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<td width="81%"><font face="Verdana, Arial, Helvetica, sans-serif" size="2" color="#FFFFFF">Russia
Report. A Quarterly Newsletter.<br>
October 2004</font></td>
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<td valign="top" bgcolor="#FFFFCC"><p> </p>
<p><font color="#993300" size="4" face="Verdana, Arial, Helvetica, sans-serif"><strong>Some Extreme North benefit requirements dropped</strong></font><br>
<font size="2" face="Arial, Helvetica, sans-serif"><strong>Amendments remove some mandatory employee benefits</strong></font><br>
<br>
<font size="2" face="Arial, Helvetica, sans-serif">As of January 1, the generous additional employment benefits for workers
in the Extreme North and Near Extreme North areas (which include Sakhalin
and much of the Russian Far East) will be reduced. According to Elena
Iourkina of our Moscow office, the obligation of employers to provide
housing and accommodation benefits has been removed entirely.<br>
Some benefits which were obligatory for all employers are now limited
to employees of Federal institutions. Iourkina explains that the former
benefits, including vacation travel payments for workers and their families
every two years, relocation expenses and supplementary medical benefits,
will now be subject to private bargaining between employers and their
employees.<br>
She cautions, however, that other legislation still contains references
to some of these same benefits, so employers in the Extreme North and
Near Extreme North areas will need to review laws carefully when determining
employee benefits.</font></p>
<p> </p> <p><font color="#993300" size="4" face="Verdana, Arial, Helvetica, sans-serif"><strong>Foreign organizations must register anew</strong></font><br>
<strong><font size="2" face="Arial, Helvetica, sans-serif">New filing with tax authorities due Jan. 1</font></strong><br>
<br>
<font size="2" face="Arial, Helvetica, sans-serif">Foreign organizations registered with Russian tax authorities have until
Jan. 1 to receive new certifications or informational letters if their
current documentation was issued before Oct. 1, 2003, Elena Iourkina
reports. On Jan. 1, such registrations made before Oct. 1, 2003, will
become void, she notes.<br>
<br>
A July 2003 order by the Ministry of Taxes and Levies applies to branches
and representative offices of foreign companies, diplomatic representatives,
foreign organizations with bank accounts in the Russian Federation, and
foreign organizations having vehicles in the Russian Federation, she
explains.</font></p>
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<td valign="top" bgcolor="#FFFFCC"><p> </p>
<p><font color="#993300" size="4" face="Verdana, Arial, Helvetica, sans-serif"><strong>Ministry to promote economic development, trade</strong></font><br>
<strong> <font size="2" face="Arial, Helvetica, sans-serif">Agency also to oversee foreign economic activity</font></strong></p>
<p><font size="2" face="Arial, Helvetica, sans-serif">The Russian Federation has
expanded the role of the Ministry of Economic Development and Trade,
reports Olesya Mormul, of our Yuzhno-Sakhalinsk
office. Among the ministry’s new duties will be analysis and prediction
of social and economic development, and promotion of entrepreneurial
activity (including medium and small businesses), she notes.</font></p>
<p><font size="2" face="Arial, Helvetica, sans-serif">The new ministry also will oversee foreign economic activity and customs
operations, and will set policy for property relations, bankruptcy and
financial management of organizations, land relations and territorial
zone administration, she adds. The Aug. 27 decision authorizes the Ministry
to regulate foreign trade activity, regulate property appraisals, and
conduct bidding and auctions to sell export and import quotas where applicable,
she reports.</font></p>
<p><font size="2" face="Arial, Helvetica, sans-serif">The new ministry will be responsible for investigating violations of
special protective, antidumping or compensation measures that apply to
imported goods, Mormul notes.</font></p>
<p> </p>
<p><font color="#993300" size="4" face="Verdana, Arial, Helvetica, sans-serif"><strong>Sakhalin Energy backs gray whale study</strong></font><br>
<strong><font size="2" face="Arial, Helvetica, sans-serif">Program aims
to minimize projects’ impact
on whale population</font></strong></p>
<p> <font size="2" face="Arial, Helvetica, sans-serif">Sakhalin Energy and several other oil companies working on Sakhalin
