( ) Page: 1/50. Committee on Subsidies and Countervailing Measures SUBSIDIES

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1 1 May 2014 ( ) Page: 1/50 Committee on Subsidies and Countervailing Measures Original: English SUBSIDIES NEW AND FULL NOTIFICATION PURSUANT TO ARTICLE XVI:1 OF THE GATT 1994 AND ARTICLE 25 OF THE AGREEMENT ON SUBSIDIES AND COUNTERVAILING MEASURES RUSSIAN FEDERATION Revision The following communication, dated 23 April 2014, is being circulated at the request of the Delegation of the Russian Federation. Attached is new and full notification of the Russian Federation pursuant to Article XVI:1 of the GATT 1994 and Article 25 of the Agreement on Subsidies and Countervailing Measures (SCM Agreement) for the year of Due to the transparency-oriented provisions for the obligation on notification and in accordance with Article 25.7 of the SCM Agreement, this notification does not prejudge, under the GATT 1994 and the SCM Agreement the legal status of the notified s, their effects, or the nature of the s themselves. Information on s granted or maintained at sub-federal levels in the Russian Federation is included in the Annex. TABLE OF CONTENTS 1 AUTOMOBILE INDUSTRY Support of Investment Projects in the Automobile Industry Auto Investment Programme Support of Sales Volume in the Automobile Industry Encouragement of Private Persons to Purchase New Cars Subsidies for Railway Transportation of New Motor Vehicles AIRCRAFT INDUSTRY Federal Target Programme "Development of Russian Civil Aeronautic Engineering in and in the Period until 2015" Support of Sales of Aircrafts on Lease Support of Sales of Aircrafts on Lease Subsidies to the Aircraft Industry for Technical Re-equipment Support of the Russian Airline Companies... 11

2 Support of Russian Airline Companies (Domestic and Local Airlines) MACHINE BUILDING AND INSTRUMENTAL INDUSTRY Sub "Development of Domestic Machines, Tools and Instruments Industry" in of the Federal Target Programme "National Technological Base" in Sub "Creation and Establishment of Production in the Russian Federation of New Generation Diesel Engines and Components thereof in " of the Federal Target Programme "National Technological Base" in Subsidies to Machinery Manufacturers on Technical Re-equipment SHIPBUILDING INDUSTRY AND MARINE TECHNICS Federal Target Programme "Development of Civil Marine Engineering in " Support of Transport Companies for Purchasing of Civil Vessels Subsidies for Construction and Modernization of Fishing Vessels ELECTRONIC INDUSTRY Federal Target Programme "Development of Electronic Components Base and Radio Electronics" in PHARMACEUTICAL AND MEDICAL INDUSTRY Federal Target Programme "Development of the Pharmaceutical and Medical Industry of the Russian Federation for the Period until 2020 and Beyond" LIGHT AND TEXTILE INDUSTRY Support of the Light and Textile Industry FISHING INDUSTRY Federal Target Programme "Efficient use and development of the resource potential of fishery complex in years" Subsidies for Construction and Modernization of the Fish Processing Infrastructure NATIONAL ART CRAFTS Support of National Art Crafts TIMBER INDUSTRY Interseasonal Support of the Timber Industry INTERSECTORAL INCENTIVES Special Economic Zones (SEZs) Incentives in the Kaliningrad SEZ Incentives in the Magadan SEZ Innovative Center "Skolkovo" Support Scheme Support of Small and Medium Enterprises Compensation of Export Credit Interest Contributions to the Charter Capitals of Certain Companies SUB-FEDERAL PROGRAMMES (ANNEX) Amur oblast Arkhangelsk oblast Bryansk oblast Republic of Buryatia Chelyabinsk oblast... 32

3 - 3 - Chukotka Autonomous Okrug Chuvashi Republic Ivanovo oblast Irkutsk oblast Jewish Autonomous oblast Kabardino Balkarian Republic Kamchatka oblast Karachayevo - Cherkessian Republic Republic of Karelia Republic of Khakasia Khanty-Mansijsk Autonomous Okrug Komi Republic Kostroma oblast Leningrad oblast Lipetsk oblast Moscow oblast Murmansk oblast Nizhni Novgorod oblast Novosibirsk oblast Omsk oblast Orenburg oblast Oryol oblast Perm Territory Primorie Kray Rostov oblast Sakhalin oblast Republic of Sakha (Yakutia) Samara oblast Tambov oblast Republic of Tatarstan Udmurtian Republic Ulyanovsk oblast Volgograd oblast Vologda oblast Yamalo-Nenets Autonomous Okrug Yaroslavl oblast... 50

4 - 4-1 AUTOMOBILE INDUSTRY 1.1 Support of Investment Projects in the Automobile Industry Title of the subsidy Support of Investment projects in the Automobile Industry. Support of completion of the investment projects launched by the Russian motor vehicle producers. Act: Resolution of the Government of the Russian Federation No. 640 of 1 August Authority: Ministry of Industry and Trade of the Russian Federation. Direct funding from the Federal budget. Recipients and terms Legal entities engaged in the automotive industry received partial compensation of loan interest (including loans covered by state guarantees of the Russian Federation) and of coupon yields on bonds under condition that the investment projects, which the credit resources had been attracted to, were aimed at: 1) development and engineering of modern vehicles or components thereof; 2) modernization of means of production; 3) reconstruction of production facilities; 4) increase of production capacity. 3,778 million RUB. Since It is not possible to estimate what, if any, trade effects may result from the use of this. 1.2 Auto Investment Programme Title of the subsidy Auto Investment Programme.

