Article 183. Operations Which Are Not Taxable (Exempt From Taxation)

1. Not subject to taxation (the following operations are exempt from taxation) shall be:

1) transfer of excisable goods by a structural unit of an organization not being an independent taxpayer for production of other excisable goods to another similar structural unit of this organization;

2) sale of denatured ethyl alcohol made from all kinds of raw materials by organizations in the procedure established by the Federal Law on the State Regulation of Production and Circulation of Ethyl Alcohol, of Alcohol and Alcohol-Containing Products.

For the purposes of the present Chapter, denatured ethyl alcohol shall be defined as ethyl alcohol containing such concentrations of denaturants that make it impossible to use said alcohol in the production of alcoholic and other food products made according to and approved by authorized federal bodies of executive authority by normative and technical documents, having passed state registration with an authorized federal body of executive authority and entered in the State register of ethyl alcohol and alcohol containing solutions from non-food raw material, or in the State Register of Ethyl Alcohol from Food Raw Materials, Alcohol Products and Alcohol-Containing Products in the Russian Federation.

Ethyl alcohol shall be defined as denatured (exempt from taxation) only provided its denaturation is effected on the basis of ethyl alcohol within the framework of a single technological process involving production facilities of an organization (without transfer during this technological process from one structural unit of the organization to another if the organization has such structural units);

3) the sale by organizations of alcohol containing denatured products in the procedure established by the Federal Law on the State Regulation of Production and Circulation of Ethyl Alcohol, of Alcohol and Alcohol-Containing Products.

For the purposes of the present Article, alcohol containing denatured products shall be defined as alcohol containing non-food products containing denaturants in such concentrations of denaturants that make it impossible to use said alcohol in the production of alcoholic and other food products made according to the approved authorized federal bodies of executive power in accordance with the normative and technical documents, that were granted state registration with the authorized federal body of executive power and entered into the State Register of ethyl alcohol and alcohol containing solutions made from non food raw materials or in the State Register of Ethyl Alcohol from Food Raw Materials, Alcohol Products and Alcohol-Containing Products in the Russian Federation;

4) the sale of excisable goods and/or transfer by a person of petroleum products produced by the person from customer's raw materials to the owner of the said raw materials (materials) or to other persons, such goods having been placed under the customs regime of export, out of the territory of the Russian Federation with the account taken of the losses within the limits of natural decrease norms. Said bonification shall be provided under Article 184 of the present Code;

5) the initial sale (transfer) of confiscated and/or ownerless excisable goods or excisable goods that were refused in favour of the state, and which are to be transferred into state and/or municipal property, for industrial processing under customs control and/or that of the tax authorities or destruction;

6) pumping of natural gas into strata to maintain reservoir pressure;

7) pumping of natural gas into underground storage;

8) the use of natural gas to prepare heat-carriers for pumping into petroleum strata and other methods of raising oil recovery, and also for gas lifting products of crude oil;

9) the use of natural gas for own process needs of organizations producing and transporting natural gas within the limits of the specifications stipulated by the process of preparation and transportation of gas approved in the order defined by the Government of the Russian Federation;

10) the sale (transfer) of stripped petroleum gas and associated petroleum gas on the territory of the Russian Federation after their treatment or processing;

11) the sale on territory of the Russian Federation of natural gas, intended for personal consumption by natural persons, and also for consumption by housing construction co-operatives, condominiums and other similar consumers;

12) the transfer and/or sale of natural gas for production (including on commission basis) of compressed gas in case of sale of natural gas at state controlled prices;

2. Operations listed in Item 1 of the present Article shall not be taxable (are exempt from taxation) only in case separate record-keeping of operations on production and sale (transfer) of such excisable goods and/or excisable mineral raw material is maintained.

3. Not taxable shall be (shall be exempt from taxation) the import to the customs territory of the Russian Federation of excisable goods which were refused in favour of the state and which are to be transferred into the state and/or municipal property.

