TAX ADMINISTRATION CHANGES
Taxpayers who file their VAT returns in electronic format shall give explanations during the VAT desk tax audit in electronic format (Art.88, Art.174 of the Tax Code of the Russian Federation):Taxpayers which are obliged to file their VAT returns in electronic format (see Paragraph 5 Art. 174 of the Tax Code of the Russian Federation) shall, during desk tax audit, give explanations in the form established by the Federal Tax Service of the Russian Federation. Any above explanations given in hard copy will not be accepted.
Federal Act N 130-FZ dated 01.05.2016
A list of tax violations has been extended (Art.129.1 of the Tax Code of the Russian Federation):
A tax authority may charge a penalty of RUB 5000 or RUB 20000 on a person for the failure to give (in due time) explanations to the tax authority (including those during desk tax audit) in case of failure to file a corrected tax return in due time.
Federal Act N 130-FZ dated 01.05.2016
The procedure of calculation of the penalty has been changed (Art.75 of the Tax Code of the Russian Federation):
The interest which will be applied on the amount of taxes in arrears beginning from the 31st calendar day of delay in the performance of the tax payment obligation for the purpose of calculation of the penalty will increase twice. This regulation will apply to taxes in arrears formed as from 01.10.2017.
The tax payment alternatives have been extended (Art.45 of the Tax Code of the Russian Federation):
- Taxes may be paid for the entity by its founding members, chief executive officers, counterparties and other persons for the entity.
- No other person may claim refunding of the tax paid for the taxpayer from the budget system of the Russian Federation.
- This regulation has been in effect since 30th November 2016.
- To ensure correct accounting of tax payments made by other person, the Federal Tax Service of the Russian Federation has developed the Regulations on Completion of the Instructions for Payment to the Budget System of the Russian Federation (Information from the Federal Tax Service of the Russian Federation of 20 December 2016)
PROFIT TAX CHANGES
The procedure of profit tax transfer to the federal and regional budgets temporarily changes from 01.01.2017 up to and including 2020 (Art.284 of the Tax Code of the Russian Federation):- 3% (instead of 2% in 2016) - to the federal budget
- 17% (instead of 18% in 2016) – to the regional budget
Federal Act No. 401-FZ dated 30.11.2016
Restrictions have been imposed on the carry-forward of losses from 01.01.2017 to 31.12.2020 (Art.283 of the Tax Code of the Russian Federation):
- The tax base may not be reduced by more than 50% in the current taxable period.
- The restriction on the loss carry-forward (10-year period) has been cancelled.
- Loss from 0% tax operations (educational institutions and health care facilities, agricultural producers, Skolkovo, etc.) may not be carried forward.
- Loss from sale of shares, etc. may not be carried forward.
- residents of the special economic area
- participants of regional investment projects
Since 01.01.2017, the regulations on formation of the Provision for Doubtful Debts have been changed (Art.266 of the Tax Code of the Russian Federation):
The overdue and unsecured counterparties’ debt to the taxpayer for the sold goods (works, services) with regard to the taxpayer’s counter-obligations (accounts due) to the relevant counterparties shall not be taken into account in the calculation of the amount of the Provision for Doubtful Debts.
Federal Act No. 401-FZ dated 30.11.2016
The regulations on determination of the maximum possible amount of the Provision formed following the results of the reporting periods have been changed: as of the current calendar year, the amount of the Provision shall not exceed the greater of two following value: 10 percent of the revenue for the previous taxable period or 10 percent of the revenue for the current reporting period.
Since 2017, taxpayers have fallen from the right to choose a method of accounting of an unused balance of the Provision when forming the Provision as of the end of the reporting (taxable) period.
The Provision shall be used by a business entity to cover the loss from irrecoverable debts only.
Federal Act No. 405-FZ dated 30.11.2016
Since 01.01.2017, the regulation on recognition of the controlled loan debt have been changed (Art.269 of the Tax Code of the Russian Federation):
The limit of direct or indirect participatory interest has been changed from 20% to 25%. The interests on loans to “sister” companies and other related persons will be regulated. The regulations will cover the persons related both to the debtor taxpayer and foreign person owing, directly or indirectly, over 25% of the debtor’s authorized capital.
It is determined when the outstanding debt is not recognized as controlled one. Under certain conditions, the outstanding debt of Russian entities to independent banks is not recognized as controlled one, even if it is guaranteed by an independent foreign entity.