5 - 5 - Attraction of investments for development of domestic car making. Act: Joint Order of the Ministry of Economic Development of the Russian Federation, Ministry of Industry and Trade of the Russian Federation and Ministry of Finance of the Russian Federation No. 73/81/58n of 15 April Authority: Ministry of Economic Development of the Russian Federation. Preferential tariffs or tariff exemptions. Recipients and terms Motor vehicle producers which concluded the investment agreements with the Ministry of Economic Development of the Russian Federation and meet the terms of the agreements are eligible for preferential tariffs or tariff exemptions for imports used in production of motor vehicles and components and parts thereof. This program is described in detail in paragraphs of the Working Party Report on the Accession of the Russian Federation to the WTO (WPR). No statistics available. Since In accordance with paragraph 1090 of the WPR preferential tariffs and tariff exemptions under this regime will be eliminated by 1 July It is not possible to estimate what, if any, trade effects may result from the use of this. 1.3 Support of Sales Volume in the Automobile Industry Title of the Support of Sales Volume of the Automobile Industry. Support of sales volume and income of the domestic motor vehicle producers. Act: Resolution of the Government of the Russian Federation No. 244 of 19 March Authority: Ministry of the Industry and Trade of the Russian Federation. One of the negative impacts of the world financial and economic crisis for the automobile industry resulted in drastic fall in sales volume by motor vehicle producers. In order to improve the situation the Government of the Russian Federation made decision to support motor vehicle

6 - 6 - producers by supporting their sales volume. Only motor vehicles of a weight less than 3.5 tones and with a price less than 600 thousand RUB were eligible under the. Direct funding from the Federal budget. Russian credit institutions received partial compensation on loans that these organizations provided in to private persons on purchase of motor vehicles produced in the Russian Federation including those produced by the manufacturers fully controlled by the foreign investors. Subsidies are aimed at compensating falling revenues due to the provision of the loans by the credit organizations at interest rates below market levels. The opportunity to purchase a motor vehicle under this expired on 1 January After this date the credit organisations have been receiving compensation only for the loans that were granted under this program prior to 1 January 3,253 million RUB It is not possible to estimate what, if any, trade effects may result from the use of this. 1.4 Encouragement of Private Persons to Purchase New Cars Title of the Encouragement of Private Persons to Purchase New Cars. Improvement of road safety and stabilization of the ecological situation in the Russian Federation. Act: Resolution of the Government of the Russian Federation No of 31 December Authority: Ministry of Industry and Trade of the Russian Federation. Direct funding from the Federal budget. Russian trading organizations engaged in sales of new motor vehicles received compensation for their losses arising from selling new motor vehicles to private persons at a discounted price, under condition that the private persons had deposited owned old cars for recycling. Other requirements for receiving the subsidy were the following:

7 - 7-1) gross weight of the old motor vehicle subject to recycling was less than 3.5 tonnes and its age was more than 10 years; 2) the old car was transferred for recycling in years. 3) the new motor vehicle was produced in Russia and its gross weight was less than 3.5 tonnes; 4) the new motor vehicle was sold to a private person at a discount of 50 thousand RUB; 258 million RUB It is not possible to estimate what, if any, trade effects may result from the use of this provision. 1.5 Subsidies for Railway Transportation of New Motor Vehicles Title of the Subsidies for railway transportation of new motor vehicles. Support of the Russian car manufacturers in overcoming logistical problems with delivery of cars from the European part of Russia to Far East part of Russia and in backward direction Act: Resolution of the Government of the Russian Federation No of 20 December Authority: Federal Railway Transport Agency of the Russian Federation. Direct funding from the Federal budget. Support was provided to certain Russian car manufacturers in delivery of their products from the European part of Russia to Far East part of Russia and in backward direction by means of free of charge transportation of their products. Losses of Open Joint Stock Company "Russian Railways" were subject to compensation from the Federal budget. 2,775 million RUB. Since 2011.

8 - 8 - It is not possible to estimate what, if any, trade effects may result from the use of this. 2 AIRCRAFT INDUSTRY 2.1 Federal Target Programme "Development of Russian Civil Aeronautic Engineering in and in the Period until 2015" Title of the Federal Target Programme "Development of Russian Civil Aeronautic Engineering in and for the Period until 2015". The purpose of the Programme is to support R&D in the industry and to improve characteristics of aircrafts and components thereof. Act: Ministry of Industry and Trade of the Russian Federation. Authority: Resolution of the Government of the Russian Federation No. 728 of 15 October The Programme consists of the list of objectives, key indicators and measures to be taken in order to achieve objectives set out by the. Provision of goods and/or services. The governmental support is being provided under two directions: capital investments and funding of R&D. Basic mechanism of the support is in provision of goods or services to an enterprise. In order to provide goods or services the governmental authority places an order, performer of which is to be selected at the tender on a best bid basis. R&D 34,132 million RUB; capital investment 689 million RUB It is not possible to estimate what, if any, trade effects may result from the use of this provision. 2.2 Support of Sales of Aircrafts on Lease Title of the Support for leasing market of domestic aircraft.

