The LAWOF PSKOV REGIONOn tax remissions and state support of investment activity in Pskov region Adopted by regional Assembly of deputies 29 September 2005 The subject of the present Law is definition of forms, conditions and procedure of granting the tax remissions and state support to investors investing in the territory of Pskov region (further – region). Section I. General provisions Clause 1. General concepts The concepts and terms, incorporated in the present clause, are used for the purposes of the present Law. 1. Investments – monetary funds, securities, other property, including rights of property, other rights with pecuniary valuation, invested by investor in objects of investment activity for profit purposes and (or) achievement of socially useful effect. 2. Investment activity objects – located in the territory of region various kinds of newly created and (or) modernized fixed assets in private, state, municipal and other forms of property, with exceptions, stipulated by federal laws.3. Investment activity – execution of practical actions on investment in fixed assets.4. Investors – legal entities, registered in tax authorities of region and executing investment activity in the territory of region. 5. Executed investments – investments in newly created or acquired and placed in operation property, registered in balance as fixed assets and actually used by the organization in activity.6. Investment project – program of investment activity of investor, with a specific intent, definite implementation deadlines, resources, as well as business plan and required documentation, developed in compliance with the current legislation.7. Business plan of an investment project - documentation, including description of practical actions on investing, developed in accordance with and approved by Administration of region Requirements to applications for granting state support to investors realizing investment projects approved by Administration of region (further – Requirements).8. Tax treatment – rates of regional taxes set by region laws and federal taxes in part, entered to region budget. Clause 2. Investment financing sources Investment financing is executed by investors at their own cost and (or) attracted funds. Section II. State support of investment activity in region Clause 3. Forms of state support of investment activity 1. The state support to investors in region is granted in the following forms:1.1. application of reduced rate for tax on organizations’ property on executed investments in part of newly created, modernized or acquired property in accordance with clause 4 of the present Law (notification order);1.2. on investment projects, approved by Administration of region, - in accordance with Clause 5 of the present Law (authorization order): 1.2.1. establishment of preferential rates in whole on organization on profit tax in part, entered to budget of region, and (or) tax on property of organizations;1.2.2. providing of state guarantees on a competitive basis against regional budgetary funds.2. Investor is entitled to use one of variants of support, stipulated in sub articles 1.1 and 1.2 of the present clause. The choice of variant for use of tax remissions should be done by investor independently and is determined by submitted to tax authorities in accordance with clauses 4 and 6 of the present Law documents, confirming the right for use of corresponding privilege. Clause 4. Conditions and procedure of granting to investors the right for application of reduced rate on tax on property of organizations on executed investments (notification order) 1. The investors, invested in the following: acquisition of fixed assets not been before in operation in the territory of region; construction (including construction by own facility); reconstruction and modernization of fixed assets – are granted the right to calculate and pay the tax on property of organizations at rate 0,01% of depreciated cost of the indicated objects of the fixed assets.2. Regulations of the present clause cover the organizations with executed investments in fixed assets objects, indicated in article.1 of the present clause, over any calendar year, starting with 1 January 2005, making up in total not less than 10 million rubles.Investments should be executed by the organization with purpose of production of goods (work, services) except the following kinds of activity: wholesale and retail trade (section G, classes 51, 52, subclasses 50.1, 50.3-50.5 of All-Russian Classifier of Kinds of Economic Activity), financial activity (section J of All-Russian Classifier of Kinds of Economic Activity), real estate activities, lease and services (section K of All-Russian Classifier of Kinds of Economic Activity), activity in organization of gaming (section О group 92.71 of All-Russian Classifier of Kinds of Economic Activity). At use of real estate object for implementation of various kinds of activity the amount of investment in real estate object should be distributed proportionally to area, used by the corresponding kind of activity. The area is determined on the basis of inventory and legal documents.3. The right for application of reduced rate of tax on property is granted to investor for the period, starting from reporting period, following the tax period, in which investments have been executed in established volumes, and making up 5 tax periods.4. At calculation of amount of executed investments, entitling for application of reduced rate on tax on property of organizations, it is accepted the amount of initial costs (actual expenses for acquisition, construction or production, except value added tax and other refundable taxes) of fixed assets objects, indicated in article 1 of the present clause. In case of reconstruction or modernization the cost increase of fixed assets objects is taken into account. 