A court is authorized to recognize the outstanding debt under debt instruments which are not specified in the Tax Code of the Russian Federation as controlled one, if it is established that the ultimate purpose of payments under them is payments to foreign entities interrelated with the taxpayer.
Federal Act No. 25-FZ dated 15.02.2016
Since 01.01.2017, the useful life of fixed assets has been determined subject to the new classification (Art.258 of the Tax Code of the Russian Federation):
The updated Classification is based on new Russian Classifier OK 013-2014 (SNS2008) “Russian Classifier of Fixed Assets“ (Rostandard’s Order No. 2018-st dated 12.12.2014, Rostandard’s Order No. 458 dated 21.04.2016 “On Approval of Direct and Reverse Transition Keys Between Versions OK 013-94 and ОК 013-2014 (SNS 2008) of the Russian Classifier of Fixed Assets").
- The new version of the Classification shall be used to determine the useful life of fixed assets placed in operation as from 01.01.2017.
The amendments to the Classification give no rise to revision of the useful life (Letters of the Ministry of Finance of the Russian Federation Nos. N 03-03-РЗ/65124 dated 08.11.2016, and 03-05-05-01/58129 dated 06.10.2016).
- Restated version of Resolution of the Government of the Russian Federation No. 1 dated 01.01.2002 being of effect as from 01.01.2017 contains no provisions which would allow using of the Classification for the accounting purposes.
Since 01.01.2017, the method of tax assessment in case of use of the international treaties of the Russian Federation method has been adjusted (Art.312 of the Tax Code of the Russian Federation):
A foreign entity which is actually entitled to income shall, along with the confirmation of its permanent residence in a country with which the Russian Federation has entered into an international tax treaty, and without being requested by the tax agent to do so (as previously was), confirm that it is actually entitled to income (by provision of a letter from the company, organizational chart of the group of companies).
Letter of the Ministry of Finance of the Russian Federation No. 03-08-05/70917 dated 30 November 2016.
Since 01.01.2017, the tax agents have been permitted, wnen paying dividends, use zero tax rate established by Paragraphs 1 Clause 3 Art. 284 of the Tax Code of the Russian Federation.
The legislator has stopped to use the concept of the “Russian business entity" in the wording of the above conditions, which allows using the provisions of Clause 1.1 Art. 312 of the Tax Code of the Russian Federation in respect of the foreign legal entities which recognized themselves as tax residents of the Russian Federation, as well. Now the participatory interest of a resident of the Russian Federation in the capital of a Russian entity which pays dividends is determined exclusively of the period from the date of payment of dividends till the end of a taxable period in which dividends are being paid.
Federal Act No. 32-FZ dated 15.02.2016
The regulations on qualification of the establishment of a foreign entity’s permanent representative office in the Russian Federation have been specified in more detail (Art.306 of the Tax Code of the Russian Federation):
The provision by a foreign entity of services in electronic form, the place of supply of which is recognized to be the territory of the Russian Federation, does not result in the establishment of a permanent representative office of that entity in the Russian Federation.
Federal Act No. 244-FZ dated 03.07.2016
- The scope of application of the increasing coefficient to the basic depreciation rate of the fixed assets produced pursuant to the terms and conditions of a special investment contract has been extended (Art.259.3 of the Tax Code of the Russian Federation).
- The list of grounds for application of 15 % tax rate on bonds issued by Russian entities has been extended (Art.284 of the Tax Code of the Russian Federation).
- The costs of independent merit rating can be included in the Other Costs (Art.264 of the Tax Code of the Russian Federation)
- The composition of income and expenditures of associations of exempted travel operators (outbound tourism) has been specified in more detail (Art.251, 270 of the Tax Code of the Russian Federation)
The regulations on recognition of entities as tax residents of the Russian Federation have been specified in more detail for foreign entities which take part, as part of their core business, in projects pursuant to high risk production-sharing agreements, concession agreements, license agreements or service agreements (contracts) or other similar agreements with the government of the relevant country (territory) or with the institutions and establishments authorized by that government (governmental authorities, state-owned companies), being a party to such agreements (Art.246.2 of the Tax Code of the Russian Federation).
Federal Act No. 32-FZ dated 15.02.2016
REPORTING TO TAX AUTHORITIES PROFIT TAX CHANGES
A new form of profit tax return, as well as the procedure of completing and electronic filing thereof have been approved. The new tax return shall be filed with the Tax Authority for the year 2016 (before 28 March 2017).- Sheet 02 “Tax Calculation” has been changed (the tax base formula under line 100 has been corrected, new lines have been added, including those for volume of capital investments made for the purpose of implementation of an investment project).
