Текст книги "Правовая поддержка иностранных инвестиций в России"
Автор книги: авторов Коллектив
Жанры:
Ценные бумаги, инвестиции
,сообщить о нарушении
Текущая страница: 11 (всего у книги 17 страниц)
One specific of the Russian legislation is the establishment of a special procedure by which foreign individuals and legal entities, as well as stateless persons, can acquire land plots. In particular, the following restrictions are envisaged:
• land plots are transferred to ownership by these entities only for a payment (clause 5 article 28 of the LC RF) (in contrast, for example, to Russian associations of housing owners and individuals which, in cases established by law, may acquire such rights free of charge);
• foreign citizens and stateless persons may not own land in border regions (the list of such areas is determined by the President of the RF) or in other specially designated areas, in accordance with the federal laws (clause 3, article 15 of the LC RF);
• the given entities, as well as Russian legal entities in which foreign citizens, foreign legal entities or stateless person hold over 50 % of the authorised (share) capital, may only lease land plots or shares in common ownership of land plots of agricultural purpose (article 3 of Federal Law No. 101-FZ of 24 July 2002 “On Agricultural Land Transactions” (which came into effect on 28 January 2003).
State or municipally owned land plots may be provided for construction purposes by right of ownership or lease or, to a limited range of legal entities, of permanent (termless) use (clause 2, 3 article 30; clause 1 article 20 of the LC RF). It is not permitted to refuse to provide land plots for construction purposes to individuals and legal entities by right of ownership, except in cases when:
• land plots are withdrawn from the market;
• federal law prohibits privatisation of land plots;
• land plots are reserved for state or municipal purposes (clause 4 article 28 of the LC RF).
Land plots may be provided for construction purposes both with and without prior agreement of the location of the facilities (article 30 of the LC RF).
Land plots are granted to commercial organisations on lease with prior agreement of the location of the construction facilities. As a rule, prior agreement is required for investment in construction of industrial facilities outside or on the territory of population centres, if the location of the facilities is not in full compliance with the town-planning documents and rules governing land use and development (territorial zoning). In these cases, a project for locating an industrial facility requires the environmental, architectural, sanitary and other aspects to be thoroughly analysed.
Local government bodies of urban and rural population centres are required to inform the population of the possible or impending location of construction facilities. If the location of the buildings or structures affects the interests of the residents, the decision has to be made on the basis of a referendum held on the given territory (clause 3, article 31 of the LC RF; clause 3, article 35 of Federal Law of 10 January 2002 “On Environmental Protection”).
The Russian Land Code envisages granting ownership or lease rights to land plots for construction purposes without prior agreement of the location of the facilities exclusively on a tender basis. This procedure is applied primarily in urban areas, where land plots are granted by state executive authorities or local government bodies on a tender or auction basis. Each such land plot must be prepared for sale or for sale of the lease rights: a draft of the plot boundaries must be drawn up, a cadastral number assigned, the technical specification for connecting the plot to public utilities determined, and so on. A land plot may be granted for lease without prior agreement if, after timely publication of notification of the land plots proposed for transfer, only a single application is submitted.
Prior agreement is also not performed when a facility is located in an urban or rural population centre in accordance with the town-planning documents and rules governing land use and development (clause 11, article 30 of the LC RF).
Let us consider the procedure for granting agricultural land plots to individuals and legal entities. As envisaged in article 10 of the Federal Law “On Agricultural Land Transactions”, ownership rights to state or municipally owned agricultural land plots are granted to individuals or legal entities by tender or auction. The organisation and holding of tenders for the sale of such land plots and of the lease rights to them must conform to article 38 of the Russian Land Code (i.e., be carried out in the same way as land is provided for construction purposes).
If only a single application is submitted for leasing of the land plot and the announcement of the offer of such lease rights was published in the media well in advance, the transfer is made as determined in article 34 of the LC RF (in the manner that land plots are provided to individuals for purposes not connected with construction). In this case, the decision on leasing out the land plot is taken on the condition that no other applications are submitted within a month of publication of the announcement. If two or more applications are submitted, a tender or auction is held.