5. For application of reduced rate on tax on property of organizations, reports to be submitted for the tax period, in which investments have been executed, shall include:investment amount calculation, stipulated by article 4 of the present clause, fulfilled in accordance with form, set in appendix 1 to the present Law; copy of accounting report for the tax period (forms № 1,5);list of fixed assets objects supplemented with verified by head of organization, chief accountant and sealed copies of primary documentation on fixed assets records: fixed assets objects acceptance reports (forms №ОС-1, №ОС-1а, №ОС-1б), fixed assets objects inventory cards (forms №ОС-6, №ОС-6а);for confirmation of used fixed assets presence beyond the region: verified by head of organization, chief accountant and sealed copies of fixed assets objects inventory cards of their former owners (forms №ОС-6, №ОС-6а);for fixed assets imported to Russian Federation: copies of customs declaration and supply contract and documents, confirming payment for imported goods (work, services). 6. Taxpayers, granted the right for application of reduced rate on tax on property of organizations, shall submit to tax authority by place of registration, starting from first reporting period, in which the reduced rate on tax on property of organizations is applied within the calculation of advance payment on tax or tax declaration, the calculation of tax base and amount of tax on property subject to preference according to the present clause. Clause 5. Conditions and procedure of granting state support to investors implementing investment projects, approved by Administration of region (authorization order) 1. While implementing investment projects in the territory of region the investors can be granted state support on condition of investment projects approval by Administration of region.2. The decision on approval of investment project and granting state support on it is taken by commission, created by Administration of region (further – commission), and is formalized by decree of Administration of region in accordance with the present clause and Procedure of granting state support to investors on implementation of investment projects, approved by Administration of region (further – Procedure).3. For approval of investment project and receiving of state support the investor shall submit application to commission for consideration.The application shall include the following documents:a) application with indication of requested state support;b) business plan, developed in accordance with Requirements;c) notarized copy of investor constituent instruments;d) notarized copies of documents on investor state registration and on registration in tax authorities of region;e) for operating organizations – auditor’s conclusions, including audited accounting reports with explanatory note for preceding to application financial year and copies of accounting reports for past period of current financial year with notes of tax authority on acceptance;f) in case of attraction of funds of other organizations (except credit institutions) for project realization – auditor’s conclusions of the given organizations, including audited accounting reports with explanatory note;g) in case of attraction of funds of credit institutions – copies of credit contracts or other documents, confirming attraction of the indicated funds;h) other documents, which investor considers relevant to submit to Administration of region for making decision. 4. The investors’ applications are taken to consideration by commission after the documents are brought to conformity with the Requirements. 5. The investors’ applications are considered by commission before 30 days. Before expiration of the indicated time the commission should take one of the following decisions: - To approve the investment project and grant the state support to investor;- To return the documents to investor for bringing the application to conformity with Requirements;- To refuse the grant of state support to investor. 6. The refusal to investor should be reasoned.There are the following reasons for refusal:conclusion of commission taken on the ground of submitted in application documents on lack of financial feasibility of investment project applied for;unconformity of investment project to requirements of existing legislation of Russian Federation;investment project failed pass the competitive contest, in case if investor applies for state guarantee. 7. On receiving of state support the investors are liable to:- realize the investment project in accordance with business plan;- annually at a stated time submit to commission the reports on investment project made in accordance with Requirements.8. Control of use of state support is executed on the ground of the reports on investment project submitted by investors. 9. The state support granted to investor on investment project, approved by Administration of region, can be cancelled in the following cases:a) recipient of state support within six months after expiration of term stipulated by the Procedure failed to submit in full the reports on project to commission; b) investment project is not realized by investor: according to reports the deviation of actually executed investments for past period of project realization against the declared volume makes up over 15%;c) investor submitted invalid data in application or reports;d) in case of Arbitration court decision on bankruptcy procedure to investor.10. The decision on cancellation of state support on reasons indicated in article 9 of the present clause shall be taken judicially.11. Statement of claim to court on cancellation of state support is submitted by Administration of region or authorized body on the basis of commission decision. 12. On the basis of court decision Administration of region issues decree on cancellation of state support. Clause 6. Tax remissions granted to investors realizing investment projects, approved by Administration of region 1. Investors realizing investment projects, approved by Administration of region, are granted the following preferential rates of taxes in whole on organization:Rate of tax on property of organizations is set as 0,01%;Rate of tax on profit of organizations in part, entered to budget of region, is set as 13,5%.2. Investor is entitled for independent option of preference or collect of preferences, stipulated in article 1 of the present clause.3. Tax remissions for investor are set for 5 years from start of investment project realization.Starting point of investment project realization is the beginning of quarter, in which the property is registered on balance as fixed assets in accordance with investment project.4. To establish the right of use the tax remissions, stipulated by the present clause, investor submits to tax authorities the decree of Administration of region on approval of investment project and granting of state support. 