9 - 9 - Modernization of the aircraft fleet of domestic airline companies. Act: Resolution of the Government of the Russian Federation No. 90 of 16 February Authority: Ministry of Industry and Trade of the Russian Federation. Direct funding from the Federal budget. Russian leasing companies had received partial compensation of payment of interest on loans taken out in the Russian banks in for the purchase of the Russian aircrafts given that such aircrafts were subsequently sold to the Russian airline companies on lease. Where this mechanism was applied to aviation simulators the were granted to the Russian aircraft producers too. 326 million RUB. Since 2008 until 5 November It is not possible to estimate what, if any, trade effects may result from the use of this. 2.3 Support of Sales of Aircrafts on Lease - 2 Title of the Support of Sales of Aircrafts on Lease 2. Modernization of the aircraft fleet of the Russian airline companies. Act: Resolution of the Government of the Russian Federation of 22 October 2012 No Authority: Ministry of Industry and Trade of the Russian Federation. Direct funding from the Federal budget.

10 Russian leasing companies had received partial compensation of payment of interest on loans taken out in the Russian banks in for the purchase of aircrafts including foreign aircrafts given that such aircrafts were subsequently sold to the Russian airline companies on lease. Where this mechanism is applied to aviation simulators the were granted to the Russian aircraft producers too. 1,171 million RUB. Since 6 November It is not possible to estimate what, if any, trade effects may result from the use of this. 2.4 Subsidies to the Aircraft Industry for Technical Re-equipment Title of the Subsidies to the Aircraft Industry for Technical Re-equipment. Technical re-equipment and modernization of the Russian aircraft industry. Act: Resolution of the Government of the Russian Federation No. 91 of 16 February Authority: Ministry of Industry and Trade of the Russian Federation. Direct funding from the Federal budget. The support is provided to the Russian manufacturers of aircrafts, helicopters and aircraft engines for partial compensation of interests on the loans taken out in and of leasing payments under leasing contracts concluded since 2006 for re-equipment of production facilities. 336 million RUB

11 It is not possible to estimate what, if any, trade effects may result from the use of this. 2.5 Support of the Russian Airline Companies Title of the Support of Russian Airline Companies. Renewal of the aircraft fleet of the Russian airline companies. Act: Resolution of the Government of the Russian Federation No. 466 of 26 June Authority: Federal Air Transport Agency of the Russian Federation. Direct funding from the Federal budget. The support is provided to the Russian airlines for partial compensation of interest on loans taken in and leasing payments under leasing contracts concluded from 2002 to 2010 for the purposes of purchasing Russian aircrafts. According to recent amendments to the Resolution of the Government of the Russian Federation of 26 June 2002 No. 466 (Resolution of the Government of the Russian Federation of 27 February 2013 No. 164) there was a decision to fix the cut-off point for providing of the. The introduced amendments limited the scope of the support program only to contracts concluded by the Russian airline companies with the financial organizations in million RUB. Since It is not possible to estimate what, if any, trade effects may result from the use of this. 2.6 Support of Russian Airline Companies (Domestic and Local Airlines) Title of the Support for Russian airlines - aircraft leasing

12 Renewal of the aircraft fleet of the Russian airline companies for domestic regional and local airlines. Act: Resolution of the Government of the Russian Federation No of 30 December Authority: Federal Air Transport Agency of the Russian Federation. Direct funding from the Federal budget. Russian regional and local airline companies receive partial compensation of lease payments for aircrafts including foreign aircrafts regional under leasing contracts that entered into force after 1 January 934 million RUB. Since It is not possible to estimate what, if any, trade effects may result from the use of this. 3 MACHINE BUILDING AND INSTRUMENTAL INDUSTRY 3.1 Sub "Development of Domestic Machines, Tools and Instruments Industry" in of the Federal Target Programme "National Technological Base" in Title of the Sub "Development of Domestic Machine-Tool and Instrumental Industry" in of the Federal Target Programme "National Technological Base" in Scientific, technical, industrial and infrastructural development of the domestic machines, tools and instruments industry. Act: Resolution of the Government of the Russian Federation No. 531 of 1 July 2011.

13 Authority: Ministry of Industry and Trade of the Russian Federation. The sub consists of the list of objectives, key indicators and measures to be taken in order to achieve the goals of the Programme. Provision of goods and/or services. The governmental support is provided for funding of R&D. Basic mechanism of the support is provision of goods or services to an enterprise. In order to provide goods or services the governmental authority places an order, performer of which is to be selected at the tender on a best bid basis. R&D 1,826 million RUB It is not possible to estimate what, if any, trade effects may result from the use of this. 3.2 Sub "Creation and Establishment of Production in the Russian Federation of New Generation Diesel Engines and Components thereof in " of the Federal Target Programme "National Technological Base" in Title of the Sub "Creation and Establishment of Production in the Russian Federation of New Generation Diesel Engines and Components thereof in " of the Federal Target Programme "National Technological Base" in Development and production of competitive diesel engines and related R&D activities. Act: Resolution of the Government of the Russian Federation No. 820 of 6 October Authority: Ministry of Industry and Trade of the Russian Federation. The sub consists of the list of objectives, key indicators and measures to be taken in order to achieve its goals. Provision of goods and/or services.

