Juridical persons and entities of all types of property (including foreign and partially foreign) irrespective of place of their juridical registration and being tax payers to the Lipetsk regional budget system under the present Law are entities for support.

The investment projects developed by the regional enterprises by means of internal funds, loan proceeds and borrowed funds are objects of support in the following types of activity:
- industry
- agriculture
- intermediates
- consumer service
- public catering
- motor passenger traffic
- communal services
- housing construction
- public health

1. The part of the profit being subject to collecting to the regional budget and made as a result of new goods output for a given enterprise is tax-free during 2 years after commission new production capacities. For the following 2 years the profit tax is collected half the amount.

2. The part of the profit being subject to collecting to the regional budget and aimed at developing of 5 economically effective, social and significant investment projects is tax-free.The list of the said projects is subject to be passed annually under the Law about the redional budget for the regular financial year.

3. The profit tax rate for banks and other credit agencies is reduced at every 0,5% on attached to the 1% increase of the long term credits share (in terms of credit injections volume) aimed at the investment projects financing on the territory of the region.

1. The part of the property (machines, equipment, buildings and industrial structures) being subject to collecting to the regional budget and created or aquired at the result of investment projects developing is tax-free during 2 years after commission. For the following 2 years the said property tax is collected half the amount.

2. The part of the enterprise property (machines, equipment, industrial buildings and structures) being subject to collecting to the regional budget and object for reconstruction, expansion and re-equipment of production in the terms of 5 economically effective, social and significant investment projects under the given Law item 2, Article 4.

1. The volume of the realized products (goods, services), the stock rotation and the trade turnover of enterprises and institutions made as a result of investment projects developing is taxed at the minimum rate for 2 years under the Law of the Russian Federation "On road funds in the Russian Federation".

2. The profit tax rate for banks and other credit agencies is reduced at 0,2% on attached to the 1% increase of the long-term credits share aimed at the investment projects developing.

Article 7. Privileges on a single tax on aggregate income for entities of small business.

The part of the aggregate income being subject to collecting to the regional budget and made as a result of new goods output for a given enterprise is tax-free during 2 years after commission new production capacities. For the following 2 years a single tax on aggregate income is collected half the amount.

The privileges granted by the given Law can't be revised for the worse for investors during 10 years from adaptation of the Law.

"On introduction of additions to the
Lipetsk Regional Law "On procedure of
superintendence and disposal of
property in the Lipetsk region"

25th of February 1997 a. N 60-03
the Russian Federation
the law of the Lipetsk region

To introduce the following additions to the Lipetsk Regional Law "On procedure of superintendence and disposal of property in the Lipetsk region" from the 21th of April, 1995 N 10-03:

1. Article 2 is added with point 2 worded as follows:
"The guaranty fund of the Lipetsk region (onwards "the guaranty fund") is established of the regional property objects. The guaranty fund includes securities, currency and money resources within the limits of the sums allowed in the regional budget for the regular financial year. It includes estate property, rights of possession, usage and disposal of lots.
The guaranty fund is the complex of the objects of guaranteeing of the Lipetsk regional encumbrances; a creditor-pledge is granted with a right to get satisfaction at the expense of the pledged property in case of defaulting the obligations by a pledger. The following items are not handed over to the quaranty fund:
- monuments of nature
- natural and historical monuments
- complexes of great nature-conservative, ecological, genetic, scientific-recreative importance
- natural green areas including forest and park conservative zones
- particularly protected areas
- monuments of culture

2. Point 1 of article 9 is added with the paragraph worded as follows:
"The regional administration possesses, has at its disposal and manages the quaranty fund of the region under the Law of the Russian Federation "On Pledge", the hereby given Law, other statutory acts of the Russian Federation, regional legislative acts. The regional administration is in the capacity of a pledger, determines the objects of pledge, the concrete content and form of an agreement on pledge, conditions of its quaranteeing, establishes all other relations being noncontradictory to the regional interests".

Decree of the Head of Lipetsk Region Administration

June 17, 1997 N 291

With a view to stimulate domestic and foreign investments to the economy of the region, to create favourable conditions for the attraction of credit resources for the realization of investment projects of enterprises in accordance with law of Lipetsk region dated 21.04.95 N 10-03 "On the Order of the Property Control and Command in Lipetsk Region", the Law of 25.02.97 N 60-03 "On the Entry of Supplements into the Law of Lipetsk Region "On the Order of the Property Control and Command in Lipetsk Region" and in addition to the Decree of the Head of Lipetsk Region Administration of 31.07.95 N 342 "On the Fund of business undertakings and investments". The Head of Lipetsk Region Administration ENACTS:

1. To adopt Regulations on granting guarantees to the enterprises and institutions for the fulfilment of investment projects (addendum).