5. The right of use the tax remissions can be realized by investor in tax periods, in which tax remissions, for the period passed from the beginning of approved investment project realization, shall not exceed 50% amount of executed investments on project for period, passed from the beginning of investment project realization, and in case of realization by investor of several such projects – 50% amount of investments, executed for the indicated period on all projects. Tax remissions for the period passed from the beginning of investment project realization, are determined as calculated for tax periods, in which investor realized the right of use the tax remissions, difference between amount of taxes, calculated without taking remissions into consideration and amount of taxes, calculated with application of reduced rates, stipulated by article 1 of the present clause.6. If on result of tax period the tax remissions exceed limits, stipulated by article 5 of the present clause, the investor forfeits right of use the tax remissions in the tax period for reporting year. 7. Investor simultaneously with tax declaration for the tax period submits to tax authorities the following:calculation, confirming the right of use in tax period the remissions, stipulated by article 1 of the present clause, made in form according to appendix 2 of the present Law;auditor’s conclusion, confirming executed investments for period, passed from the beginning of investment project realization and for tax period of reporting year;copy of accounting reports for tax period (forms №1,5);list of fixed assets objects supplemented with verified by head of organization, chief accountant and sealed copies of basic accounting documents for fixed assets recording: fixed assets objects acceptance certificates (forms №ОС-1, №ОС-1а, №ОС-1б), fixed assets objects inventory cards (forms №ОС-6, №ОС-6а). Clause 7. Providing of state guarantees to investors at the cost of regional budget Investors realizing investment projects approved by Administration of region against borrowed funds, can be granted state guarantees on a competitive basis at the cost of regional budget for discharge of obligations on the given projects on condition of investment of own monetary funds for financing project at the starting point of its financing in amount not less than 30 percent of investment outlay volume, stipulated by business plan of investment project.State guarantees to investors are granted within funds, appropriated annually for the indicated purposes by law on regional budget for the next financial year.Providing of guarantees is executed in accordance with the Procedure. While providing state guarantees Administration of region should make financing rating of investor and is entitled to request the insurance of investments. Clause 8. Activity of foreign investors in the territory of region Foreign investors enjoy the same rights as residents of Russian Federation, unless otherwise stated by legislation of Russian Federation. If international treaty of Russian Federation establishes rules other than stipulated by the present Law, then international treaty rules are applied. Clause 9. Investors’ rights guarantees 1. Investors are guaranteed:for investment projects, approved by Administration of region, - conservation of tax treatment, being in force at the moment of investment project approval by Administration of region. securing of equal rights in investment activity;publicity in discussion of investment projects;right to appeal in court the decisions and actions (inaction) of public authorities, local government bodies and officials.2. Guarantees for conservation of tax treatment are not applied to alterations and amendments, made to existing legislative acts of region, and to new laws and other standard legal acts, passed for the purpose of protection of basic constitutional order, morality, health, rights and legal interests of other individuals, state security, as well as to cases of bringing the indicated acts to conformity with federal legislation. 3. For the purpose to secure guarantees of investor’s rights the Administration of region:approves Procedure of granting state support to investors realizing investment projects, approved by Administration of region, and Requirements to applications for receiving state support to investors realizing investment projects, approved by Administration of region, representing an integral part of Procedure;creates commission and approves regulations on commission, which in accordance with the present Law takes decisions on granting state support, as well as conducts control of its use by investors. Section III. Final provisions Clause 10. Effectiveness of the present Law 1. To declare expired the Law of Pskov region «On tax remissions and state support of investment activity in Pskov region» of 26.07.2001 № 146-OZ (in edition of laws of Pskov region of 21.03.2002 № 182-OZ, of 23.07.2003 № 292-OZ and of 03.06.2004 №352-OZ) (further - Law of Pskov region «On tax remissions and state support of investment activity in Pskov region» of 26.07.2001 № 146-OZ), except article 1 of clause 6 and clause 7, which act with respect to tax remissions, granted to investors before taking effect of the present Law, up to expiration of time, stipulated by standard acts of Administration of region for realizing investment projects. To amend second paragraph of article 1 of clause 6 of Law of Pskov region «On tax remissions and state support of investment activity in Pskov region» of 26.07.2001 № 146-OZ, stated it as the following edition:«rate of tax on profit of organizations in part, entered to budget of region, is set in amount of 13,5%;».2. The present Law takes effect on the expiry of one month from it official publishing and covers legal relationship, originated from 1 January 2005.3. Administration of region shall bring the legal standard acts to conformity with the present Law. Head of Administration of region M.V.Kuznetsov Pskov12 October 2005 № 473-OZ