Article 184. Features of Exemption from Taxation of Operations in the Sale of Excisable Goods outside the Territory of the Russian Federation

1. Exemption from taxation of operations stipulated by Subitem 4 of Item 1 of Article 183 of the present Code shall take place only in case of the export of excisable goods under the customs treatment of export from the territory of the Russian Federation directly by the manufacturer of these goods acting as the taxpayer, and also by the owner of petroleum produced from its own raw material under an agreement for processing petroleum with an oil refinery, or on their instruction by another person on the basis of a contract of commission agency, contract of delegation or agency contract.

The taxpayer shall be relieved from excise tax when he sells excisable goods produced by him and/or transfers petroleum products produced from customer's raw materials, such goods or products having been placed under the customs regime of export, out of the territory of the Russian Federation if a bank surety (Article 74 of the present Code) or a bank guarantee. Such surety (a bank guarantee) should provide for the undertaking of the bank to pay the excise tax amount and appropriate fine if the taxpayer fails to submit in the order and terms laid down by Item 6 of Article 198 of the present Code documents confirming the fact of export of excisable goods and default on payment of the tax and/or fine.

In the absence of a surety of a bank (a bank guarantee), the taxpayer is obliged to pay the excise tax according to the standard order governing operations on the sale of excisable goods on the territory of the Russian Federation.

2. Upon payment of the excise tax due to the absence of a surety of a bank (a bank guarantee), at the taxpayer the paid amounts of the excise tax and appropriate fine shall be refundable upon submission by the taxpayer to the tax authorities of documents confirming the fact of export of excisable goods.

The tax shall be refunded in the order stipulated by Article 203 of the present Code.

Article 185. Features of Taxation in Case of Movement of Excisable Goods Across the Customs Border of the Russian Federation

1. In case of import of excisable goods to the customs territory of the Russian Federation depending on a selected customs treatment, taxation shall be made in the following order:

1) if excisable goods are placed under the customs treatment of release for free circulation, the excise tax shall be paid in full;

2) if excisable goods are placed under the customs treatment of re-import, the taxpayer shall pay the amount of excise tax from which he was exempt or which was returned to him in connection with the export of goods according to the present Code in the order stipulated by the customs legislation the Russian Federation;

3) if excisable goods are placed under the customs treatments of transit, bonded warehouse, re-export, duty-free shop, processing under customs control, free customs area, free warehouse, destruction or refusal in favour of the state, the excise tax is not paid;

4) if excisable goods are placed under the customs treatment of processing on the customs territory, the excise tax is paid upon the import of said goods to the customs territory of the Russian Federation and subsequently the paid amounts of the excise tax are refunded on exportation of products of their processing from the customs territory of the Russian Federation;

5) if excisable goods are placed under the customs treatment of temporary import, the excise tax shall be exempted in full or partially in the order stipulated by the customs legislation of the Russian Federation.

2. In the case of export of excisable goods from the customs territory of the Russian Federation, the tax shall be imposed in the following manner:

1) in case of export of goods under the customs treatment of export from the customs territory of the Russian Federation, the excise tax is not paid with allowance for Article 184 of the present Code or the paid amounts of the excise tax are refunded (are offset) by the tax authorities of the Russian Federation in the order stipulated by the present Code.

The order laid down in the present Subitem shall apply also if goods are placed under the customs treatments of bonded warehouse, free warehouse or free customs area for the purposes of their (including products of their processing) subsequent export according to the customs treatment of export from the customs territory of the Russian Federation;

2) in case of export of goods under the customs treatment of re-export from the customs territory of the Russian Federation, amounts of excise tax paid on their import to the customs territory of the Russian Federation shall be refunded to the taxpayer in the order stipulated by the customs legislation the Russian Federation;

3) in case of export of excisable goods from the customs territory of the Russian Federation according to customs treatments different from those listed in Subitems 1 and 2 of the present Item, there is no exemption from taxation nor a refund of paid amounts of excise tax, unless otherwise stipulated by the customs legislation of the Russian Federation.

3. In case excisable goods which are not intended for industrial or other activities are moved by natural persons, the simplified or preferential order of payment of excise tax can be used according to the customs legislation of the Russian Federation.