- New fields for sales tax amounts have been added to the tax return.
- Code 6 has been assigned to residents of the territories of faster social and economic growth to be reflected under “Taxpayer Attribute” (Code)".
- New sheets: Sheet 08 " Income and Expenditures of the Taxpayer Who Made Self (Symmetrical, Reverse) Adjustment"; and Sheet 09 “Calculation of Corporate Property Tax on Income Represented as Profit of a Foreign Controlled Company“ have been added.
- The name of Appendix No. 2 to the tax return “Information about Personal Income Paid to the Individual by the Tax Agent from the Securities Business...“ has been specified in more detail.
FOREIGN CONTROLLED COMPANIES(FCCS)
The regulations on tax exemption of the FCCs’ profit have been changed (Art.25.13-1 of the Tax Code of the Russian Federation):If a FCC has a status of an entity authorized to receive an interest income payable on marketable bonds, the persons controlling such an entity are not exempted from paying a tax on profit of such an entity.
Federal Act No. 32-FZ dated 15.02.2016
The procedure of accounting of the FCC’s profit has been specified in more detail (Art.25.15 of the Tax Code of the Russian Federation):
If the participatory interest of the taxpayer being a controlling entity in a FCC is other than the share in profits to which the taxpayer is entitled, if distributable (in accordance with its personal law, constituent documents or shareholder (member) agreement), the FCC’s profit shall be included in the tax base of the taxpayer being a controlling person proportionally to the share in the FCC’s profit to which the person is entitled as of the date of the profit distribution resolution adopted in a year following the taxable period under the relevant tax for the taxpayer being a controlling entity on which the date of yearly closure falls in accordance with the personal law of that FCC, and if no such resolution is adopted, - on 31 December of a calendar year following the taxable period for the relevant tax for the taxpayer being a controlling entity on which the date of yearly closure of a FCC falls.
Federal Act No. 32-FZ dated 15.02.2016
VALUE ADDED TAX CHANGES
Since 01.01.2017, taxation specifics have been established in respect of services provided by foreign entities in electronic form (Art.174.2, Art. 148 of the Tax Code of the Russian Federation):- The services in electronic form have been defined as those provided automatically using information technologies via an information telecommunications network, including the Internet.
- The Articles contains a list of such services.
- The VAT amount is defined as a tax base percentage corresponding to the imputed 15,25% tax rate.
- The place of supply of services in electronic form for the VAT purposes is determined in a special manner - where a service buyer conducts his/her/its business.
- If a service buyer is a Russian entity and a service seller is a foreign entity not registered in Russia, then such a Russian entity will act as a VAT agent;
- If a service buyer is a Russian citizen and a service seller is a foreign entity not registered in Russia or its foreign intermediate, then VAT is paid by such a foreign entity or its intermediate as a tax agent.
- Foreign companies which provide electronic services to individuals in Russian shall be registered on the special web-portal of the Federal Tax Service and pay VAT on the services provided.
- The form of a special VAT return for services provided by foreign entities in electronic form has been approved.
- Act No. 244-FZ does not cancel the benefit under Clause 26 Art. 149 of the Tax Code of the Russian Federation (the Act does not change the regulations on VAT exemption of the sale of exclusive intellectual property rights and right to use thereof under a license agreement).
The codes of types of products subject to 10 % VAT will be determined in accordance with the new classifier (Art. 164 of the Tax Code of the Russian Federation):
The Government of the Russian Federation recommends to use the Russian Classifier of Products by Economic Activities (OKPD 2) OK 034-2014 (KPES 2008) along with the Foreign Economic Activity Commodity Classification OK 005-93.
Federal Act No. 248-FZ dated 03.07.2016
The concept of advertising periodicals has been specified in more detail for the purpose of application of 10 % rate (Art.164 of the Tax Code of the Russian Federation):
Since 01.01.2017, the advertising periodicals have included periodicals in which advertising takes above 45 percent (earlier - 40 percent) of the volume of one issue.
Federal Act No. 408-FZ dated 30.11.2016
A list of VAT free operations has been extended (Art.149 of the Tax Code of the Russian Federation):
Operations related to issue of guarantees by taxpayers which are not banks, i.e. commercial banks and other lending institutions licensed by the Central Bank of the Russian Federation, are not subject to VAT.
Federal Act No. 401-FZ dated 30.11.2016
REPORTING TO TAX AUTHORITIES vat changes
A special VAT return form, as well as the procedure of completing and electronic filing thereof have been approved for foreign entities which provide services in electronic form.- When foreign entities provide services in electronic form, A tax return shall be filed from the first taxable period of 2017 to the 25th day of a month following the expired reporting quarter.