Ownership of a land plot leased to an individual or a legal entity may be acquired by the lessee at its market price on expiry of three years from the time the lease contract is signed, on the condition that proper use is made of the land plot. The decision to provide the title to a land plot must be taken within two weeks of the written application being submitted to the state executive authorities or local government bodies so empowered. Agricultural purpose land plots that are state or municipal property may be leased to religious organisations (associations), scientific research institutions, agricultural educational institutions, Cossack communities, and communities of small indigenous people of the North, Siberia and the Far East for agricultural production, maintenance and development of the traditional way of life, husbandry and production, as well as to individuals for hay-making and animal grazing. The title to land plots leased for these purposes may not be bought up. The procedure for leasing out land plots for the given purposes is determined in article 34 of the Land Code of the Russian Federation.
Privatisation of the landAttempts to introduce land transactions were made immediately after state sovereignty of the RSFSR was declared in 1990. The real reform began, however, only after adoption in 1993 of the Constitution of the RF and the Decree of the President of the RF, dated 24 December 1993, “On Bringing the Land Legislation of the Russian Federation into Conformity with the Constitution of the Russian Federation”. The main significance of these documents lies in the fact that they determined the political direction in which the land reform in Russia was to develop. At the same time, the land was only a means for implementation of investment projects, rather than an independent subject of commercial relations. For investment projects, the land was usually leased out and cases of actual sale and purchase were quite rare.
The appearance of the Land Code of the Russian Federation at the end of 2001 acted as an impetus to the process of land privatisation. More and more enterprises began to purchase the land accommodating the buildings they owned. Transactions with state-owned land on which industrial facilities were located ceased to be the exception. Over recent years, this has been an intensive process. Russian businessmen must realise that the price of land will rise continuously and that this trend is unlikely to change. It is a result of the Russian Land Code linking the price of land to the land tax rate: the higher the tax, the greater the land purchase price. In 2002, to the benefit of budget revenues, the land tax rate was doubled; in 2003 it was increased by 80 per cent and in 2004 by 10 per cent.
The legislation determines quite specifically the formula for calculating the purchase price of state or municipally owned land plots for the owners of buildings and structures located thereon. At the same time, the legal status of such property and its history (property acquired, constructed, privatised, etc.) is of no significance for price formation purposes.
Before adoption of the LC RF, this issue was regulated by Decree of the President of the RF, dated 22 July 1994, “On the Main Provisions of the State Programme for Privatisation of State and Municipal Enterprises of the Russian Federation after 1 July 1994”, in which the price of a land plot was calculated on the basis of the standard land price. The Law on Enactment of the LC RF (as well as the Federal Law “On Privatisation of State and Municipal Property”) envisages calculation of the price on the basis of the land tax rate. The standard price, according to the Decree of the President of the RF, is higher than that proposed by the Federal Law. At the same time, as already noted, the rise in the land tax rate is automatically accompanied by a rise in the purchase price, too.
In any case, article 2 of the Law on Enactment of the LC RF empowers constituent entities of the Russian Federation to set the price of land in centres with a population numbering:
• over 3 million – at between five and thirty times the land tax rate per unit area of the land plot (m2);
• between 500 thousand and 3 million – at between five and seventeen times the land tax rate per unit area of the land plot;
• up to 500 thousand and for land outside populated areas – at three to ten times the land tax rate per unit area of the land plot.
Until the federative constituent entity sets the land price, the corresponding minimum land tax rate is applied on its territory.
As envisaged by the LC RF, when a land plot is sold, an adjustment factor[39]39
Not currently set.
[Закрыть] is to be applied to its value, in consideration of the main type of use of the buildings and structures located on the land plot. Adjustment factors considering the main type of use must be approved by the Government of the RF and be between 0.7 до 1.3.
In the Moscow Region, for example, in the absence of a population centre numbering over 500 thousand residents, the maximum purchase price of a land plot is set at 10 times the land tax rate.