2. To charge with documents preparation on drawing the guarantees on the Economic Department of the Region Administration (Chunikhin V.I.) under the agreement:
- of the Financial Department of the Lipetsk Region Administration (Scheglevatykh V.M.) - in case of monetary pledge;
- State Property Management Department of the Lipetsk Region (Lavrentiev V.V.) - in case of securities pledge;
- Region Committee on Land Resources and Land-tenure (Zolotukhin N.A.) - in case of the pledge on ownership rights, use or command of the land.

3. To charge with the control of decree fulfilment on the First Deputy Head of Lipetsk Region Administration Borodin V.I..

Regulations on guarantees granting to the enterprises and institutions aimed at the investment projects realization

1. Enterprises send to the Lipetsk Region Administration requisitions for the guarantees granting and the following documentation:
1.1. Constituent documents, certified by a notary or the registration institution (constitutive agreement, Statute, a copy of the State registration certificate, a Xerox-copy of the card with the samples of signatures and seals certified by a notary and by the bank where the account has been open).
1.2. Complete accounting report certified by the Tax Inspection on the situation for the two last reporting dates.
1.3. Application to the Lipetsk Region Administration on granting credit guarantees. It should contain the following data:
a) conditions of crediting (sum, interest rate, repayment terms, interest of credit settlement);
b) sum of the receipts to the current account and foreign currency account of the enterprise for the period of 3 last months - monthly report;
c) inventory transactions for the last month (remains at the storages, receipts and expenditure);
1.4. The documents characterising the property state of the client:
a) Tax Inspection reference on the opened loan and depositary accounts at the date of the last report;
b) copies of credit agreements of the borrower with the other banks that are valid at the moment of the credit application submission;
c) copies of reception or transfer agreements on the basic funds leasing.
1.5. Information on the object of crediting:
a) business plan on the development or setting up a production;
b) copies of contracts or other documents confirming the purposeful credit use in accordance with the business plan;
c) copies of all necessary licenses and permits;
d) documents, confirming the ownership right on the proposed subject of pledge.

2.1. Economic Department of the Lipetsk Region Administration together with committees, departments the Regional Administration makes an examination of the projects. Making an examination they check rightness and validity of calculations, they determine riskness of credit irretrievability, real possibility of procedures fulfilment, credit repayment guarantees, business standing of the enterprise, its solvency and other data that are necessary for the making of the substantiated decisions. According to the conclusion of the experts comission the Head of Lipetsk Region Administration takes a decision on granting a guarantee. Basing on this decision the chairman of the Competitive Comission of the Fund of business undertakings support and investments concludes a treaty with the enterprise on guarantees granting and terms of reimbursement of all the possible damages to the Administration including the way of enterprise's property pledge.

3.1. Economic Department of Lipetsk Regional Administration takes under its control the credits use, granted in accordance with the Administration guarantee and fulfilment of agreement terms.
3.2. Service of debt is accomplished by the recipient of credit. It includes keeping the documents on credit and pledge agreements, transferring the payments under the credit obligations and management of separate account.
3.3. The enterprise (borrower) opens a separate account in a bank which is used for financial operations. Credit resources entered to the account may be withdrawn from it only within the limits of finance budget and only with the aim of project financing. The budget is being envisaged by its business plan and feasibility report. Agreement on keeping the account is signed by the bank, borrower and creditor.
3.4. The enterprise is obliged to send regularly to the Economic Department of the Lipetsk Region Administration a financial report (balance form N 1, supplement to the balance form N 2), information on payment transfer to clear off debts, to inform immediately on the circomstances preventing the execution of obligations on the credit agreement being supported with the Lipetsk Region Administration pledge (guarantee).

On introduction of amendments to the law of
Lipetsk oblast "On support of investments
in the ecomony of Lipetsk oblast"

the Russian Federation
the law of the Lipetsk region
June 5, 2000 š 94-OZ

To introduce amendments to the law of the Lipetsk Oblast š 59-OZ "On Support of Investments in the Economy of the Lipetsk Oblast", setting it foth as follows: the law of the Lipetsk Oblast "On Support of Investments in the Economy of the Lipetsk Oblast

This law establishes common principles and procedures of granting tax privileges to organizations, investing in the economy of the Lipetsk Oblast (hereinafter referred to as the "Oblast") considered as a category of tax-payers.

Legal and economic conditions of the investment activity on the territory of the Oblast are regulated by the Constitution of the Russian Federation, the Tax Code of the Russian Federation and other laws in force, as well as by this law.

Investors are organizations which invest their own, borrowed or owner-occupied assets in the form of investments and ensure their target use.

Investments are monetary means, securities, other property, including property rights, other rights having monetary estimation, which are invested in the objects of entrepreneurial and (or) other activity with a view to make profit and (or) achieve other useful effect.

Investment activity is investing and implementation of practical measures with a view to gain profit and (or) achieve other useful effect.

Objects of investment activity are fixed and current assets, newly created and (or) modernized, in all the branches of economy, securities, target monetary deposits, scientific and technical products, other objects of property, as well as property rights and intellectual property rights.

