Your Guide to the Baker & McKenzie Tax Practice in Russia

Tax Russia Your Guide to the Baker & McKenzie Tax Practice in Russia Award for Excellence Law Firm of the Year in Central and Eastern Europe Chambers Europe 2011 Law Firm of the Year in Russia PLC Which lawyer? 2010 ACQ Country Awards for Achievement 2010 Award For Excellence - Law Firm of the Year in Russia Chambers Europe 2009

With a network of more than 3,750 locally qualified, internationally experienced lawyers, including 657 tax lawyers, in 69 offices across 41 countries, we have the knowledge and resources to deliver the broad scope of quality services required to respond effectively to both international and local needs. Baker & McKenzie was the first international law firm to open a presence in Russia. Active in the USSR / Commonwealth of Independent States (CIS) for over 40 years, we are now one of the largest legal practices in the CIS. Baker & McKenzie s Moscow office has what is widely recognized as Russia s leading tax practice. Baker & McKenzie s tax practice in the CIS includes 26 lawyers from its offices in Almaty, Baku, Kyiv, Moscow and St. Petersburg. Being an absolute leader, the firm offers a full range of tax and customs advisory services to companies in the metallurgical, oil and gas, manufacturing, IT and telecommunications, engineering, pharmaceutical, banking and financial, aircraft, real estate and other areas of industry. We are the most highly rated and recommended tax adviser among law firms, recognized worldwide as thought leaders in direct and indirect taxation, transfer pricing, and dispute resolution. What singles us out among law firms in the region is the ability to serve as both your tax and legal advisors at the same time working as one team in the framework of complex domestic and cross-border transactions that eliminates the need to engage separate tax and legal advisors and helps to reduce costs. Our tax lawyers, economists and advisers keep abreast of changing tax laws, practices and dispute resolution techniques, and can help design, implement, and defend tax strategies for international operations and transactions. Baker & McKenzie also leverages its global network and legal skills to work on complex pro bono projects, which meaningfully advance fundamental rights and opportunities for people in need throughout the world. We consider undertaking such work to be our obligation, and it is a feature that is firmly embedded in our core values. As part of our pro bono activities in the CIS, Baker & McKenzie serves as special legal adviser to the State Hermitage Museum in St. Petersburg. According to an International Tax Review survey, Baker & McKenzie is the only international law firm that competes with the Big Four. But, unlike accounting firms, we have significant experience as tax lawyers in tax litigation, and have represented our clients in all phases of handling tax controversies. What especially makes us different is that at Baker & McKenzie we are able to seamlessly integrate tax and legal advice for our clients. When it comes to sophisticated tax transactions, we bring you reliable advice from the leading and largest law firm tax practice in the world. Alexander Chmelev Partner, Head of the CIS Tax Practice 2

Why choose Baker & McKenzie What our partners say about Baker & McKenzie Leading tax practice in Russia according to international legal and tax directories The largest tax practice in Russia among international law firms Integrated tax and legal aspects limit the risks and minimize cost Unmatched geographic footprint spans 41 countries, including a truly pan-cis network Business-oriented and client-focused approach ensures delivery of high-quality advice tailored to your business needs Industry Focus Aircraft Automotive Financial Instruments and Capital Markets Hotels, Restaurants & Entertainment IT & Telecommunications Leasing Manufacturing and Industrial Products Natural Resources (including Oil & Gas, Mining, Metallurgy) Pharmaceuticals Real Estate Retail and FMCG Our strong expertise in both tax and legal matters makes Baker & McKenzie uniquely positioned worldwide to serve as a one-stop shop offering clients full-scope tax and legal advice as part of complex M&A, financial and other transactions. - Maria Kostenko, Partner A difficult regulatory environment and unpredictable tax administration have been among the key factors hampering business in Russia. Evolving case law and judicial doctrines are another variable. However, once you can face a tax audit without fear and know how to avoid or assess the risks in any scenario from a commercial transaction to a restructuring initiative you are in a position to put your business on a sound footing in the long run. - Arseny Seidov, Partner The Moscow tax team consists of practitioners possessing a thorough legal knowledge, a passion to advise clients on a broad range of tax issues, and the enthusiasm to design various customized tax products, and implement them to the satisfaction of our clients. - Sergei Zhestkov, Partner Being the longest established among the international law firms and the Big 4 on the Russian market, we capitalize on the knowledge and experience of our tax specialists whose professionalism and high quality is confirmed by our clients consistently naming us as the leading tax practice in Russia. We also benefit from our very close cooperation with our tax colleagues working in other Baker & McKenzie offices located all over the world. That gives us a unique ability in Russia to efficiently serve local and multinational clients on complicated tax matters, especially those requiring a multi-jurisdictional approach. - Alexander Bychkov, Partner 3

