – see template)

Confirmation letter by the EC Delegation (or the EC in Brussels for non-decentralised projects), stating that the goods, works or services are being delivered in the framework of the Tacis project
Copy of the charter and registration documents of the final beneficiary (not required if the beneficiary is a government body or representative of local governmental authorities)
List of equipment (4 copies), stating the customs value of the equipment, and bearing the stamp and signature of the recipient on every page (i.e. notarised copies are not required)
Supply contract

The documents should be delivered personally or sent by registered letter (or courier) to the postal address of the CIHTA (see below).
The files will be handled by the Working Group of the CIHTA at its regular meetings within one month after the receipt of a complete file. While the registration procedure prescribes that the application for the issuance of certificates must be issued within three weeks of the submission, the process may in practice take up to six weeks, and possibly longer. The decision on tax exemption certificates is taken by CIHTA during its Working Group meetings.

^ 3. Obtaining subsequent tax/customs exemption from the tax authorities
Upon submission of the certificates issued by the CIHTA granting the right to exemption of tax and customs duty, the relevant local tax or customs authorities should accept the tax/customs exemption. Since August 2004, the CIHTA sends out the certificates directly to the tax and customs authorities which should make the process more secure and reduce the possibility that the local tax authorities would not accept the tax exemption certificates of CIHTA (and, for example, require additional documentation from the tax authorities, e.g. the State Customs Committee or the Tax inspectorate). In case of further difficulties, the Contractor should contact his contact person at the CIHTA for further practical advice.
^ The right to obtain a certificate - restriction
Please note that the right to obtain a certificate is restricted to Russian recipients of technical aid. Only a recipient may submit an application for a certificate. This limitation makes it difficult to obtain a certificate, and the subsequent customs exemptions, where goods works or services are intended for the Contractor’s use prior to transfer to the beneficiary (e.g. equipment), or subcontracting of works or services.

^

Exemption of VAT and customs duty upon importation of goods under Tacis projects

If goods are imported under Tacis projects from the EU into Russia the customs authorities will levy no import VAT and customs duty, provided that the relevant tax/customs exemption certificates can be submitted. It is our understanding that this procedure works satisfactorily in practice, and projects actually obtain import VAT and customs duty exemptions upon importation.
^ Possible refunds of input VAT incurred on Russian sales under Tacis projects
If goods are purchased in Russia under Tacis projects, it is regular procedure that the input VAT has to be paid first. The Russian authorities are of the opinion that a contractor, who is eligible for a VAT exemption for Tacis projects, should first pre-pay input VAT and subsequently request for a refund with the tax authorities. This regular VAT refund procedure requires that the contractor has to register in Russia for tax purposes and subsequent files of a VAT return with the tax authorities.
CIHTA on behalf of MEDT holds the view that Tacis projects should register with the tax authorities for tax purposes and request for a reimbursement for input VAT in accordance with the regular established procedure.
It must be noted, however, that although the Russian VAT legislation provides for a regular procedure to obtain a refund of input-VAT on project equipment incurred under Tacis projects, it may be extremely difficult for Contractors to obtain an actual refund of input VAT in practice, given the extensive and cumbersome requirements for such a procedure, and the fact that local tax authorities may often lack funds for a tax reimbursement.
^ VAT exemption at point of sale
Under Russian legislation Tacis projects are entitled to point-of-sale exemptions from VAT. Yet the procedural requirements that have been laid down for this exemption are difficult to comply with in practice. The Delegation was informed by CIHTA in November 2001 the VAT exemption at point of sale (in line with Art.149 of the second part of the Tax Code ^³) is now functioning, since the restrictive VAT Decree No.688 of September 2000^⁴ that has been revoked as of January 2001. (Whilst this VAT Decree was effective, a VAT exemption at point-of-sale was a practical impossibility). However, this procedure seems to require the assistance of CIHTA.

