23.12.2015 — Supreme Court Explains How to Assess Cadastral Value of Real Estate
After the mass cadastral value reassessment carried out in Russia, often the cadastral value of real estate determined by relevant state authorities exceeds its market value. The Supreme Court has clarified which evidence to adduce in order to prove this fact, as well as which rules are to be used by appraisers.
A claimant filed a suit against the Federal Cadastre Chamber arguing that the cadastral value of real estate it owns exceeds its market value by three times, referring to the report prepared by an independent appraiser that had received a positive review by appraisers who were members of a self-regulatory organisation (SRO).
The lower courts refused to satisfy the claim, concluding that the independent appraiser’s report was unreliable, as the appraiser failed to apply the appraisal standard “Determination of the cadastral value” (Federal appraisal standard No.4) approved by the Decree of the Russian Ministry of economic development No. 508 dated 22.10.2010.
Nevertheless, the Supreme Court quashed the lower courts’ decisions and ordered a re-trial of the case (Resolution dated 21.12.15 No. 305-ЭС15-12075 in the case No. А40-81849/2014). The Supreme Court noted that the relevant appraisal standard is applicable only to determining the cadastral value of the real estate, and therefore is not applicable to establishing its market value.
The Supreme Court also confirmed that the following evidence shall be adduced in order to challenge the cadastral value: a report determining the cadastral value as of the date the state authority determined its cadastral value; as well as a relevant expert opinion.
22.12.2015 — Russian State Duma Approves Bill Broadening Emergency Powers of Federal Security Service Officers
The Russian State Duma has passed a bill amending the Federal law “On the Federal Security Service” in its third reading. The bill broadens the powers of the Federal Security Service (FSB), such as the powers connected with the use of weapons in self-defence and for the purposes of the fight against terrorism, and also entitles FSB officers to take fingerprints without having to inform citizens thereof.
According to the bill, a FSB officer will be entitled to fire a gun without warning, provided that any delay may endanger the life and health of citizens or the said officer. Moreover, a FSB officer will be able to use any means turned out to be at hand in self-defence, provided that he or she does not have a gun or special equipment. Also, the bill provides that special equipment can be used by a FSB officer in order to prevent civil unrest.
Furthermore, the FSB will be empowered to obtain, record, store, classify, use, provide and destroy fingerprint data, and will not be obliged to warn an individual that such data will be, or has been, collected.
According to Alexander Hinstein, Deputy Head of the State Duma Security Committee, currently the FSB does have these powers, however they are provided for by secondary legislation. Should the bill be enacted, into law, the broad powers of FSB officers will have a statutory basis.
21.12.2015 — Tax Secrecy to Be Abolished to Enable Business Partner Checks - State Duma Considers Controversial Bill
The Russian State Duma is considering a bill which makes it simpler to check whether one’s business partner is trustworthy. According to the bill, certain information, such as the amount of paid taxes and duties, taxpayer’s income and expenses, will no longer be subject to the tax secrecy treatment. Notably, as clarified by the Supreme Arbitrazh Court, companies doing business in Russia are obliged to ensure that their business partners are trustworthy and shall bear the negative consequences if they fail to do so: e.g. they may be deprived of their right to claim a VAT refund under a contract with a fly-by-night company.
The bill has been proposed as it is often next to impossible to obtain sufficient information required in order to check a company’s trustworthiness. Although the Russian tax authorities possess such information, it is subject to the tax secrecy treatment and therefore cannot be disclosed to third parties.
According to the bill, the following information shall be disclosed: the average number of employees and their total income in the preceding calendar year; the amount of taxes and duties; as well as the taxpayer’s income and expenses according to its accounting statements. If the bill is passed into law, taxpayers will be obliged to annually disclose this information, and it will be published on the official website of the Russian Tax authority.
Arguably, disclosure of such information may enable to carry out full-fledged business partner checks and will make business dealings more transparent. Nevertheless, imposing such an obligation may be too burdensome, or could be abused, e.g. by the company’s competitors or potential corporate raiders.