Calculation of the land plot purchase price may be presented by the following formula:
P = Ltr × S × Fp × Fa,
where Ltr – land tax rate (at the opening of the current calendar year);
S – area of the land plot;
Fp – factor set by the constituent entity of the Federation depending on the population size (for example, in the Moscow Region[40]40
See: Law of the Moscow Region No. 217/2001-OZ, dated 13 December 2001. “On the Price of Land on the Sale of Land Plots to the Owners of Buildings and Structures Located Thereon on the Territory of the Moscow Region” // Bulletin of the Moscow Region Duma. 2001. No. 12.
[Закрыть] Fp = 10, in the Novosibirsk Region[41]41
Resolution of the Head of the Administration of the Novosibirsk Region No. 1279, dated 28 December 2001, “On the Price of Land”.
[Закрыть] it fluctuates from 5 to 17, and in the Ryazan Region it is 8);
Fa – adjustment factor set by the Government of the RF between 0.7 and 1.3 depending on the main type of use of the buildings and structures located on the land plot.
Clause 7, article 28 of the Federal Law “On Privatisation of State and Municipal Property” also determines a procedure for calculating the price of land plots that virtually replicates the formula included in the Law on Enactment of the LC RF, yet omitting the federal adjustment factors it envisages. The question arises as to whether or not the adjustment factors should be paid.
The letter from the Deputy Minister for Property Relations of the RF states that, until such factors have been adopted by the Government of the RF, they are not subject to payment. The same view was expressed in Resolution No. 11 (clause 9) of the Plenum of the Supreme Arbitration Court of the RF, dated 24 March 2005.
At the same time, clause 3, article 2 of the Law on Enactment of the LC RF states specifically that, when a land plot is sold, an adjustment factor should be added to its value.
There are certain contradictions in the legislation concerning who makes the decision on a sale and who concludes the sale and purchase agreement. It is evident that, in any case, the budgetary distribution of the funds received from the sale of land plots will not change and the state will not suffer any losses. Even so, the process is dragged out by the indeterminacy concerning which authorities are responsible for deciding on privatisation of land plots and concluding sale and purchase agreements for them. For example, clause 7 of the Rules for Disposal of State-owned Land Plots before Division of State Ownership of the Land (approved by Resolution of the Government of the RF No. 576, dated 7 August 2002) establishes that decisions on privatisation of land plots accommodating real estate facilities the title to which is acquired by individuals or legal entities are to be taken:
• by the Russian Ministry for Property[42]42
Currently the Federal Agency for Administration of Federal Property.
[Закрыть] if the property acquired was federal property;
• by the relevant authority of the federative constituent entity if the property acquired belonged to the constituent entity of the Federation or the land plot was leased out by decision of the state authorities of the federative constituent entity.
In all other cases, such a decision is to be taken by the local government body, i.e., if the land plot was provided by the local government body and real estate facilities were subsequently built on it, the decision to sell such a plot is the responsibility of said local government body.
Constituent entities of the Russian Federation sometimes, however, establish other requirements. For instance, the legislation of the Moscow Region envisages that a decision on disposal of land plots with an area of over 3 ha. is the responsibility of the Government of the Region.
If, however, the plot is leased out by a local government body and the real estate purchased was, before privatisation and subsequent sale, federal property or belonged to a constituent entity of the Federation, in our opinion it would be more correct for the decision on privatisation to be taken by both the local government body and the relevant authority of the federative constituent entity.
Thus, the Government of the RF is to approve adjustment factors of from 0.7 to 1.3, but they have not yet been approved or applied. The Government of the RF may approve them at any time, however, and then the price of land will either rise or fall by 30 %.
Those wishing to purchase agricultural land might encounter a number of difficulties.
In the course of the agrarian reform implemented in the country since the beginning of the 1990s, collective and state farms were reorganised into partnerships, companies or production co-operatives. At the same time, agricultural land used by enterprises was privatised by being divided up into conditional land shares. The owners of the land shares were the workers of the reorganised enterprises.
A land share may be defined as a share in shared ownership of the land of an agricultural organisation, being expressible quantitatively but having no particular location.