^

Tax and customs arrangements under EC tendering procedures for procurement of supplies

The VAT point-of-sale exemptions may work for local supply tenders. When project equipment is procured by means of an EC supply tender procedure (e.g. through a simplified procedure, a local or international open tender in accordance with the EC Practical Guide) the offers by suppliers will be free of VAT and other fiscal charges. The general conditions to EC supply contracts specify that for supplies that are manufactured locally all internal fiscal charges applicable to their manufacture shall be excluded. For supplies to be imported into Russia all taxes and duties applicable to their importation, including VAT, are to be excluded (see Article 16 of the General Conditions of Supply Contracts Financed by the EC). There are precedents of Tacis contractors who have successfully tendered the acquisition of equipment in Russia to Russian suppliers without any charge of VAT.
It must be noted, however, that although the Russian VAT legislation now provides for a procedure to obtain a refund of input-VAT on project equipment incurred under Tacis projects, it may be extremely difficult for Contractors to obtain an actual refund of input VAT in practice, given the extensive and cumbersome requirements for such a procedure, and the fact that local tax authorities may often lack funds for a tax reimbursement.
^ Exemption from Russian personal income tax
Article 12 (4) of the General Rules No 14-FZ state that foreign legal persons and citizens, taking part in the European Communities financed E.C. Technical Assistance Programme to Russia in the Russian Federation according to thee General Rules, shall be exempt in the Russian Federation from payment of income tax on receipts arising from the EC Grant. For foreign specialists the unified social tax does not have to be paid. For Russian specialists, though, the unified social tax has to be paid. At request, the EC Delegation can issue letters of support to individual experts confirming their status as Tacis expert.
The exemption from Russian personal income tax is only applicable to international experts and does not apply to local Russian staff.
^ General comments
The above information serves as guidelines for project registration and obtaining tax exemptions under Tacis projects. Please note that Contractors are under no obligation to use either these guidelines or attached template.
The EC Delegation may only provide for general information on Tacis taxation rules, and issuance of letters of support either to contractors for obtaining tax exemptions on goods, works or services, or to individual experts confirming their status as Tacis expert for Russian personal income tax purposes. The EC Delegation does not give any tax advice. This remains the responsibility of the Contractor and individual experts.
Please note that the Russian legislation and conditions that tax registration and obtaining tax exemptions is subject to change. The EC Delegation will try to provide you with any changes and up-dates. The EC Delegation cannot be held responsible for any such changes.

^

Contact details

Commission for International Humanitarian and Technical Assistance at the Government of the Russian Federation (CIHTA)

The main contact persons of the Commission for International Humanitarian and Technical Assistance at the Government of the Russian Federation (CIHTA) are:
Mr. Dmitri Ivanovich Kvitko

Head of Unit for International Projects, MEDT, Trubnikovskii per. 19, Moscow

(tel. 248-84-11, fax. 248 84 77, dik55@bk.ru)

Mrs. Olga Esaulova, Deputy Head of Unit for International Projects, MEDT, TRubnikovskii per 19, Moscow (tel. 248 84 21, esaulova@economy.gov.ru)

Mrs Natalia Petrovna Lantseva (Responsible Secretary of CIHTA) (tel:)

Mr. Viktor Petrovich Matriunichev (tel. 248 86 22)

Mr. Ruslan Kakabadze (tel: 248 85 83)
Postal address:

Head of the National Coordination Unit, Deputy Chairman of the Commission of International Humanitarian and Technical Assistance at the Government of the Russian Federation,

Ministry of Economic Development and Trade of the RF

Ganeeva, Svetlana Valerievna

Trubnikovskii pereulok, 19, Moscow,
Internet page address: www.isr.ru

^

National Coordinator for Tacis projects

Any questions on the above issues could be addressed to the contact persons of the National Coordinator for Tacis projects as set forth below. The National Coordinator for Tacis is Mr Saveliev, First Deputy Minister for Economic Development and Trade (MEDT). The Head of the National Coordination Unit is Svetlana Ganeeva, the Director of the Department for Investment Policy and State Investment at the MEDT. Deputy Head of the National Coordination Unit, and Executive Secretary of the CIHTA is Mr. D. Kvitko. For issues concerning Tacis project registration and tax exemptions, please get in touch with the following contact person:
Mr Ruslan Aliev (tel: 248 85 58)

Mrs Elena Kolerova (tel: 248 85 58/ 8452; fax: 248 84 77)
^ Delegation of the European Commission in Russia
If you have any comments or questions in respect to the above, please feel free to get in touch with the contact person in the Tacis section of the EC Delegation in Moscow for project registration and tax/customs exemptions of Tacis projects:
Stefanie Harter

Tacis Programme officer

Tel: 721-2035 / 721-2000 (reception)

Fax: 721-2040

Email: stefanie.harter@cec.eu.int
For letters of support from the EC Delegation concerning Tacis tax exemptions for Contractors or EU experts, please liaise directly with the Project Manager or Project Officer who is the contact person for the relevant Tacis project, or his/her secretary.

