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Changes in Taxation Quarter I of 2006
Below is the brief summary of ihe most important updates, which took place in the period 1 January 2006 31 March 2006.

Development of the home-based labour force
The New Presidential Decree "On measures for stimulation of enlargement of cooperation between large industrial enterprises and production of services on the basis of home-based labour development" was issued on 5 January 2006. The Decree is aimed to improve the effectiveness of operations of large enterprises which have lower contribution margins and are of labour intensive nature by stimulating production under home-based conditions. In accordance with the Decree home-based employees conclude labour contracts and are considered to have employment status and provided with work-books. Labour contracts should contain certain obligations by the enterprises such as employee training, compliance with safety measures, provision of equipment, inventory and raw materials, etc. Responsibility for observance of established quality standards of production is placed on:
- home-based employees when the goods are transferred to industrial enterprises;
- industrial enterprises when the goods arc sold to final consumers.
Transfer of finished goods by home-based employees to enterprises in accordance with the labour contract is not considered as wholesale trade and is not subject to licensing. The Decree stipulates that the enterprises cooperating with home-based employees are subject to the 5 year exemption from Unified Social Payment with respect to payroll related to home-based employees, effective 1 February 2006. Moreover equipment and inventory provided to home-based employees on a no-charge basis, or on a rent basis are not subject to property tax for the period of usage by home-based employees.

Changes to Property Tax
In accordance with the joint Resolution of the Ministry of Finance and State Tax Committee registered with the Ministry of Justice #1107-5 of 8 February 2006 (Resolution), the Property Tax instruction was amended. Thus, Article 5 was supplemented with the  following paragraph:
"Net book value of fixed and intangible assets is determined as the difference between historic value of the assets and the amount of accumulated depreciation calculated by method(s) specified in the taxpayer's accounting policy".

We suggest that this change reads as allowing the application of all four depreciation methods for the Property Tax purposes: straight-line method, product ion-based method.
double declining balance method, and the sum-of-the-years digits method, whichever is prescribed by the accounting policy of the company.

Also, Article 18 was reworded to read that the property tax calculations should be filed with the tax authorities at place of the taxpayer's registration. Previously, the properly tax calculations were submitted to tax jurisdictions where respective property was located.