1. Standards in Microfinanсe.
The Third meeting of the Microfinance Standards Working Group was held in Moscow on June 25th, 2003. 22 representatives of organizations from different regions attended the Standards Working Group meeting. Discussion was focused on simplified list of ratios for MFI evaluation, and methods for portfolio risk calculation. Since many questions remain open and relevant and to provide detailed information in this regard RMC’s specialists would greatly appreciate the opinion of microfinance experts throughout Russia. The Standards Working Group decided to integrate this set of questions in the upcoming conference on microfinance planned for St. Petersburg, in December 3-5, 2003.
2. Information on the Legal Experts Group
As the opinion of regional experts is highly valued by the RMC, and to minimize travel expenses, on June 4th the First regional meeting of the Legal Experts Group was held in Khabarovsk.
Meeting attendees considered the possibilities of transition to the simplified system of taxation for funds with 1-3 promoters. Changes and additions to the contents of the earlier proposed handbook for start-up microfinance organizations became the subject of discussion during the session. Participants also debated on principles of reforming the legal environment to support the development of MFIs.
For more detailed information on the Legal Experts Group activities please contact RMC legal issues advisor Natalya Burtseva: .
3. Public events on Microfinance.
Presentation “Introduction to microfinance” was conducted by RMC on June 20th, in Tula, for Heads of regional Administrations and for municipal and regional funds for Small Business Support.
On June 26-28 in Krakow, The 2nd Newly Independent States Policy Forum on Microfinance Law and Regulation was held. Representatives of Central banks, executive and legislative authorities of 10 NIS countries participated the Forum. The Russian delegation consisted of: Yemelyanov M.V. – Deputy of the State Duma, Deputy Chair of the property committee; Simanovskiy A.Y. – Department of Banking Regulation and Supervision; and Mozhaitov A.P. – Vice-Governor of Voronezh Region. The format of the Policy Forum combined plenary presentations, group discussions and concurrent sessions, which provided participants with the opportunity for a free exchange of views and experiences among peers on key issues related to microfinance regulating and supervision.
More detailed information on II Newly Independent States Policy Forum on Microfinance Law and Regulation could be obtained at: .
4. Regional news.
a. On June 26th, with the assistance of credit consumer
cooperative “Kredit’” and together with Sberbank Boad of Directors, the round table for representatives of local credit cooperatives was organized in Republic of Komi. Purpose of this event was to sign bilateral treaty with a view to create a bank of credit histories for further determination and encouragement of conscientious MFI clients.
b. Credit consumer cooperative “WomenBusinessCenter” of
Chalyabinsk reports that in cooperation with public organization of the same name and with institution for mutual insurance “Garantiya” launched a discounted loan program for business start-ups. The program is funded by shareholders and designed for providing entrepreneurs loans at a discounted rate during the businesses start-up period.
5. Training news.
Initiated by Sverdlovsk Oblast network of municipal funds for small businesses support, RMC has provided the "Loan Officer Course.” 21 participants, representing 20 regional MFIs attended this 4 day long course, hosted by Sverdlovsk regional Fund for Small business support
Upcoming events.
Together with the Microfinance Centre for CEE and the NIS, RMC is planning following open-enrollment courses in Moscow:
15-18 Sep 2003 – “Delinquency Management and Setting Effective Interest Rates"
20-23 Oct 2003 – “Financial Analysis for MFIs”
10-13 Nov 2003- “Business Planning and Modeling with MICROFIN”
With all questions regarding educational services, provided by RMC, please contact RMC training coordinator Irina Serova,
6. Question-Answer
We continue to publish the most interesting answers to the questions, received by RMC last month. Question:
A foreign company has awarded grant funds to Credit Consumer cooperative for mutual financial support. Due to Grant’s specific it is only designed for microcredit operation via separate bank account and has to be confirmed by representation of cash flow documentation. A foreign company is not listed in docket of authorized grants awarding organizations. How to avoid the tax on profit upon the receipt of these funds?
Answer:
According to the article 250 of Russsian Tax Code (TC) all the assets, except for cases disclosed separately in the article 251, granted to taxpayer considered his/her income and therefore is a subject for taxation. Let’s consider all cases disclosed in the article 251, which, perhaps fall to this particular situation.
- Grant
Due to inadequacy to the required conditions, disclosed in subparagraph 14 of the article 251, awarded funds don’t fall into grants category because:
Grants are being issued on nonrefundable and irretrievable basis to individuals, non profit organizations, including foreign and international organizations and unifications, according to the list approved by Russian Government;
Grants are being issued only for conducting operations in one of the following areas:
Education, art, culture, environmental conservation, as well as for executing more concrete scientific researches.
- Donations
While determining the taxation base and according to the subparagraph 1 of the article 251 TC, donations, acknowledged by the RF Civil Code, are not discounted while composing the taxation base.
3. Funds for charity
According to subparagraph 4, paragraph 2, of the TC article 251, non profit organizations (including credit consumer cooperatives) are given opportunity not to include funds, receipt for charity into their taxation base. Definition for the term “charity” is given in the 1st article of the “Charity and aid organizations” act, #135-F3, list of all possible charity forms is given in the article 2 of this same act.
In order to exclude the receipt assets of the taxation base, you should independently evaluate and in case if aroused argument be prepared to defend and therefore prove charity origin of these funds. In this regard the separate accounting of income and expenditures, affected solely by charity assets should be empowered. No special approvals are required.
- Technical support.
According to subparagraph 6, paragraph 1 of the article 251 (TC), for exclusion the awarded assets of the taxation base, under this pool, the separate micro lending program should be registered. Programs registration and identity card are being processed in accordance to Technical Support Programs registration order, to the procedure of issuing the identity card, confirming its rating to technical support and supervising methods of its disposal, which has been approved by Government’s decree # 1046, Sep. 17th, 1999.
RMC legal issues adviser
Natalya Burtseva
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