14 The governmental support is provided for funding of R&D. Basic mechanism of the support is provision of goods or services to an enterprise. In order to provide goods or services the governmental authority places an order, performer of which is to be selected at the tender on a best bid basis. R&D 1,170 million RUB It is not possible to estimate what, if any, trade effects may result from the use of this. 3.3 Subsidies to Machinery Manufacturers on Technical Re-equipment Title of the Subsidies to Machinery Manufacturers on Technical Re-equipment. Technical re-equipment and modernization of the Russian machinery industry. Act: Resolution of the Government of the Russian Federation No. 205 of 10 March Authority: Ministry of Industry and Trade of the Russian Federation. Direct funding from the Federal budget. Support is provided to the Russian enterprises of the farm machine industry, timber processing complex, engineering in gas-and-oil complex, machine-tool industry and special metallurgy industry. The recipient receives direct funding from the Federal budget on partial compensation of interest on the loans taken out in for the purposes of technical re-equipment. Compensations are available for the loans with the terms not exceeding 5 years. Both domestic and foreign equipment purchased on the loans were eligible under the subsidy. 350 million RUB

15 It is not possible to estimate what, if any, trade effects may result from the use of this. 4 SHIPBUILDING INDUSTRY AND MARINE TECHNICS 4.1 Federal Target Programme "Development of Civil Marine Engineering in " Title of the Federal Target Programme "Development of Civil Marine Engineering in ". Development of national science and technology and improvement of competitiveness of the civil marine equipment industry. Act: Resolution of the Government of the Russian Federation No. 103 of 21 February Authority: Ministry of Industry and Trade of the Russian Federation. The Programme consists of the list of objectives, key indicators and measures to be taken in order to achieve its goals. Provision of goods and/or services. The governmental support is provided on two directions: capital investments and funding of R&D. Basic mechanism of the support is provision of goods or services to an enterprise. In order to provide goods or services the governmental authority places an order, performer of which is to be selected at the tender on a best bid basis. R&D 12,821 million RUB; capital investment 4,861 million RUB It is not possible to estimate what, if any, trade effects may result from the use of this provision. 4.2 Support of Transport Companies for Purchasing of Civil Vessels Title of the Support of Transport Companies for Purchasing Civil Vessels.

16 Fleet modernization of the Russian transport companies. Act: Resolution of the Government of the Russian Federation 383 of 22 May Authority: Ministry of Industry and Trade of the Russian Federation. Direct funding from the Federal budget. Russian transport companies received partial compensation of interest on loans taken out in and lease payments under lease contracts signed from 2008 to 2012 for purchasing of civilian ships. 162 million RUB for partial compensation of expenses on interest on loans. 200 million RUB for partial compensation of expenses on lease payments under lease contracts. Since It is not possible to estimate what, if any, trade effects may result from the use of this. 4.3 Subsidies for Construction and Modernization of Fishing Vessels Title of the Subsidies for Construction and Modernization of Fishing Vessels. Stimulation of construction and modernization of fishing vessels. Act: Resolution of the Government of the Russian Federation No of 29 December Authority: Federal Agency for Fisheries of the Russian Federation. Direct funding from the Federal budget.

17 Enterprises engaged in fishery received partial compensation of the interest on loans received in the Russian credit institutions in for a period of up to 5 years for construction and modernization of fishing vessels. 10 million RUB It is not possible to estimate what, if any, trade effects may result from the use of this. 5 ELECTRONIC INDUSTRY 5.1 Federal Target Programme "Development of Electronic Components Base and Radio Electronics" in Title of the Federal Target Programme "Development of Electronic Components Base and Radio Electronics" in Development of scientific, technical and production base for improvement of competitiveness of the electronic and radio-electronic industries. Act: Resolution of the Government of the Russian Federation No. 809 of 26 November Authority: Ministry of Industry and Trade of the Russian Federation. Federal Target Programme consists of the list of objectives, key indicators and measures to be taken in order to achieve the goals of the Programme. Provision of goods and/or services. The support is provided under 2 directions: capital investments and funding of R&D. Basic mechanism of the support is in provision of goods or services to an enterprise. In order to provide goods or services the governmental authority places an order, performer of which is to be selected at the tender on a best bid basis. R&D 15,012 million RUB; capital investment 10,044 million RUB.

18 It is not possible to estimate what, if any, trade effects may result from the use of this provision. 6 PHARMACEUTICAL AND MEDICAL INDUSTRY 6.1 Federal Target Programme "Development of the Pharmaceutical and Medical Industry of the Russian Federation for the Period until 2020 and Beyond" Title of the Federal Target Programme "Development of the Pharmaceutical and Medical Industry of the Russian Federation for the Period until 2020 and Beyond" Development of scientific, technical and production basis for improvement of competitiveness of pharmaceutical and medical industries. Act: Resolution of the Government of the Russian Federation No. 91 of 17 February Authority: Ministry of Industry and Trade of the Russian Federation. Federal Target Programme consists of the list of objectives, key indicators and measures to be taken in order to achieve the goals of the Programme. Provision of goods and/or services. The Governmental support is provided under 2 directions: capital investments and funding of R&D. Basic mechanism of the support is provision of goods or services to an enterprise. In order to provide goods or services the governmental authority places an order, performer of which is to be selected at the tender on a best bid basis. R&D 5,325 million RUB; capital investment 1,303 million RUB It is not possible to estimate what, if any, trade effects may result from the use of this.

