Статья 2. Настоящий Закон вступает в силу с 1 августа 1998 года, но не ранее дня его официального опубликования.

И.о. губернатора Санкт-Петербурга
Первый вице-губернатор Санкт-Петербурга В.Н. Щербаков

Санкт-Петербург,
30 июля 1998 года
N 184-37

Translation from Russian into English
The Legislative Assembly of the city of St. Petersburg
ST. PETERSBURG LAW
ON ADDING A NEW ARTICLE TO THE
ST. PETERSBURG LAW ON TAX EXEMPTIONS
Enacted by the Legislative Assembly
of the city of St. Petersburg on 8 July 1998

Article 1
To supplement the St. Petersburg Law of 28 June 1995 No 81-11 ON TAX EXEMPTIONS by Article 11-3 to the effect of
"Article 11-3
1. The following tax exemptions should be provided to all enterprises and companies doing their business in the city of St. Petersburg:
a). while calculating the amount of company"s profit tax payable to the St. Petersburg City Budget the taxable amount should be reduced by the amount which has already been invested for production development and for other purposes including share participation as well as for loan repayments to the banks, the loan received and used for the indicated purposes, including interest payable on these loans, though the interest rate should not be higher than by 3 per cent of the interest rate established by the Central Bank of the Russian Federation (RF CB) for the time the loan was taken.
The amount of the benefit is to be calculated as indicated in par. 4.1.1 of the Instruction of the State Tax Service of the Russian Federation of 10 August 1995 No 37 "On the procedures of calculation and payment of the profit tax by enterprises to the budget". No account should be given to the costs incurred by the acquisition and setting up intangible assets.
When this tax benefit is calculated the limitation on the amount of the benefit (as indicated in item 7 of Article 6 of the RF LAW ON PROFIT TAX FOR ENTERPRISES AND COMPANIES in the wording of 1 January 1998) shall not be applied.
Starting from the first day of the quarter when this law is enacted this tax benefit amount should be calculated on the basis of actual investments made.
b) Tax payers who have already made their capital investments to their fixed assets in the period from 1 January 1992 to 31 December 1999 amounting to more than 50 million US dollars (converted into roubles by the RF CB exchange rate for the day of the said assets are put on stream), are completely exempted from the company"s property tax in the year 2000.
Tax payers who have already made their capital investments to their fixed assets in the said period ranging from 25 million US dollars to 50 million US dollars in total (converted into roubles by the RF CB exchange rate for the day of the said assets are put on stream) in the year 2000 should pay only 50 per cent of the said property tax rate as it is determined on 1 January 2000.
The indicated tax exemption and its amount calculation should be based on the documents (calculations) confirming the profit tax exemption for the companies in the form of their actual capital investments. These documents should be provided by the companies to the Tax Bodies of St. Petersburg as part of their Financial Statements for the above mentioned period, in addition documents should be submitted that show that the companies converted their costs into dollar equivalent amount during the same period.
To calculate the amount of capital investments to the capital (fixed) assets for the period from 1 January 1992 to 1 January 2000 the total sum of capital investments should be reduced by the value of alienated capital assets during the said period.
c) when the company"s income tax amount payable to the St. Petersburg Budget is calculated the property value evaluated for the tax payment should be reduced by the book value (depreciation sum being deducted) of the fixed assets put on stream during a period that should not exceed the last four quarters:
- should the total purchase value of the said fixed assets or the costs of contract jobs by which these fixed assets were established exceed 1 (one) million roubles the privilege is given for a period of 8 (eight) quarters, starting from the fir day of the quarter for which the exemption terms were enacted;
- should the total purchase value of the said capital assets or the costs of the contract jobs exceed 5 (five) million roubles the privilege is given for the period of 16 (sixteen) quarters, starting from the first day of the quarter for which t exemption terms were enacted;
- should the total purchase value of the said capital assets or the costs of the contract jobs exceed 500 (five hundred) million roubles and they are put on stream during a period of 10 months running, the privilege is given for the period of 28 (twenty eight) quarters, starting from the first day of the quarter for which the exemption terms were enacted.
The privilege is to be granted only once for any single fixed asset (facility).
Shall the fixed assets be alienated before the four year period of tax exemption expires (the period is to be considered as started from the day the privilege is awarded), the company property tax amount not paid to the St. Petersburg budget due to the said privilege, should be paid in full amount for the entire period of the tax exemption;
d) land plots, within appropriately authorised boundaries, which are not trusted, leased or transferred into any other type of property and which are used for new development or/and rehabilitation of the property located at this plot, are exempted from the land tax in the amount to be paid to the St. Petersburg budget starting from the time the actual investments are made and for the period of the entire construction (rehabilitation) project, as this period is determined in the authorised project design, and the exemption is further effective in the course of two years after the construction project is over;
e) tax payers who produce goods that are subject to excise are exempted from the following taxes and charges that otherwise should have been transferred to the St. Petersburg Budget:
- 50% of the company profit tax;
- land tax;
- housing tax and tax for the support of social and cultural facilities;
- advertisement tax.
The indicated privilege is awarded for the period of five years only.
To get tax exemptions the following conditions should necessarily be fulfilled:
- capital investments to the fixed assets should be made in the amount equivalent to at least 5 million US dollars at the rate of exchange established by the RF CB on the day the said fixed assets are put on stream;
- the total tax amount to be transferred to the St. Petersburg Budget in each subsequent year should not be less than that transferred to the St. Petersburg Budget in the base year (the year when the amount of capital investments exceeded the am equivalent to 5 (five) million US dollars).
The tax exemptions, stipulated hereby, are awarded from the first day of the first month following the day when the amount of capital investments exceeded the amount which is equivalent to 5 (five) million US dollars.
Should a tax payer fail by the end of the fiscal year to pay the minimal amount of taxes and charges he loses the opportunity for tax exemption right.
Each single facility of the fixed assets can be taken into consideration for getting a tax exemption only once.
2. If a company-tax payer is liquidated or is removed from the Register of the State Tax Inspection of the city of St. Petersburg but is registered afterwards in any other Subject of the Russian Federation before its privileged 5-year period expi the tax exemption becomes invalid and starting from the day the privilege becomes invalid the company should pay the amount of property tax, profit tax and land tax not transferred to the St. Petersburg budget because of its tax exemption right, to the St. Petersburg City Budget within three months from the date the decision was made to liquidate the company by any authorised body of the tax payer or any other competent body, or changes were introduced to the Company"s By-Laws that resulted in its removal from the Register of the State Tax Inspection of the city of St. Petersburg, though not later than the date the company was removed from the Register of the State Tax Inspection of the city of St. Petersburg.
3. Should the investments to the fixed assets be paid in the foreign currency a criterion for tax exemption amounts indicated in the present law, is to be calculated, the amount of capital investments to the fixed assets should be converted into roubles using the exchange rate set by the RF CB on the date the fixed assets are commissioned".
Article 2
The present law is effective from 1 August 1998, though not earlier than the day it is officially published.
Signed by
V.N. Shcherbakov,
Acting Governor of St. Petersburg
First Vice Governor
And stamped with the official seal of the
Protocol Department of the St. Petersburg Governor"s Office
St. Petersburg
30 July 1998
N 184-37
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