- Payment shall be made on or before the 25th day of a month following the expired taxable period.
- A tax return shall be filed in electronic form using the taxpayer’s account and shall be signed by a unqualified electronic signature.
- When the account cannot be used by a foreign entity, a tax return shall be filed via the electronic document management operator.
- Tax agents shall calculate and pay the tax as provided in Clause 5 Art. 161 of the Tax Code of the Russian Federation, subject to the specifics provided by Clause 4 Art.174.2 of the Tax Code of the Russian Federation.
CORPORATE PROPERTY TAX CHANGES
The procedure of tax base determination in the event of change of the cadastral value of tax entities has been specified in more detail (Art.378.2 of the Tax Code of the Russian Federation):The change in the cadastral value of a tax entity because of correction of any errors in its cadastral value will be taken into account in the determination of the tax base as from the taxable period in which the erroneous cadastral value was applied and not from that in which the error was made.
Federal Act No. 401-FZ dated 30.11.2016
The types of immovable property for which the zero tax rate is established have been specified in more detail (Art.380 of the Tax Code of the Russian Federation)
They include cross-country gas pipe-line facilities, gas production facilities, helium production and storage facilities, as well as relevant supporting facilities. A list of such facilities is approved by Order of the Government of the Russian Federation No. 2188-r dated 19.10.2016
Federal Act No. 242-FZ dated 03.07.2016
REPORTING TO TAX AUTHORITY TRANSPORT TAX CHANGE
A new transport tax return form, as well as the procedure of completing and electronic filing thereof have been approved.The new tax return shall be filed with the Tax Inspectorate for the year 2017 (before 1 February 2018) .
- The changes relate to the correction of the Tax Code of the Russian Federation with regard to the change of the concept of “a month of registration (deregistration, removal from the State register of ships and so on)", as well as application of the tax deduction as to a vehicle with the maximum permitted weight of above 12 tons registered in the vehicle register of the charge system. The relevant amendments have been in effect since 01.01.2016.
- The dates of registration (deregistration) and the year of manufacture of a vehicle shall be specified in Section 2 of the Tax Return. The number of years after the year of manufacture shall be determined as of 1 January of the current year from a year following the year of manufacture.
SIMLIFIED TAXATION SYSTEM
The income and fixed asset remaining book value limits which allow applying the Simplified Taxation System by Taxpayers have been increased- The reporting (taxable) period income limit which allows applying the Simplified Taxation System by taxpayers in the current and next taxable periods will make up to and including 150 million Russian roubles. This threshold has been increased twice and a half.
- The above amount of income will remain unchanged in 2017 to 2020.
- The price-to-book value of fixed assets amortizable and recognized to be amortizable in accordance with Chapter 25 of the Tax Code of the Russian Federation, which is determined in accordance with the accounting laws and regulations of the Russian Federation, shall not exceed 150 million Russian roubles. This is once and a half higher than the previous limit.
UNIFIED TAX ON IMPUTED INCOME OF INDIVIDUAL ENTREPRENEURS FOR SEPARATE LINES OF BUSINESS
The term of operation of the system of taxation named the unified tax on imputed income of individual entrepreneurs has been prolonged for three years – before 01.01.2021- Those entrepreneurs who make payments to individuals will be able to reduce the amount of the unified tax on imputed income of individual entrepreneurs by the amount of insurance contributions paid for himself or herself;
- The 2017 deflator for the purpose of application of Chapter 26.3 of the Tax Code of the Russian Federation has been established as 1.798;
- A list of consumer services in respect of which the system of taxation named the unified tax on imputed income of individual entrepreneurs may be applied will be determined by the Government of the Russian Federation
NEW PROCEDURE OF USE OF CASH REGISTERS
All business entities which use cash registers shall use online cash registers which transmit payment information via fiscal data operators to the Federal Tax Service of the Russian Federation – from 1 July 2017.- The previously used cash registers may continue to be used before 1 February 2017 only.
- Since 1 February 2017, tax officers will only register online cash registers, i.e. those cash registers which transmit the issued receipts data to the Federal Tax Service’s server.
- The issued receipts data will be transmitted to the Federal Tax Service’s server via fiscal data operators.
- Since 1 July 2017, all who are obliged to use cash registers will be obliged to use online cash registers
Download Tax and Accounting Changed to Legislation (PDF)
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