19 LIGHT AND TEXTILE INDUSTRY 7.1 Support of the Light and Textile Industry Title of the Support of the Light and Textile Industry. Support of seasonal procurement of raw materials and technical re-equipment of the light and textile industry manufacturers. Act: Resolution of the Government of the Russian Federation 993 of 29 December Authority: Ministry of the Industry and Trade of the Russian Federation. Direct funding from the Federal budget. Subsidies are provided to the Russian manufacturers of the light and textile industry for partial compensation of interest on the loans. Compensations are available for the loans taken for the purposes of technical re-equipment and for the loans taken for the purposes of seasonal purchasing of raw materials. 472 million RUB. Since It is not possible to estimate what, if any, trade effects may result from the use of this. 8 FISHING INDUSTRY 8.1 Federal Target Programme "Efficient use and development of the resource potential of fishery complex in years" Title of the Federal Target Programme "Improvement of Effectiveness of Use and Development of Resource Potential of the Fishery Complex in ".

20 Sustainable development of the fishery complex through reproduction and increase of fish resources. Act: Resolution of the Government of the Russian Federation No. 606 of 12 August Authority: Federal Agency of Fishery of the Russian Federation. Federal Target Programme consists of the list of objectives, key indicators and measures to be taken in order to achieve the goals of the Program. Provision of goods and/or services The Governmental support is provided under 2 directions: capital investments and funding of R&D. Basic mechanism of the support is provision of goods or services to an enterprise. In order to provide goods or services the governmental authority places an order, performer of which is to be selected at the tender on a best bid basis. R&D 16 million RUB; capital investment 1,481 million RUB It is not possible to estimate what, if any, trade effects may result from the use of this provision. 8.2 Subsidies for Construction and Modernization of the Fish Processing Infrastructure Title of the Subsidies for Construction and Modernization of Fish Processing Infrastructure. Stimulation of construction and modernization of fish processing infrastructure. Act: Resolution of the Government of the Russian Federation 1182 of 29 December Authority: Federal Agency of Fishery of the Russian Federation. Direct funding from the Federal budget.

21 Fishing enterprises received partial compensation of interest on loans taken out in for up to 5 years for construction and modernization of fish processing infrastructure. 64 million RUB It is not possible to estimate what, if any, trade effects may result from the use of this. 9 NATIONAL ART CRAFTS 9.1 Support of National Art Crafts Title of the Support of National Art Crafts. Policy Objective and/or Purpose Preservation and development of national cultural traditions and valuables. Act: Federal Law No. 7-FL of 6 January 1999 (Article 4); Order of the Ministry of Industry and Trade of the Russian Federation No. 64 of 17 February Authority: Ministry of the Industry and Trade of the Russian Federation. Direct funding from the Federal budget. Subsidies are granted to the producers of national art crafts products for partial compensation of production and development cots, promotion of products, registration of the intellectual property rights. 312 million RUB. Since 2009.

22 It is not possible to estimate what, if any, trade effects may result from the use of this. 10 TIMBER INDUSTRY 10.1 Interseasonal Support of the Timber Industry Title of the Interseasonal Support of the Timber Industry Reduction of the impact of the interseasonal factor on the financial stability of the timber industry. Act: Resolution of the Government of the Russian Federation No. 329 of 13 May Authority: Ministry of Industry and Trade of the Russian Federation. Direct funding from the Federal budget. Subsidies are provided from the Federal budget to organizations of the timber industry for partial compensation of the interests on loans taken out in for creation of interseasonal stocks of wood, raw materials and fuel. 450 million RUB. Since It is not possible to estimate what, if any, trade effects may result from the use of this. 11 INTERSECTORAL INCENTIVES 11.1 Special Economic Zones (SEZs) Title of the Incentives for the Residents of the Special Economic Zones.

23 Attraction of investments to the special economic zones (SEZs). Act: Federal Law No. 116-FZ of 22 July Authority: Federal Tax Service of the Russian Federation. Tax reduction related to: income tax (in part transferred to the Federal budget), property tax, transport tax and land tax. In some of the SEZs additional tax reduction is granted and is related to: value-added tax and payments to the social welfare funds. Moreover, the residents benefit from the improved infrastructure of the SEZs. Tax reduction schemes depend on the type of the SEZ (industrial, technology-implementing, port or tourist-recreational) and apply to the residents. No statistics available. Since It is not possible to estimate what, if any, trade effects may result from the use of this Incentives in the Kaliningrad SEZ Title of the Incentives in the Kaliningrad SEZ. Attraction of investments to the Kaliningrad SEZ. Act: Federal Law No. 16-FZ of 10 January Authority: Federal Tax Service of the Russian Federation. 1) Tax reduction related to income tax and property tax. 2) Exemption of imported inputs from customs duties and taxes (free customs zone regime).