Tax Practice Areas Tax structuring in Russia is complex. The regulatory environment is constantly changing. Properly managed, however, this can mean new and efficient options for in-country management and cross-border tax structuring. In addition to general tax advice, Baker & McKenzie s Moscow and St. Petersburg offices provide a full range of tax services on local and international tax issues. Our key practice areas include: 4 Tax planning and structuring Transaction support Tax controversies & litigation VAT & indirect taxation Transfer pricing Capital markets and financial products Employee benefits and share incentives Wealth management Customs International tax planning and structuring for major multinational and domestic corporations, including: - development and implementation of holding structures for inbound and outbound investment, joint ventures, investment funds, pre-m&a and IPO projects, and post-closing business integration; - development and implementation of tax efficient structures for all kinds of business and industries, including manufacturing operations and distribution structures; - tax planning in all major jurisdictions worldwide for any types of transactions. Full-scale tax support for transactions, including: - general tax optimization advice for commercial contracts; - advice on tax structuring of M&A transactions, including acquisition finance, tax structuring of JVs; - full-scope or limited tax due diligence of Russian and foreign companies (incl. for M&A deals, IPOs, business restructurings); - tax advice on pre-acquisition and post-acquisition restructurings, tax reorganizations; - M&A deals support (incl. drafting tax provisions in SPAs, negotiating of M&A deals). Handling tax disputes with the tax authorities, including: - preparing clients for potential tax audits and advice on strategy for handling tax audits; - providing legal support during the audit process, including for witness interrogations; - representing client interests at all levels of administrative appeals and court litigation, as well as in tax treaty mutual agreement procedures; - criminal investigations and litigation. Legal advice on all VAT-related issues, including: - international and domestic VAT planning; - VAT and excise tax advice on supply of goods or services, including import and export transactions; - transactional VAT advice; - VAT-related litigation. Support and representation of international businesses in: - transfer pricing and tax planning; - transfer pricing studies, including economic and functional analyses; - preparing transfer pricing documentation; - transfer pricing litigation, including competent authority assistance. Advisory services for issuers, borrowers, lenders, underwriters, trustees, and other parties on a broad range of tax issues related to complex financing transactions, including: - IPOs, Eurobonds, ADRs; - corporate and syndicated loans; - project finance; - taxation of financial instruments, development of tax-efficient derivatives. Development and implementation of various employee benefit plans, including: - traditional discretional and structured bonuses and retirement plans; - employee share incentives (stock options, conditional share awards and others); - advice on tax and legal treatment of various employee bonus systems, including preparation of implementation documents, advice on tax deductibility of plan costs, etc. Tax structuring and planning, asset protection, succession, regulatory, compliance and related services to private banks, trustees, family offices, private clients and wealth management professionals, including: - development and implementation of personal holding companies, personal holding mechanisms and family offices; - advice on asset protection, family issues, succession planning, immigration, regulatory, compliance and related matters; - legal support for international private transactions (real estate, aircraft, yachts, arts, philanthropy). Full scope tax-related customs advice, including: - customs valuation issues; - Russian import VAT and excise issues; - planning and implementation of distribution structures; - customs due diligence review; - customs regimes for special economic zones; - tariff engineering & non-tariff restrictions; - customs disputes; - administrative and criminal customs investigations and litigation.

Russian Tax System - Highlights Tax / Category Rate / Description Corporate profits tax (flat rate) 20% Capital gains tax 20% Participation regime (dividend tax exemption) yes Transfer pricing rules yes Tax consolidation n/a When it comes to complex tax transactions, you need to get it right. You need reliable advice and precise execution from professionals you trust. Controlled foreign corporation rules Tax losses carry forward Tax losses carry back Capital duty, stamp duty, transfer tax Withholding tax rate on dividends domestic rate 9% n/a 10 years n/a n/a best treaty rate 5% Withholding tax rate on interest / royalties domestic rate 20% best treaty rate 0% Double tax treaties in effect 77 Statute of limitations for tax audits VAT (standard rate) 18% Corporate property tax 2.2% Social fund taxes (standard flat rate applicable to annual compensation up to RUR 463,000 in 2011), including: Pension fund 26% Social security fund 2.9% Federal medical insurance fund as of 01.01.2011 3.1% 3 prior calendar years 34% as of 01.01.2012 5.1% Territorial medical insurance fund as of 01.01.2011 2.0% as of 01.01.2012 0.0% Contributions to social security fund covering labor accidents and occupational decease 0.2%-8.5% (depending on the occupational risk class) Individual income tax (flat rate) residents 13% non-residents 30% Effective tax burden (2010) Order of the Russian Federal Tax Service No. MM-3-06/333@ Industry Effective tax rate Tax cases considered by the Russian courts (2010) - taxpayer wins The Russian Supreme Arbitrazh Court website statistics Tax overpayment refunds 67% Won 33% Lost Challenging acts of the tax authorities 64% Won 36% Lost Collection of compulsory payments 62% Won 38% Lost 5

