Open Joint Stock Company Gazprom

circumstances, if the disposal proceeds are payable by a Russian organisation, individual entrepreneuror a Russian permanent establishment of a foreign organisation, the payer may be required to withholdthis tax. There is a risk that the taxable base may be affected by changes in the exchange rates betweenthe currency of acquisition of the Notes, the currency of sale and Roubles.Resident HoldersA holder of a Note who is a physical or legal person resident in Russia for tax purposes is subjectto all applicable Russian taxes.Taxation of Interest on the LoanIn general, payments of interest on borrowed funds by a Russian entity to a non-resident legalperson are subject to Russian withholding tax at the rate of 20%, absent reduction or eliminationpursuant to the terms of an applicable double tax treaty. Based on professional advice it has received,Gazprom believes that payments of interest on the Loan should not be subject to withholding under theterms of the double taxation treaty between Russia and the Federal Republic of Germany. Howeverthere can be no assurance that such relief will be obtained. If, as a result of the enforcement by theTrustee of the security granted to it by the Bank by way of the security interests created in the TrustDeed, interest under the Loan becomes payable to the Trustee, the benefit of the double tax treatybetween Russia and the Federal Republic of Germany would cease and payments of interest may besubject to Russian withholding tax.VAT is not applied to the rendering of financial services involving the provision of a loan inmonetary form. Therefore no VAT will be payable in Russia on interest payments.If the payments under the Loan Agreement are subject to any withholding (as a result of whichthe Bank would reduce payments under the Notes in the amount of such withholding), Gazprom isobliged to in-crease payments as may be necessary so that the net payments received by the Bank willnot be less than the amount it would have received in the absence of such withholding. It should benoted however that gross-up provisions in contracts may not be enforceable under Russian law. In theevent that Gazprom fails to increase payments, such failure would constitute an Event of Default underthe Loan Agreement. If Gazprom is obliged to increase payments, it may prepay the Loan in full. In suchcase, all outstanding Notes would be redeemable at par with accrued interest.Federal Republic of GermanyThe following is a general discussion of certain German income tax consequences of theacquisition, ownership and disposition of Notes to original purchasers of the Notes. This summary isbased on the laws currently in force and as applied in practice on the date of this Offering Circular, whichare subject to change, possibly with retroactive effect. The information provided below does not purportto be a complete, exhaustive or final summary of the tax law and practice currently applicable in theFederal Republic of German.Resident HoldersUnder German law, as currently in effect, payments of interest on the Notes to persons who areresidents of Germany (that is, persons whose residence, customary place of abode, seat or place ofmanagement is located in Germany) are subject to German personal or corporate income tax. If theNotes are kept or administered in a domestic securities deposit account by a German financialinstitution, which term includes a German branch of a foreign financial institution but excludes a foreignbranch of a German financial institution, interest payments in respect of such Notes will be subject to a30% advanced interest income tax (Zinsabschlagsteuer) and a 5.5% solidarity surcharge on such tax.As a result, such payments will be subject to a total withholding tax charge of 31.65%. TheZinsabschlagsteuer and solidarity surcharge withheld from such payments are later credited asprepayments against the German personal or corporate income tax and the respective solidaritysurcharge of the recipient.90