24 - 24-1) The residents of the Kaliningrad SEZ benefit from the reduced rates of income tax and property tax. During the first six years of operation within the SEZ the taxes are levied at a rate of 0%. From the seventh to the twelfth year of operation within the SEZ only a half of the taxes otherwise due is levied. 2) All juridical persons and individual entrepreneurs registered in the Kaliningrad oblast under special economic and investment regime established and active under the Federal Law No. 13-FZ of 22 January 1996 are eligible for the procedure when the goods imported under the free customs zone regime and then released for free circulation into the rest of the Russian Federation are not subject to customs duties and taxes if they meet certain requirements. In accordance with the paragraph 1124 of the Working Party Report on the Accession of the Russian Federation to the WTO this regime will be applied until 1 April No statistics available. Since It is not possible to estimate what, if any, trade effects may result from the use of this provision Incentives in the Magadan SEZ Title of the Incentives in the Magadan SEZ. Attraction of investments to the Magadan SEZ. Act: Federal Law No. 104-FZ of 31 May Authority: Federal Tax Service of the Russian Federation. 1) Tax exemption related to income tax. 2) Exemption of imported inputs from customs duties and taxes (free customs zone regime). 1) The residents of the Magadan SEZ benefit from the zero income tax rate applied to profits that are invested in production and social sphere. 2) All juridical persons and individual entrepreneurs that are participants of the Magadan SEZ in accordance with the Federal Law No. 104-FZ are eligible for the mechanism when the goods imported under the free customs zone regime and then released for free circulation into the rest of the Russian Federation are not subject to customs duties and taxes if they meet certain

25 requirements. In accordance with the paragraph 1124 of the Working Party Report on the Accession of the Russian Federation to the WTO this regime will be applied until 1 January Since It is not possible to estimate what, if any, trade effects may result from the use of this provision Innovative Center "Skolkovo" Support Scheme Title of the Innovative Center "Skolkovo" Support Scheme. Support of entrepreneurs performing activities in the innovative center "Skolkovo". Act: Federal law No. 244-FZ of 28 September Direct funding from the Federal budget. Support is provided to the Russian legal entities engaged in construction of infrastructure of the innovative center "Skolkovo" and to the participants of the center performing R&D activities. 934 million RUB. It is not possible to estimate what, if any, trade effects may result from the use of this Support of Small and Medium Enterprises Title of the Support of Small and Medium Enterprises (SMEs).

26 Development of SMEs in the Russian Federation. Act: Resolution of the Government of the Russian Federation No. 178 of 27 February Authority: Ministry of Economic Development of the Russian Federation. Direct funding from the Regional budgets. Ministry of Economic Development of the Russian Federation organizes annual competitive tender between sub-federal units of the Russian Federation to distribute between them funds from the Federal budget for Regional s of the SME support which are capitalized on the basis of co-financing from the Federal budget. Average shares of federal inputs in Regional support are about 70%. The recipients of the are SMEs, as well as operators of SME support infrastructure (business incubators, industrial and technological parks). Support is granted for the following aims: - compensation of lease payments; - compensation of the interests on loans; - grants to entrepreneurs beginning their operation; - providing guarantees for loans; - loans at discounted rates; - development of SME support infrastructure (business incubators, industrial and technological parks). 20,800 million RUB. Since It is not possible to estimate what, if any, trade effects may result from the use of this Compensation of Export Credit Interest Title of the Compensation of Export Credit Interest. Support of export of industrial goods with a high degree of processing.

27 Act: Resolution of the Government of the Russian Federation No. 357 of 6 June Authority: Ministry of the Industry and Trade of the Russian Federation. Direct funding from the Federal budget. Subsidies were provided to the Russian exporters of industrial products for partial compensation of the export credit interest. 3,000 million RUB November It is not possible to estimate what, if any, trade effects may result from the use of this Contributions to the Charter Capitals of Certain Companies Title of the Contributions to the Charter Capitals of Certain Companies. Financial support of certain companies for development of their activities in accordance with their statutory goals. Act: Federal Law No. 371-FL of 30 November 2011 (the Federal budget). Authority: depends on the sphere of activity of the company. Non-repayable contributions from the Federal budget to the charter capitals. The federal authorities of the Russian Federation transfer contributions to the charter capitals of companies. The most substantial contributions to the charter capitals in 2012: Open Joint Stock Company (OJSC) "Federal Hydro Company RusHydrо" in the amount of 50,000 million RUB for the implementation of the priority projects in the fuel and energy complex of the Eastern s of the Russian Federation;

28 OJSC "Russian Railways" in the amount of 49,400 million RUB in order to create transport infrastructure for the XXII Olympic Winter Games and XI Paralympic Winter Games of 2014 in Sochi; OJSC "Special Economic Zones" in the amount of 9,800 million RUB to support the project of tourist cluster in the North Caucasus Federal District. 313,516 million RUB. It is not possible to estimate what, if any, trade effects may result from the use of these contributions.