Some of our recent disclosable deals Advising Brown-Forman Corporation, one of the largest spirits producers worldwide, known for such brands as Jack Daniels whiskey and Finlandia vodka, on a complex project for the distribution of Brown-Forman s portfolio of alcohol beverage brands in the Russian market through Coca-Cola Hellenic Bottling Company; Successful representation of OAO Central Fuel Company in the Federal Arbitrazh Court for the Moscow District (Cassation Appeal Court) in its dispute with the Russian tax authorities concerning more than USD 193 million in connection with a contribution of shares into the charter capital of a foreign company. The Federal Arbitrazh Court for the Moscow District set an important precedent in reversing decisions of lower courts that would have imposed significant tax barriers for both Russian companies investing abroad and foreign companies investing in Russia; Representing China Investment Corporation in connection with its USD 300 million investment in an upstream oil and gas joint venture with respect to the Nobel Oil Group, based in Russia; Advising Heerema Marine Contractors Nederland BV, an offshore contractor in the oil and gas industry worldwide, on various Russian tax and customs law matters related to the design, transportation and installation of deep-water facilities on the Russian continental shelf; Advising Lenenergo, a major electric power supply company in the northwest of Russia, as the borrower in a USD 200 million syndicated loan facility arranged by Barclays Bank PLC, including advice on taxation of loan proceeds and repayments (principle, interest and other payments); Successfully representing the Russian subsidiary of Orkla ASA in a court case against the Russian tax authorities concerning tax audit results. The taxes and fines in question were refunded by the Russian tax authorities; Advising Pirelli Tyre on the establishment of a joint venture together with the Russian Technologies state corporation and setting up a new production facility in the Samara region. The projected investment into the joint venture is approximately EUR 300 million; Advising SABMiller plc, one of the world s leading brewers, on tax issues in the acquisition of a 100% participation interest in Vladpivo LLC, the largest brewer in Russia s far eastern Primorie region. The gross assets being acquired are valued at approximately USD 69 million; Advising Sibir Energy plc on tax issues in its USD 50 million acquisition of a 100% interest in eight Russian exploration licenses for the Koltogorsky block in Western Siberia; Alexander Chmelev s very competent tax team at Baker & McKenzie CIS, Limited gives value for money Legal 500 EMEA 2011 The Russian and Ukrainian Tax practice groups of Baker & McKenzie are recommended for transactional and tax planning work by the International Tax Review Ranked in band 1 in Tax by Chambers Europe 2010-2011 Tax litigation is the area in which the team particularly stands out Ranked in tier 1 in Tax by Legal 500 EMEA 2011 Rated leading in Tax by PLC Which lawyer? 2011 Rated Tier 1 by International Tax Review, World Tax 2010 Rated leading practice by PLC Which lawyer? Yearbook 2010 Tax structuring for Weatherford International Ltd. in the approximately USD 450 million acquisition of TNK-BP International s Oilfield Services Division; Tax and real estate structuring for Wells Real Estate Funds, a large US real estate company, in a cross-border real estate fund investment deal, which required sophisticated cross-border planning; Transaction tax structuring for West Siberian Resources Ltd., a Stockholm Stock Exchange-listed independent oil company, in its USD 1.5 billion merger with Alliance Oil Company; Successful representation of Western Union MT East in its dispute with the Russian tax authorities, which claimed that Western Union money transfer services are not banking operations and are therefore subject to Russian VAT, with the amount in question exceeding USD 20 million. 6

