Peculiarities of Moscow legislation

In recent years, Moscow legislation has undergone serious changes. Among the most significant ones for entrepreneurial and investment activities are the following:

1. Up until recently, Moscow’s legislation was defined by the city’s status as Russia’s capital, defined by federal legislation, on the one hand, and by a lack of Moscow’s own independent municipal authorities, whose functions are actually performed by the state legislative authorities of Moscow as Russia’s region — the Moscow City Duma and branch executive authorities. These two factors help explain the somewhat excessive concentration of financial and administrative powers of city authorities, which has also affected the legal regulation of public relations in Moscow.

In recent years, the capital’s authorities passed the following decrees in order to eliminate these discrepancies:

• No. 51, "On budgetary system and budgetary processes in the city of Moscow" dated October 9, 2002 (as amended on June 2, 2004), (ceased to be in effect after the adoption of Law No. 39 dated September 10, 2008 "On budgetary system and budgetary processes in the city of Moscow");
• No 56, "On the organization of local self-government in the city of Moscow" dated November 6, 2002 (as amended on December 26, 2007).

Provisions of the new law (No. 39) dated September 10, 2008, "On budgetary system and budgetary processes in the city of Moscow," became effective on September 30, 2008. The law regulates relations in the sphere of the budgetary system, the organization and implementation of budgetary processes, and powers of subjects of budgetary relations in the city of Moscow.

2. Beginning on January 1, 2005, there is no tax on advertising or the use of water resources in accordance with the federal law dated No. 83-FZ dated July 28, 2004, "On changes to the second part of the Tax Code of the Russian Federation, changes to article 19 of the Russian Law ‘On the basis of the tax system in the Russian Federation,’ and on the acknowledgement of certain legal acts of the Russian Federation as having ceased to be effective," as well as the federal law No. 95-FZ dated July 29, 2004, "On changes to the first and second parts of the Tax Code of the Russian Federation and the acknowledgement of certain legal acts on taxes and duties (provisions of legal acts) of the Russian Federation as having ceased to be effective." At the same time, according to provisions of the Law No. 75 of the City of Moscow dated November 24, 2004 (as amended on July 5, 2006), "On a single tax on temporary activity for distributing and (or) placing outdoor advertising" on the territory of Moscow, the tax on advertising is paid by entrepreneurs whose business is distribution and (or) placement of outdoor advertising.

Types of taxes and duties imposed on the territory of Moscow in 2008:

1. Federal taxes and duties for which no incentives are provided in Moscow (or no incentives are provided by legislation):
   • Value Added Tax (VAT)
   • Excise duty
   • Income tax for individuals
   • Single social tax
   • Fees for polluting the environment
   • Tax on gambling industry
   • Water tax
2. Federal taxes and duties for which incentives are provided in Moscow:
   • Corporate profits tax
3. Taxes and duties imposed by the city of Moscow as a Russian region:
   • Corporate property tax
   • Transportation tax
4. Local taxes and duties:
   • Individual property tax
   • Land tax