29 12 SUB-FEDERAL PROGRAMMES (ANNEX) Title of subsidy Period covered by the notification Policy objective and/or purpose Background and authority Description of the forms of To whom and how assistance is provided of subsidi2qes Amur oblast of 1.1. State guarantees of the Amur oblast 1.2. Support of manufacturers of caterpillar combine harvesters 1.3. Support of manufacturers of road barrier fencing 1.4. Support of industrial potential of the Amur oblast and implementation of investment projects 1.5. Support of investment 2012 Provision of state guarantees of the Amur oblast 2012 Support of production of farm machinery manufacturing 2012 Development of production of road barrier fencing 2012 Development of industrial potential of Amur oblast and the implementation of investment projects 2012 Support of investments under investment agreements Law of the Amur oblast No. 586-OZ of 12 December 2011 Resolution of the Government of the Amur oblast No. 265 of 14 May 2012 Resolution of the Government of the Amur oblast No. 601 of 23 September 2011 Resolution of the Government of the Amur oblast No of 9 March 2011 Law of the Amur oblast No. 389-OZ of 4 October 2010 State guarantees Partial compensation of interest on loans Partial compensation of interests on loans Partial compensation of interests on loans Tax incentives Producers of machines for plant cultivation Producers of machines for plant cultivation Producers of road special facilities Investors engaged in the following types of economic activity: "processing industry", "construction", "extraction of raw materials", "transport and communication" Investors engaged in the following by types of economic activity: "processing industry", "agriculture, hunting and forestry" million RUB Terms of the guaranteed liabilities + 50 calendar days 15.0 million RUB million RUB million RUB Decrease of income tax to 13.5% Until the end of the payback period, but not more than three years G/SCM/N/253/RUS/Rev.1

30 Title of subsidy 1.6. Support of investment Period covered by the notification Policy objective and/or purpose Background and authority Description of the forms of To whom and how assistance is provided of subsidi2qes Support of investments under investment agreements Law of the Amur oblast No. 266-OZ of 28 November Arkhangelsk oblast 2.1. Support of development of certain industries 2.2. Support of investment in certain industries 2012 Development of certain industries 2012 Encouraging investments in certain industries Law of the Arkhangelsk oblast No OZ of 21 November 2011 Law of the Arkhangelsk oblast No OZ of 14 November 2003 Tax incentives Tax incentives Tax incentives Organizations implementing investment projects in certain types of economic activity (specified in the Law) Organizations engaged in certain economic activities may apply simplified taxation system and benefit from the reduction of the single tax rate from 15 to 10 percent. Organizations invested more than 1 billion RUB within 3 years in certain industries may RUB enjoy exemption from the property tax. Property tax exemption of Starting from the commissioning date of the object of investment and until the end of payback period (but not more than three years) 18.7 million RUB Until 31 December million RUB Up to three years G/SCM/N/253/RUS/Rev.1 3. Bryansk oblast 3.1. Support of national art crafts 2012 Support of national art crafts Law of the Bryansk oblast of 27 December 2003 No. 79-Z Tax incentives Organizations engaged in national art crafts 0.07 million RUB 2012

31 Title of subsidy 3.2. Support of enterprises of the Bryansk oblast 3.3. Support of implementation of the investment projects in the Bryansk oblast Period covered by the notification Policy objective and/or purpose Background and authority Description of the forms of To whom and how assistance is provided of subsidi2qes Increase of investment attractiveness of the Bryansk oblast 2012 Support of investment activity in the Bryansk oblast 1) Law of the Bryansk oblast No. 131-Z of 19 December 2011; 2) Resolution of the Administration of the Bryansk oblast No. 192 of 2 March Law of the Bryansk oblast No. 29-Z of 19 August 1996 Partial compensation of interest on loans Tax incentives Organizations and individual entrepreneurs engaged mainly in manufacturing of goods. Main recipients of the grants: 1) JSC "Bryanskpivo"; 2) ZAO "Klintsovsky lime factory"; 3) TNV "Syr Starodubsky"; 4) LLC "Moloko"; 5) "Konservsushprod." Reduction of tax on the assets of organizations and reduction of the income tax. The largest recipients: 1) OAO "Klintsovskiy avtokranovyy zavod" 2) ZAO "Proletariy" 3) ZAO "Termotron-Zavod" 4) ZAO "Bryanskiy zavod silikatnogo kirpicha" 5) ZAO "Klintsovskiy silikatnyy zavod" 6) ZAO "Metakley" 7) ZAO "Mal'tsovskiy portlandtsement" 18.9 million RUB. (in total) The amount of grants provided to the mentioned enterprises: 1) 4 million RUB; 2) 3.1 million RUB; 3) 2.9 million RUB; 4) 2.4 million RUB; 5) 2.1 million RUB. 1) 20.0 million RUB; 2) 26.8 million RUB; 3) 8.1 million RUB; 4) 2.3 million RUB; 5) 7.8 million RUB; 6) 7.1 million RUB; 7) million RUB. of Subsidies for working capital 1 year, for implementation of investment project 5 years G/SCM/N/253/RUS/Rev.1 4. Republic of Buryatia 4.1. Support of implementation of investment projects 2012 Implementation of certain investment projects Resolution of the Administration of the Republic of Buryatia No. 77 of 21 February 2008 Tax incentives 1) JSC "Baykalskaya lesnaya kompaniya" (timber industry) 2) JSC "Selenginskiy CKK" (pulp and paper industry) 1) 75.5 million RUB 2) million RUB