are continuing their joint program to study gray whales in the region,
reports Evgeny Kuzmenko, of our Yuzhno-Sakhalinsk office. The program
cost is more than $2 million this year, he notes.</font></p> <p><font size="2" face="Arial, Helvetica, sans-serif">In the program, Russian and international experts will conduct various
studies of the Western Gray Whale population and develop strategies to
minimize the impact of Sakhalin oil and gas projects on the whales, Kuzmenko
explains. Last year, the program identified at least 10 new calves, which
is the highest number of calves recorded since the studies began, he
reports.</font></p>
<p> </p>
<p><font color="#993300" size="4" face="Verdana, Arial, Helvetica, sans-serif"><strong>Bill would hike migration rule violation penalties</strong></font><br>
<strong><font size="2" face="Arial, Helvetica, sans-serif">Fine for improper foreign employee use would skyrocket</font></strong></p> <p> <font size="2" face="Arial, Helvetica, sans-serif">A bill to toughen penalties
for violating Russia’s migration
laws has passed the Federal Duma, Evgeny Kuzmenko reports. The bill
would increase the upper level of fines, he explains. For instance, the
upper
level of fine for unlawful use of foreign employees would increase
from
2,000 RUR to 200,000 RUR (approximately $7,000), he notes.</font></p>
<p><font size="2" face="Arial, Helvetica, sans-serif">In the current political climate
in the Russian Federation, the bill surely will become law soon, he
predicts. “Considering the complexity
and severity of Russian migration laws, toughening the liability without
changing the migration rules seems to be unreasonable,” he comments.</font><br>
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<p><font color="#993300" size="4" face="Verdana, Arial, Helvetica, sans-serif"><strong>Russian Far East gets new U.S. consul</strong></font><br>
<strong><font size="2" face="Arial, Helvetica, sans-serif">Pommersheim replaces Spratlen in Vladivostok</font></strong></p>
<p><font size="2" face="Arial, Helvetica, sans-serif">The U.S. Consul for the Russian Far East, Pamela Spratlen,
has completed her two-year appointment and departed Vladivostok for
another diplomatic
position in Hawaii, reports Natalya Prisekina, of our Vladivostok office.
(The last Russin & Vecchi's Newsletter reported Ms. Spratlen's suggestions
for improvements in the business climate of the Russian Far East). Recently
arrived John Mark Pommersheim, 40, will serve as appointed U.S. Consul
General in Vladivostok for the next three years, Prisekina notes.</font></p>
<p><font size="2" face="Arial, Helvetica, sans-serif">During his press conference with local reporters on Sept.
7, Pommersheim highlighted two prime tasks that he aims at achieving
during his service — further
development of economic relations between the USA and Russian Far East
and implementing existing programs for citizens, Prisekina reports. Speaking
about business relations between the two countries, Mr. Pommersheim noted
that they had been actively developing, she says. He emphasized the energy
industry, timber, machinery export and agriculture as the main spheres
of present cooperation.</font></p>
<p><font size="2" face="Arial, Helvetica, sans-serif">Prisekina observes that, although business activities
in Russia are often complicated by federal laws, Mr. Pommersheim sounded
optimistic,
saying: "Russian laws keep improving." Mr. Pommersheim arrived
in Vladivostok with his wife and three sons. In his free time he likes
piloting, jogging and sailing.</font></p>
<p> </p>
<p><font color="#993300" size="4" face="Verdana, Arial, Helvetica, sans-serif"><strong>R&V
News</strong></font></p>
<p><font color="#993300" size="4" face="Verdana, Arial, Helvetica, sans-serif"><strong>R&V
wins assignment for chapter on Russian law</strong></font><br>
<strong> <font size="2" face="Arial, Helvetica, sans-serif">Book to survey international laws on labor, employment</font></strong> </p>
<p><font size="3" face="Arial, Helvetica, sans-serif">Russin & Vecchi has been invited to contribute the chapter on Russian
employment law for the publication, “International Labor and Employment
Law,” to be published shortly by Aspatore publishers of New York.
Readers can access the text of the chapter on Russian employment law
through the "publications" section of the Russin & Vecchi
website, www.russinvecchi.com.</font><br>
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<td><p><font size="1" face="Arial, Helvetica, sans-serif">© 2004 Russin & Vecchi,
LLP</font></p>
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