Please meet our tax partners Alexander Chmelev Alexander Chmelev is recommended in Tax by Chambers Europe 2011 and Chambers Global 2011. He is a real authority on tax as a result of his long-standing experience. Alexander Chmelev is endorsed in Tax by PLC Which lawyer? 2011 Alexander Bychkov Alexander Bychkov is recommended in Tax and named a very well-recognised tax specialist Chambers Europe 2011 Alexander Bychkov has a highly respected, broad tax practice, with his expertise covering customs, general corporate matters, tax structuring and dispute resolution Chambers Global 2011 Sergei Zhestkov Sergei Zhestkov is recommended in Tax by Chambers Europe 2011 and Legal 500 EMEA 2011 Sergei Zhestkov has extensive experience advising domestic and international clients on multi-jurisdictional matters, including crossborder tax planning and structuring. Chambers Global 2011 Maria Kostenko Maria Kostenko is recommended by Legal 500 EMEA 2011 and Tax Director Handbook 2011 Arseny Seidov Arseny Seidov is ranked Up and Coming in Tax Chambers Europe 2011 Arseny Seidov is a visible lawyer in the field and is commended for his technical knowledge of tax Chambers Global 2011 Years of experience: 25 Key practice areas: tax planning and structuring issues for both foreign and domestic companies operating in Russia and other CIS countries, tax advice for M&A deals, tax controversies and international tax considerations of companies with interests in the CIS Professional memberships: Board of Directors of the International Tax and Investment Center, Board of Directors of the American Chamber of Commerce in Russia Education: University of Rochester (B.A. degree, 1981); Boston University School of Law (J.D. degree, 1986); New York University School of Law (LL.M., 1991) Languages: English, Russian Years of experience: 18 Key practice areas: Russian tax, tax structuring, customs issues, compliance and tax/ customs dispute resolution (including representation of clients in related criminal investigations) Professional memberships: Moscow City Bar, New York State Bar, American Chamber of Commerce in Russia s Tax and Customs Committees, Association of European Business in Russia, French-Russia Chamber of Commerce Education: Moscow State Institute of International Relations (MGIMO) (law degree, 1994); New York University School of Law (LL.M. in International Taxation, 1999) Languages: Russian, English, French Years of experience: 16 Key practice areas: international tax, trust and estate planning and structuring, wealth management advice, employee benefits and share incentive plans Professional memberships: Moscow City Collegium of Advocates: Society of Trust and Estate Practitioners: Baker & McKenzie European Wealth Management Steering Committee Education: Moscow State University (law degree, 1995); Institute of State and Law of the Russian Academy of Sciences (Ph.D., 2001) Languages: Russian, English Years of experience: 15 Key practice areas: domestic and international tax planning, tax restructuring, tax reorganizations, tax due diligence and tax advice for M&A deals, including acquisition finance, transfer pricing, permanent establishments, handling tax audits and tax litigation Education: Moscow State Institute of International Relations (law degree, 1997); Institute of State and Law at the Russian Academy of Sciences (Ph.D., 2002); New York University School of Law (LL.M. in International Taxation, 2009) Languages: Russian, English, German Years of experience: 10 Key practice areas: international and domestic tax planning and restructuring, transactional tax advice, indirect taxation and transfer pricing, permanent establishments, tax litigation Professional Memberships: International Fiscal Association, Tax Committees of the American Chamber of Commerce and Association of European Businesses Education: Moscow State University of International Relations (LL.B., 2001; law degree, 2002); Diplomatic Academy of the Ministry of Foreign Affairs of Russia (Ph.D., 2004); New York University School of Law (LL.M. in International Taxation, 2007) Languages: Russian, English, German 7

For further information on these and related services, please contact: www.bakermckenzie.com Moscow Sadovaya Plaza, 12th Floor 7 Dolgorukovskaya Street Moscow 127006, Russia Telephone: +7 495 787 2700 Facsimile: +7 495 787 2701 Alexander Chmelev alexander.chmelev@bakermckenzie.com Alexander Bychkov alexander.bychkov@bakermckenzie.com Sergei Zhestkov sergei.zhestkov@bakermckenzie.com Maria Kostenko maria.kostenko@bakermckenzie.com Arseny Seidov arseny.seidov@bakermckenzie.com St. Petersburg BolloevCenter, 2nd floor 4A Grivtsova Lane St. Petersburg 190000 Russia Telephone: +7 812 303 9000 Facsimile: +7 812 325 6013 2011 Baker & McKenzie. All rights reserved. Baker & McKenzie CIS, Limited is a member firm of Baker & McKenzie International, a Swiss Verein with member law firms around the world. In accordance with the common terminology used in professional service organizations, reference to a partner means a person who is a partner, or equivalent, in such a law firm. Similarly, reference to an office means an office of any such law firm. This may qualify as Attorney Advertising requiring notice in some jurisdictions. Prior results do not guarantee a similar outcome.