32 Title of subsidy Period covered by the notification Policy objective and/or purpose Background and authority Description of the forms of To whom and how assistance is provided of subsidi2qes Chelyabinsk oblast of 5.1. Regional target "Development of innovative activity in the Chelyabinsk oblast" for Support of the sea-hunting industry 2012 Development and implementation of innovative projects 2012 Development of the sea-hunting industry 1) Resolution of the Government of the Chelyabinsk oblast No. 186-P of 27 October 2010; 2) Resolution of the Government of the Chelyabinsk oblast No. 48-P of 16 February Chukotka Autonomous Okrug Decree of the Government of the Chukotka Autonomous Okrug No. 239 of 14 August Chuvashi Republic Partial compensation of costs Grants Organizations that implement innovative projects. Organizations in seahunting 34.4 million RUB million RUB G/SCM/N/253/RUS/Rev Support of fish industry 2012 Development of fish industry Resolution of the Cabinet of Ministers of the Chuvashi Republic No. 551 of 29 October 2010 Partial compensation of interest on loans The are provided to organizations engaged in industrial fish culture, regardless of their legal forms for compensation of interest on loans received for purchase of pedigree fish, machinery and equipment (up to 5 years) and for construction, reconstruction and modernization of fish farms (up to 8 years). Federal budget: 12.4 million RUB; Republican budget: 3.1 million RUB 2012 Provided for the loans with the term of up to 5 years (purchase of pedigree fish) and with the term of up to 8 years (infrastructure).

33 Title of subsidy Period covered by the notification Policy objective and/or purpose Background and authority Description of the forms of To whom and how assistance is provided of subsidi2qes Ivanovo oblast of 8.1. Improvement of the investment climate in the Ivanovo oblast for the period of Support of the innovative investment projects ) Modernization of manufacturing of molded products; 2) Implementation of the investment project; 3) Implementation of the investment project Improvement of the investment climate Administration of the Ivanovo oblast. 1) Resolution of the Administration of the Ivanovo oblast No. 327-rp of 30 November 2011; 2) Resolution of the Government of the Ivanovo oblast No. 179-rp of 4 July 2012; 3) Resolution of the Administration of the Ivanovo oblast No. 283-rp of 7 November 1) Decree of the Government of the Ivanovo oblast No. 319-rp of 4 September 2008; 2) Decree of the Government of the Ivanovo oblast No. 131-rp of 29 May Partial compensation of interest on loans and tax incentives Tax incentives 1) LLC "AGMA"; 2) JSC "Ivanovo's parachute factory "Polyot"; 3) LLC "EGGER Drevprodukt shuya". Organizations implementing innovative projects 11.1 million RUB (partial compensation of interest on loans); decrease of the property tax to 1.2% million RUB During the payback period of the investment projects, but not more than five years G/SCM/N/253/RUS/Rev.1

34 Title of subsidy Period covered by the notification Policy objective and/or purpose Background and authority Description of the forms of To whom and how assistance is provided of subsidi2qes Irkutsk oblast of 9.1. Support of the manufacturing industries Support of investment activity 2012 Establishment of new business entities, development of new and modernization of current production facilities, improvement of the technical level of manufacturing process and its competitiveness Realization of the investment project Administration of the Irkutsk oblast. 1) Law of the Irkutsk oblast No. 75-RL of 8 October 2007; 2) Law of the Irkutsk oblast No. 60-OZ of 12 July Jewish Autonomous oblast Administration and Investment council of the oblast. 1) Regional Law No OZ of 22 December 2010; 2) Resolution of the Regional Administration No. 35-PP of 9 February Tax incentives Partial compensation of interest on loans and tax incentives Organizations executing investment projects in Okrugmanufacturing of the following goods: - food, drinks and tobacco; - textile products; - leather, leather products and footwear; - chemical industry; - production of fuel and energy resources; - manufacturing of transport equipment; - manufacturing of aircrafts. JSC "Birobidjanskaya promishlenno-torgovaya trikotazhnaya firma "Viktoriya" Determined by the local tax authority in the 1st quarter of the year following the year of providing tax incentives million RUB G/SCM/N/253/RUS/Rev.1

35 Title of subsidy Period covered by the notification Policy objective and/or purpose Background and authority Description of the forms of To whom and how assistance is provided of subsidi2qes of 11. Kabardino Balkarian Republic Tax incentives 2012 Completion of the investment projects on establishment of production of: 1) manufacturing of gypsum board and plaster and modern automated brick production; 2) leather in the city of Chegem; 3) digital medical x-ray equipment. 1) Law of the Republic No. 57-RA of 26 July 2010; 2) Decree of the Government of the Kabardino-Balkarian Republic No. 202-PP of 22 August 12. Kamchatka oblast Long-term кegional "Development of fish industry of the Kamchatka oblast in " Support of the fishery industry 2012 Construction and modernization of infrastructure for fishprocessing industry 2012 Support of fishermen in case of facing negative consequences from the auctioning of fish quotas. Establishment of conditions for renewal of fleet and modernization of the industry of fish processing. Decree of the Government of the Kamchatka oblast No. 452-P of 20 November Administration of the Kamchatka oblast. Law of the Kamchatka oblast No. 688 of 22 November 2007 Tax incentives Partial compensation of interest on loans Tax incentives LLC "Capital invest" (projects No. 1); LLC "Karista" (project No. 2); LLC "Sevkavrentgen-Din" (project No. 3). Organizations engaged in execution of projects under the Programme Organizations engaged in catching and (or) processing of fish and seafood 1) 17.1 million RUB; 2) 2.4 million RUB; 3) 0.2 million RUB million RUB million RUB G/SCM/N/253/RUS/Rev.1