Article 186. Features of Levying of Excise Tax on Excisable goods moved Across the Customs Border of the Russian Federation in the Absence of Customs Control and Customs Registration

1. If, under an international treaty of the Russian Federation with a foreign state, the customs control and customs registration are abrogated for goods being moved across the customs border of the Russian Federation, the procedure for levying excise tax on excisable goods originating from such a state or released for free circulation on its territory and imported to the territory of the Russian Federation shall be established by the Government of the Russian Federation.

2. In case of export of excisable goods from the territory of the Russian Federation to the territory of foreign states defined in Item 1 of the present Article, the order of confirmation of the right to exemption from payment of excise tax shall be established by the Government of the Russian Federation, including on the basis of bilateral agreements with the governments of said foreign states.

Article 187. Determination of the Tax Base in Case of the Sale (Transfer) of Excisable Goods

1. The tax base is defined separately for each type of excisable good.

2. The tax base in case of the sale (transfer defined as an item of taxation according to the present Chapter) of excisable goods produced by the taxpayer depending on tax rates fixed for such goods shall be defined as:

1) the volume of sold (transferred) excisable goods in kind - on excisable goods for which firm (specific) tax rates (in an absolute amount per unit of measurement) are established;

2) the cost of sold (transferred) excisable goods computed on the basis of prices defined with due regard to the provisions of Article 40 of the present Code disregarding the excise tax, value-added tax and sales tax on excisable goods for which ad valorem (in percentage points) tax rates are established;

3) the cost of transferred excisable goods computed on the basis of average prices of sale effective over the previous tax period, and in their absence, on the basis of market prices disregarding the excise tax, value-added tax and the sales tax - on excisable goods for which ad valorem (in percentage) tax rates are established. In a similar order the tax base on excisable goods shall be defined for which ad valorem (in percentage) tax rates are established when they are sold on a gratuitous basis, when performing commodity swap (barter) transactions, and also by transfer of excisable goods under a cancellation compensation or novation and transfer of excisable goods as wages in kind.

3. The tax base in case of sale of confiscated and/or ownerless excisable goods, excisable goods which were refused for the benefit of the state and which are to be transferred into the state and/or municipal property, and also in case of the initial sale of excisable goods originating and imported from the territory of member states of the Customs Union without customs registration (if there are agreements on the single customs area) shall be as defined according to Subitems 1 and 2 of Item 2 of the present Article.

4. The tax base in case of transfer of jewelry produced on individual orders of the population using second-hand jewelry and/or scrap of such articles shall be defined as the cost of processing computed on the basis of the transaction price stated by the parties, unless otherwise is stipulated by Article 40 of the present Code, disregarding the excise tax, the value added tax and the sales tax.

5. When determining the tax base, the taxpayer's proceeds received in foreign currency shall be converted into the currency of the Russian Federation at the rate of the Central Bank of the Russian Federation effective on date of sale of excisable goods.

6. Not to be included in the tax base are the funds received by taxpayers and that are not associated with the sale of excisable goods.

Article 188. Assessing the Tax Base in the Case of Sale (Transfer) of Excisable Mineral Raw Materials

1. In the case of sale (transfer) of natural gas in the domestic market the tax base shall be assessed as the value of sold (transferred) transported natural gas calculated on the basis of the prices applied but not below the state regulated prices, with account taken of discounts granted in the established manner, less value added tax. When payment is made for the service of gas transportation via gas distribution networks, the cost of the service computed on the basis of the amount of tariffs for gas transportation via gas distribution networks and for using gas distribution networks shall not be included into the tax base. 2. When natural gas is sold outside the territory of the Russian Federation the tax base shall be assessed as the value of natural gas sold less value-added tax in the case of sale of natural gas to member states of the Commonwealth of Independent States, customs payments and natural gas transportation expenses incurred outside of the territory of the Russian Federation.

3. When the tax base is being assessed the value of the taxpayer's excisable mineral raw materials in a foreign currency shall be converted into Russian currency at the exchange rate of the Central Bank of the Russian Federation effective as of the date of sale thereof.

4. Amounts received by the taxpayer not connected with the sale of excisable raw materials shall not be included in the tax base.