The specific features of the way shares in shared ownership of land plots are sold and purchased are regulated by the Federal Law of 24 July 2002 “On the Sale and Purchase of Agricultural Land”. According to article 12 of the Law, a participant in shared ownership shall have the right, as its own discretion, to sell its share or otherwise dispose of it in observance of the rules on preemptive rights of sale and purchase by owners (article 250 CC of the RF), as well as the preemptive right of the federative constituent entity or municipality (article 8 of the Law). Land under common shared ownership can be sold and purchased in other ways, too. For example, if the holders of the shares sell their shares to one of their number, the latter may identify land plots on the basis of these shares and be entitled to dispose of them, including by selling them, in observance of the regulation of the Federal Law “On Agricultural Land Transactions”.
In certain cases, the legislation permits recategorisation of agricultural land, including as industrial land. As already explained, such land may be transferred to another category by the executive authorities of a constituent entity of the Federation (clause 1, article 8 of the LC RF).
The holders of land shares may exchange these for shares in a joint-stock company that is set up or contribute them to the authorised (share) capital of another agricultural business enterprise. Then it is this organisation that becomes the landowner and, as such, receives the right to dispose of the land.
The land legislation sets certain restrictions on acquiring title to agricultural land plots. Foreign citizens and stateless persons, foreign legal entities, as well as Russian legal entities in which these three categories hold over 50 % of the authorised (share) capital, can hold land plots or shares in common ownership of agricultural land only on a lease basis (article 3 of the Federal Law “On Agricultural Land Transactions”).
One more restriction is envisaged by article 4 of the Federal Law “On Agricultural Land Transactions” (in the edition of Federal Law No. 87-FZ, dated 18 July 2005). This dictates that the maximum total area of agricultural land located within a single municipal district and belonging to a single individual and (or) legal entity shall be set by the constituent entity of the Federation at no less than 10 per cent of the total area of agricultural land located on the given territory at the time such land plots are allocated and (or) acquired.
Transactions with privately owned land plots (with the exception of agricultural land)Owners of land plots with which transactions are permitted and not restricted in any way have the right to dispose freely of said plots, provided this is not detrimental to the environment and does not violate the rights and lawful interests of other persons (article 27 of the LC RF; article 209, 260 Civil Code (CC) of the RF). Sales, purchase and other transactions with privately owned land plots are regulated by the rules of the civil legislation.
It should be stipulated immediately that the legislation (in particular, the Land Code of the Russian Federation and the Federal Law “On Agricultural Land Transactions) imposes certain special requirements on transactions with agricultural land.
According to the rules of civil law, the parties to a sale and purchase transaction for privately owned land shall have the right to set their own terms for the transaction, including the price. At the same time, it should be borne in mind that the same tax rules and laws associated with transfer pricing as applicable to other transactions are also applicable to the sale and purchase of land. It is worth noting that, since 1 January 2005, the sale of land plots (or shares therein) has not been subject to VAT. Only land plots that have undergone state cadastral registration can be bought and sold (article 37 of the LC RF).
When selling or purchasing land, it is important not only to check the seller’s title, but also to request an extract from the Unified State Register of Real Estate Rights and Transactions (the Realty Register), rather than accepting just the title deeds to the land. The CC of the RF envisages mandatory state registration of the transfer of title in the event of a real estate sale and purchase transaction. The purchaser of the land plot is issued a Certificate of registration of right of ownership (the title deeds), but most important is entry of the registered right in the Realty Register.
Before enactment of the Land Code of the Russian Federation of 25 October 2001, cases of privatisation of non-agricultural land were quite rare. Privatisation of agricultural land became, however, quite widespread in the form of assignment of land shares to the members of collective and state farms (when they were reorganised into new, non-state economic forms) in accordance with Resolution No. 708 of the Government of the RF, dated 4 September 1992, “On the Procedure for Privatisation and Reorganisation of Enterprises and Organisations of the Agro-industrial Complex”.
Non-agricultural greenfield sites are rarely privately owned and special care needs to be taken in selling and purchasing such sites.
