[ncc-moscow04] RIPE NCC proposal for Russian registries

[Jochem de Ruig jochem@localhost]

Dear colleagues,

With respect to the discussions on the mailing list and the advice the RIPE 
NCC received from its lawyers please find below a short abstract and 
proposal dealing with the Standard Service Agreement, the Terms and 
Conditions and the RIPE NCC billing for Russian registries.
SUMMARY OF RIPE NCC PROPOSAL
- Every invoice / payment will be treated as a separate transaction with 3 
documents supplied: a "transaction contract", an invoice and an act of 
acceptance
- To clarify the VAT issues additional text will be added to the invoice 
and the "transaction contract"
- The relevant documents will be made available in Russian as dual language 
documents
- Invoices will be sent one month prior to the period (quarter) at issue

SERVICE FEE VS MEMBERSHIP FEE
Pursuant to the Russian civil legislation, it is possible to structure 
payments to the RIPE NCC as either membership fees, service fees or a 
combination of both. The membership fee and the service fee payments are 
treated differently for Russian currency control and tax purposes.
In principle the RIPE NCC charges a yearly service fee. Expenses for the 
RIPE NCC service fee should be deductible for corporate income taxes, 
although this is not specifically mentioned by Russian tax law. As we 
understand it, a membership fee will in principle not be deductible for 
corporate income tax and only in exceptional cases will deductibility be 
allowed.
CURRENCY CONTROL LAW
In view of the current pending status of the currency control law (# 173-FZ 
dated 10.12.2003) we do not have to address the issues regarding this law. 
We do take notice of the developments regarding the currency control law. 
So there is currently no restriction for Russian members to make 
prepayments to the RIPE NCC.
Regarding the "instruction of the Central bank of the Russian Federation" 
(# 117-I dated 15.06.2004), when a Russian registry needs an Import Deal 
passport the RIPE NCC can provide its company registration documents.
VALUE ADDED TAXES
Russian VAT is applicable if services are physically rendered in Russia or 
are deemed to be rendered in Russia.
There is ambiguity whether the RIPE NCC service fee is taxable for the 
Value Added Tax in Russia.
PROPOSED CHANGES
The RIPE NCC proposes to treat every payment as a separate transaction. So 
for every payment, a "transaction contract", invoice and act of acceptance 
will be presented. The new Standard Service Agreement will be put in place 
and will function as a general framework, whilst the "transaction contract" 
will contain a specific price and a specific description of the services 
provided that is related to the invoice and the subsequent act of acceptance.
To solve the ambiguity regarding Value Added Tax, the following sentence 
will be added on the invoice text: "This service fee does not include 
Russian VAT which must be added if applicable".
In addition the "transaction contract" will clearly state that the services 
are rendered in Amsterdam, the Netherlands. In case it is needed the RIPE 
NCC will supply the Dutch "Statement on the tax status of the business" of 
the RIPE NCC.
The Standard Service Agreement, the Standard Terms and Conditions, the RIPE 
NCC company registration documents, the "transaction contract" and the 
additional Act of Acceptance will be made available in Russian as dual 
language documents.
The English version will be authorative in case of ambiguity between the 2 
versions.
Payments will still have to be made to the RIPE NCC Dutch bank account as 
it is not feasible at this point in time for us to open a local Russian 
bank account. The invoices, the "transaction contract" and the act of 
acceptance will be sent one month in advance of the period (quarter) at issue.
Please let us know what your view is regarding this issue and reply to this 
e-mail before the 20 November 2004 so we can start preparations before the 
initial quarterly invoices for 2005.
Kind regards,



Jochem de Ruig
Chief Financial Officer
RIPE NCC