^ Should you have any comments of suggestions concerning the contents of this note, please contact Stefanie Harter

(see above)

Annexes: Templates for application form for obtaining a tax exemption certificate (English / Russian)
[ANNEX - Letterhead of relevant participant of Tacis project]

Sample Format^ FOR LETTER OF APPLICATION FOR OBTAINING A CERTIFICATE CONFIRMING THAT FUNDS, COMMODITIES, WORKS AND SERICES ARE TECHNICAL ASSISTANCE FOR TAX AND CUSTOMS EXEMPTIONS

Date: _________________________ № ______________________________
To: Chairman

Commission for International Humanitarian and Technical Assistance

Of the Government of the Russian Federation

1^st Tverskaya-Yamskaya Street, bld.1, 3

125993 Moscow
In accordance with the Decree of the Government of the Russian Federation No. 1046 of September 17, 1999, please issue a certificate confirming that funds, goods, works and services, provided within the framework of technical assistance project described below, and relevant transactions with these funds, goods works, and services, are technical assistance and therefore are entitled to the tax and customs exemptions, provided by

Bilateral agreement between the Russian Government and the European Communities No.14-FZ “General Rules Applicable to the Technical Assistance of the European Communities” of 6 January 1999, and

Federal Law of the Russian Federation No. 95 FZ “On Gratuitous Aid/Assistance to the Russian Federation and Amending Certain Legislative Acts of the Russian Federation on Taxes and on Introducing Privileges on Payments into State Non-budgetary Funds Relating to the Provision of Gratuitous Aid/Assistance to the Russian Federation” of 4 May 1999

Donor: Commission of the European Communities

Country: European Communities

Title: European Communities Technical Assistance Programme to

Russia (Tacis)

Organisation(s)-Supplier(s)_________________________________________________

________________________________________________________________________________________________

Title and stipulations of all implementing organisations and vendors under this project with indication
________________________________________________________________________________________________

of amounts provided to each of them (can be provided as an attachment)

Russian recipient(s) or criteria for selection of recipient(s)

_______________________________________________________________________

Title and stipulations including INN for recipients (can be provided as an attachment)

Title of Tacis Project ____________________________________________________

Action Programme of Project _____________________________________________

(Year of Tacis Action Programme)

Period of Tacis Project ______________________________________________________

Information on funds, commodities, works and services for which exemptions are requested:

Total value of the project in Russia _________________________________________

Information for particular transaction(s) (should be provided for each of the transactions, in case of considerable number of transactions can be provided as an attachment):

Description of the transaction ______________________________________________

______________________________________________________________________

Purpose of the transaction _______________________________________________

________________________________________________________________

Total value of the transaction ______________________________________________

Vendor _______________________________________________________________

Registration Number of Tacis Project (if known at the time of application):

EU-00 .. -000

_______________________________________________ [add name of the Russian recipient] being the Russian recipient of the Tacis project, hereby guarantees the use of the technical equipment as part of the Tacis project within the period of the project.

[signed] Relevant Russian recipient

of the Tacis project

Attachments:

Confirmation letter by the EC Delegation
Copy of the charter and registration documents of the final beneficiary (not required if the beneficiary is a government body or representative of local governmental authorities)
List of equipment (2 copies) bearing the stamp and signature of the recipient on every page
Supply contract

[ANNEX – Шапка получателя по проекту Тасис]

Образец ПИСЬМА-ЗАЯВЛЕНИЯ, С ПРОСЬБОЙ ВЫДАТЬ СЕРТИФИКАТ О ПРИЗНАНИИ СРЕДСТВ, ТОВАРОВ И УСЛУГ ТЕХНИЧЕСКОЙ ПОМОЩЬЮДЛЯ ПОЛУЧЕНИЯ ОСВОБОЖДЕНИЯ ОТ УПЛАТЫ НАЛОГОВ И ТАМОЖЕННЫХ ПЛАТЕЖЕЙ

