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SME legal base

State support to small business in the Republic of Karelia is accomplished in accordance with Federal Law No. 88-FL of 14.06.1995, “On state support to small business in the Russian Federation”, Russian Federation President’s Decrees, Russian Government’s resolutions, and corresponding republican statutory legal acts.

The following laws form the basis of state support to small and middle business in the Republic of Karelia:

- Republic of Karelia Law No. 53-RKL of 23.06.1995, “On state support to small business in the Republic of Karelia”;

- Law No. 787-RKL of 26.06.2004, “On state support to investment activities in the Republic of Karelia”.

The Law “On state support to small business in the Republic of Karelia” is aimed at promoting structural adjustment of economy of the republic, creating new work places, and raising the living standard. It determines legal, economic and organizational principles of state policy in small business support and development in the Republic of Karelia, establishes forms and methods of state stimulation and regulation of small business subjects’ activities with the aim of providing for them necessary conditions and opportunities for business realization as a full-authority subject of the competitive market system of management, as well as increasing their contribution in economic development in the Republic of Karelia.

The Law “On state support to investment activities in the Republic of Karelia” specifies types of state support to enterprises realizing investment projects in the territory of the republic, including small businesses.

Types of state support include tax remissions and state guarantees, as well as lax budget credits to realize investment projects.

Due to some changes made in federal legislation on state support to small business which resulted in abolition of the clause regulating the existence of the small business support Foundation, corresponding changes were made in the Republic of Karelia Law No. 53-RKL of 23.06.1995.

Karelian Government Decree No. 323r-II “On changing the objectives of activities and renaming the state non-profit institution ‘Foundation for small business support and development in the Republic of Karelia” was issued on 22.11.2005.

As a result of this, the institution mentioned above was renamed as the state institution “Business development Centre of the Republic of Karelia”. The Centre’s main goal is to perform functions of a business-incubator.

The Karelian Government adopted Resolution No. 111-P of 12 September 2005, “On Council on small business under the Karelian Government” which is to solve problems having to do with coordination of activities of executive bodies of the Republic of Karelia and entrepreneurs’ public organizations while formulating and implementing coordinated policy aimed at small business support and development, including overcoming of administrative barriers.

According to the Law “On state support to small business in the Republic of Karelia”, financial support to small business is realized through corresponding special-purpose programmes devised by the RK Government and approved by the RK Legislative Assembly once in two years.

Within the republican special-purpose programmes on state support to small business, the following amounts were allocated from the republican budget: 2.5 million roubles in 2003, 3.1 million roubles in 2005, and 2.3 million roubles in 2005.

The Sectoral special-purpose programme on state support to small business in the Republic of Karelia for the years 2006-08 was approved by Government’s Resolution No. 143-P of 16.12.2005, with the amount of financing from the republican budget of 34.3 million roubles (8 million roubles - for the year 2006).

The Programme activities are aimed at accomplishing the following tasks:

Creation of favourable conditions for sustainable work of small businesses
Overcoming of administrative barriers in the course of small business development
Development and introduction of effective financial techniques of supporting small business
Development of small business support infrastructure; rendering methodical, information, and consultation support to small businesses
Getting small businesses involved in exhibition-fair activities with the aim of promoting their products further in the market.

Unlike the previously adopted programmes, the present special-purpose Programme on state support to small business envisages implementation of the following activities:

Organization of the formation and development of production and innovation infrastructure in the Republic of Karelia aimed, in the first place, at developing a business-incubator system through establishing and developing the State Institution “Business Development Centre of the RK”;
Compensation of part of the rent rate for small business objects-beginners that rent premises in a business-incubator, to realize investment projects;
Subsidizing of part of the interest rate in investment credits of small business objects.

The Sectoral special-purpose programme on state support to small business in the Republic of Karelia for the years 2006-08 puts special emphasis on the improvement of normative and legal base to ensure effective entrepreneurship. The task is set to avoid standard acts complicating or aggravating the situation for small business on republican and local level, with corresponding monitoring of the republican and municipal standard acts regulating this sphere of economy envisaged for this purpose.

At the same time, some regulations of federal legislation in the field of entrepreneurship are of no help today in solving problems of business development and support. The first law to constitutionally claim small business, namely, “On state support to small business in the Russian Federation” was adopted 11 years ago. Its role in small business development can hardly be overestimated. However, with the adoption of special laws legalizing regulations for small business development in the RF Tax Code and in laws on state registration, public purchases, check-ups and others, the role of the law on small business support became less important.

Federal legislation currently in force has no notion of administrative barriers, and there is no common system approach as to overcoming of them on state level. The set of criteria for attributing economic objects to small business objects is not perfect. The functions of forming the policy concerning small business are not divided between the authority branches. Only adoption of a new law will make it possible to solve these problems, to get rid of superfluous tax administration, and to ensure diversification of small and middle business.

Considering the above-mentioned, the Ministry of Economic Development of Russia, together with the RF Chamber of Commerce and Industry, “OPORA ROSSII” (Russia’s support), and the Moscow and St. Petersburg Governments, have prepared a new concept and text of a new federal law.

Create date: 18.09.2006
Modify date: 19.09.2006