On 25 December 2012 the Federal Tax Service of the Russian Federation (the “FTS”) signed agreements on an expanded information exchange –horizontal monitoring with Joint Stock Company “RusGidro”, Joint Stock Company “INTER RAO UES”, Joint Stock Company “Mobile TeleSystems” and company “Ernst &Young (CIS) B.V.”

The horizontal monitoring provides for full disclosure of information on activities on the part of the taxpayers that includes full access to tax and accounting reporting.

If there is an unsettled issue concerning the taxation of a particular transaction, then companies can provide information on the completed or intended transaction to promptly obtain clarifications on any issues and retrospectively correct their tax policy.

In the long term such co-operation may be advantageous for taxpayers since it allows them to mitigate tax risks by increasing their ability to predict tax regulation, and reduces any uncertainties that can arise when applying different provisions of the legislation as well as decreasing expenses incurred in tax audits.

Nonetheless we draw your attention to the fact that such information exchange with the FTS is being conducted as a pilot scheme and concerns only those companies mentioned above that have signed agreements.

[More information on this issue can be found on the website of FTS following (in Russian): http://www.nalog.ru/rub_mns_news/4020258/]