Дата: _________________________ № ______________________________
To: Председателю

Комиссии по вопросам Международной Технической Помощи

1^-я Тверская-Ямская улица , дом 1, 3

125993 Москва
В соответствии с Постановлением Правительства Российской Федерации № 1046 от 17 Сентября 1999 года, пожалуйста, выдайте сертификат о признании средств, товаров и услуг и услуг оказываемых в рамках проекта технической помощи, описываемого ниже, и настоящее передвижение этих средств, товаров и услуг является технической помощью и поэтому освобождены от налогообложения и таможенных платежей на основании:

Двустороннего соглашения между Российской Федерацией и Европейской Комиссией No.14-ФЗ “Общие правила применяемые для технической помощи Европейским Сообществом ” от 6 января 1999, и

Федеральный закон РФ No. 95 -ФЗ “О безвозмездной помощи (Содействии) Российской Федерации и внесении изменений и дополнений в отдельные законодательные акты Российской Федерации о налогах и об установлении льгот по платежам в государственные внебюджетные фонды в связи с осуществлением безвозмездной помощи (содействия) Российской Федерации” от 4 мая , 1999 года

Донор: Комиссия Европейских Сообществ

Страна: Европейское Сообщество

Вид содействия Программа Технической помощи Европейского

Сообщества России (Тасис)

Организация(и)-Поставщик (и)________________________________________________

________________________________________________________________________________________________

Название и данные доля участия всех вовлеченных организация в рамках этого проекта с указанием
________________________________________________________________________________________________

суммы выделяемых им (может быть предоставлена им отдельным приложением)

Российский получатель или критерии их отбора

_______________________________________________________________________

Название и данные в получателя, включая ИНН получателя (может быть представлено приложение)

Название проекта Тасис:___________________________________________________

[Заметка – пожалуйста, убедитесь, что название проекта соответствует указанному названию в заявлении проекта в заявлении на регистрацию проекта]

Программа действий, в которую включен проект _________________________

(Год Программы действий Тасис)

Сроки проекта Тасис ____________________________________________________

Информация о товарах, услугах и средств, для которых требуется освобождение от налогообложения:

Полная сумма проекта в России ________________________________________

Информация о предполагаемых поставки (ок) (должно быть предоставлено по каждой поставки в страну, в случае большого количества, можно предоставить приложение):

Описание ввозимых услуг _____________________________________________

____________________________________________________________________

Цель ввоза __________________________________________________________

____________________________________________________________________

Общий объем поставки _______________________________________________

Продавец ___________________________________________________________

Регистрационный номер проекта Тасис (если на дату подачи заявления он известен):

EU-00 .. -000

_______________________________________________ [^ Добавьте наименование Российского получателя] являясь Российским получателем проекта Тасис, гарантирует использование технического оборудования в соответствии с целями проекта Тасис и в рамках проведения проекта.

[подпись] Настоящий Российский получатель

проекта Тасис

Приложения:

Письмо – уведомление Делегации Европейских Комиссий
Копии учредительных документов и свидетельства о регистрации конечного получателя помощи (не требуется, если получателем является правительственная структура/ учреждение и представительство местных органов власти)
Список оборудование (2 копии) с печатью и подписью получателя на каждом листе
Контракт на поставку

1 In accordance with Article 11 of the “General Rules applicable to the technical assistance of the European Communities” No.14-FZ of 6 January 1999, a bilateral agreement between the Commission of the European Communities and the Russian Government.

2 Government Decree No.420 of 19 August 2004.

3 The Second Part of the Tax Code became effective on 1 January 2001.

4 Governmental Decree No.688 “On the Approval of the Rules of Compensation of VAT paid on Production-related Material Resources (Works performed or Services rendered) Used in the Production of Goods, Works and Services Realised within the Framework of Grants (Grant Assistance) to the Russian Federation” of 15 September 2000

Kadashevskaya nab. 14/1, 109017 Moscow, Russia

Telephone: direct line (+7-095)721.20.35, switchboard 721.20.00. Fax: 721.20.40

Internet: HREF="http://www.eur.ru/" MACROBUTTON HtmlResAnchor www.eur.ru E-mail: stefanie.harter@cec.eu.int

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Information for tacis contractors in russia