Member Article

We would like to present you an overview of the most valuable changes in Tax legislation effective since January 1, 2010. Also we would like to point out the recently adopted Decision of the Presidium of the Supreme Arbitrazh Court of the Russian Federation significant from the tax standpoint.

General rules of tax duty fulfillment and tax control

-          Tax authorities shall bear responsibility for violation of term of cancelling a decision on the suspension of company-taxpayer’s bank accounts’ transactions, or for violation of term of submission of such decision to the bank. The responsibility in the form of interest shall be charged based on suspended amount for each day of delay considering actual refinancing rate of the Central Bank of the Russian Federation (clause 9.2 of article 76 of the Tax Code).

-          Taxpayers shall not submit documents to tax authorities that were already submitted earlier due to the field or desk tax audit (clause 5 of article 93 of the Tax Code).

Unified Social Tax (UST)

-          UST is replaced with insurance contributions. Therefore, number of amendments regarding insurance contributions to the Pension Fund of the Russian Federation (re. obligatory pension insurance), to the Social Security Fund of the Russian Federation (re. obligatory social insurance in the case of temporary incapacity and maternity), to the Federal and Territory Medical Insurance Funds came into force (Federal Law N 212-FZ dd. 24.07.2009).

Value Added Tax (VAT)

-          The simplified procedure of VAT refund came into force (article 176.1 of the Tax Code). These amendments provide for refund of VAT based on the taxpayer's tax return before its desk tax audit is finalized.

Formally simplified procedure may be applied as of the first quarter of the year 2010. However, it is worth to mention that Russian Ministry of Finance has not approved yet the list of the banks enable to provide a bank guarantee to taxpayers for simplified procedure purposes (for more information please see our Newsletter on Tax valuable changes circulated before).

-          Assignment of rights and obligations under the loan agreements is exempt from VAT if it is made not only by an original creditor, but also by subsequent creditors. Fulfillment of debtor’s obligations against the particular creditor is also VAT exempt (sub-clause 26 of clause 3 of article 149 of the Tax Code).

-          Documents confirming application of 0% VAT rate upon placement of goods under the export customs regime shall be submitted within 180 calendar days as of the date of placement of goods under this customs regime (clause 9 of article 165 of the Tax Code). Earlier the applied period for documents submission was extended up to 270 days for goods placed under the export customs regime within the period from July 1, 2008 till December 31, 2009.

Excise tax

-          Excise tax due for sale (transfer) of produced excisable goods shall be paid to the budget in full not later then on the 25^th day of the month following the tax period (earlier – in equal shares not later then on the 25^th day of the following month and not later then on the 15^th day of the second following month) (clause 3 of article 204 of the Tax Code).

Profit tax

-          Leasee making capital investments in leased fixed assets may calculate depreciation payment based on the useful life of such capital investment (but not of the fixed asset). This rule is applicable for capital investment that may be classified in accordance with Classification of fixed assets (clause 1 of article 258 of the Tax Code).

-          A company shall not include positive (negative) exchange rate difference in its income (expense) for profit tax purposes upon making or receiving advance payment in foreign currency (clause 11 of article 250, sub-clause 5 of clause 1 of article 265 of the Tax Code).

-          Provisions regarding expenses on interest due to debts issued before November 1, 2009 stated in clause 1 of article 269 of the Tax Code has been suspended again. From January 1, 2010 till June 30, 2010, the special norm is applied allowing recognition as an expense the amount of interest equal to the refinancing rate of the Central Bank of the Russian Federation increased by 2 times (for debts in rubles), and equal to 15% (for debts in foreign currency). As for debts issued after November 1, 2010 if there are no debts before Russian organizations issued in the same quarter on comparable terms, then the maximum rate of interest recognized as an expense shall be equal to the refinancing rate of the Central Bank of the Russian Federation increased by 1.1 times (for debts in rubles), and equal to 15% (for debts in foreign currency).

-          Interest income and expenses arising from a loan agreement shall be recognized at the end of each month. Earlier, applying accrual method, such interest was recognized at the end of tax period (clause 6 of article 271, clause 8 of article 272 of the Tax Code).

Simplified Taxation System (STS)

-          In order to switch to STS the amount of income for nine months’ period of the calendar year shall not exceed RUR 45 million. This limit is provided for the time period from January 1, 2010 till October 1, 2012 (clause 2.1 of article 346.12 of the Tax Code).

-          In order to retain the right to use STS the amount of income shall not exceed RUR 60 million. This limit is provided for time period from January 1, 2010 till January 31, 2012 (clause 4.1 of article 346.13 of the Tax Code).

Property tax

-          Companies having no fixed assets shall not submit nil property tax returns to the tax authorities (clause 1 of article 373 of the Tax Code) from January 1, 2010.

 Decision of the Presidium of the Supreme Arbitrazh Court of the Russian Federation ¹ 11200/09 dd. 24.11.2009

-     The Supreme Arbitrazh Court emphasized that the fact of actual payment made is not the crucial factor to define the moment of expenses recognition for the tax purposes. According to article 272 of the Tax Code expenses are recognized in the period of their accrual due to the terms of the transaction. Besides that, expenses are recognized for profit tax purposes in the reporting period they are related to. Expenses shall be calculated pursuant to articles 318-320 of the Tax Code and may be recognized irrespective of the date of its actual payment.