An investment project is a substantiation of economic expediency, volume and period of investments to be made, as well as a description of practical measures on their implementation (a business - plan).

Payback time of an investment project is a period from the date of the beginning the financing of an investment project up to the date when the difference between the accumulated sum of net profit with depreciation charges and volume of investment expenses acquires a positive value.

A calculated payback time of an investment project is payback time which is calculated on the basis of the investment project data.

Actual payback time of an investment project is payback time calculated on the basis of factual indicators of economic activity of the investor who implements the investment project.

Relations connected with the investment activity, carried out by foreign investors on the territory of the Oblast, are regulated by international treaties of the Russian Federation, the Civil Code of the Russian Federation, this law, other federal and regional laws and other standard legal acts.

Provisions of an international treaty are to be applied if an international treaty signed by the Russian Federation establishes other provisions, than those stipulated by this law.

The following types of tax privileges are established for investors:
- privileges on property tax payment;
- privileges on highway users tax payment to the territorial road fund;
- privileges on the flat tax on aggregate income for entities of small business.

The property of an enterprise being an object of reconstruction, expansion or technical revamping of production, as well as the property created or acquired as a result of implementation of an investment project is not liable to taxation as to the part subject to payment to the regional budget.

1. The sum of the highway users tax as to the revenue received as a result of sales of products derived from the operation of installations of investment activity, subject to payment to the territorial road fund of the oblast, is decreased by 50 per cent.

2. The rate of this tax for banks and other credit institutions is reduced proportionally to a share of credit investments (in the total amount of credit investments), directed to the implementation of investment projects on the territory of the oblast, approved and confirmed under Article 10 of this law, but not to exceed 50 per cent of the rate stipulated by the regional law on the budget of the oblast for the appropriate year. The total amount of credit investments, including investment projects, for the accounting period is determined by multiplication of the sum of the credit by the number of calendar days when these assets were used within the accounting period, and division of the received value by the number of calendar days in the accounting period.

Article 6. Privileges on flat tax on aggregate income for entities of small business.

The aggregate income as to the part subject to payment to the regional budget, received by the investor as a result of implementation of the investment project, is not liable to taxation.

1. Tax privileges are granted to the investors carrying out investment projects, approved by the administration of the oblast and having an experts' conclusion on quality of the project and its expediency, and adopted as a part of the law on the regional budget for the next fiscal year.

2. The preferential mode of taxation is fixed for the period of actual payback time of the project, but not to exceed its calculated payback time.

3. To receive the tax privileges, investors must keep separate accounts of expenses and income derived in the process of implementation of investment projects.

The investors enjoying tax privileges laid down by this law, are obliged: to present, quarterly within the period of submission of the accounting report, data on actual investments made in the investment projects subject to privileges, as well as copies of documents confirming their target use, to tax authorities in a place of their registration as tax payers and to the administration of the oblast; to fulfil requirements of the state bodies and officials, made within the limits of their competence.

1. In case the investor who enjoys tax privileges has not complied with the terms on which tax privileges had been granted to him, the tax sums underpaid herewith are to be paid to appropriate budgets according to the legislation in force.

2. Disputes arising in the process of investment activity are considered according to the rules set out by the legislation in force.

Article 10. Investment project consideration, approval and confirmation procedure.

1. Investors applying for tax privileges for the investment project being implemented by them are to submit the following documents to the administration of the oblast:
- an application written in a free form;
- a business plan prepared in compliance with international standards requirements;
- constituent instruments certified notarially or by the registering authorities;
- accounting balance sheet and the statistical report for the last fiscal year;
- a justified conclusion of the local executive body on expediency of granting tax privileges.

2. While taking a decision on approving an investment project, the administration of the oblast must consider:
- economic and social importance of the project for the oblast;
- a calculated payback time of the investment project (payback time of investment projects is differentiated depending on their types and is determined in line with the procedure established by the Government of the Russian Federation);
- volume of assets invested and tax privileges being granted;
- conformity of the project to the ecological, sanitary and hygienic, and other requirements established by the legislation.

3. An authorized body of the administration of the oblast within a month from the date of submission by the investor of the documents specified in paragraph 1 of this Article, considers them, prepares an experts' conclusion and takes a decision on approval or rejection of the investment project.

4. If the documents submitted do not comply with the laid down requirements, they are returned for completion.

5. Justified refusal of approval of an investment project is given to the investor in writing.

6. A list of approved investment projects is subject to annual adoption as a part of the law on the regional budget for the next fiscal year.

1. Privileges established by this Law, cannot be changed with an aggravating effect for investors during the period of calculated payback time of the investment project.

2. Investors specified in Article 22 of the Law of the Lipetsk Oblast dated 10.01.2000 š 65-ÎZ " On the Budget of the Lipetsk Oblast for the Year 2000 ", are not liable to profit tax as to the part subject to payment to the regional budget within the period of implementation of the project, but no longer than up to February 25, 2007.

Article 12. This law comes into force from the date of its official publication.