As of the fall of 2001, there is much fresh good economic news in Russia. The economy has grown substantially since the August 1998 financial crisis, largely thanks to high oil prices which have provided unexpected revenues to the Russian government and many businesses. Oil and gas production rose 7.3% in the period from January to July as compared to 2000. Russian industrial output rose 5.4% in the first seven months of 2001.
Russia harvested 30% more grain in January through August than in the same period last year, and expects to begin exporting grain as early as 2002. Russia is on schedule in paying $13.5 billion on its foreign debts during 2001 and is preparing to buy back more debt than the $14 billion due in 2002 in order to reduce the larger anticipated burden in 2003 Important tax and legislative reforms are being enacted. Before its summer recess, the Duma removed several more relics of the Soviet economy, removing a Communist-era ban on land sales (but not yet agricultural land), lowered the corporate tax rate to 24% from 35%, following an earlier reduction of the maximum individual tax rates to 13% from 35%. The notorious “turnover” taxes that apply to a business’s gross revenues have been reduced from 4% to 1%. Four existing social taxes previously totaling 38%.5 of a business’s payroll, have been consolidated into a unified social tax, with regressive rates. Far ranging amendments have been made to Russian corporate law, and a corporate governance code is to be released
by the government in the fall.
Favorable amendments to the Russian leasing law, discussed below, are pending and are scheduled to be given a second of three readings on September 18, 2001. The requirement would be removed for a license to be obtained for a leasing company to engage in financial leasing in Russia, and many inconsistencies between the leasing law and other laws would also be removed. The removal of this licensing requirement seems quite certain because a separate law on the licensing of many types of activities in Russia was signed by President
Putin on August 8, 2001. That law removes leasing licenses, as of January 1, 2002, from a list of licenses that are required to be obtained as part of a broader reform that removes licensing requirements for approximately 400 types of activities.
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