Payroll Changes to Legislation 2017-Publication

Reporting to IFTS

Starting from 01.01.2017 administration of insurance contributions (excluding insurance contributions against industrial accidents and occupational diseases) has been passed to the Federal Tax Service. Chapter 34 “Insurance contributions” has been added to the RF Tax Code.

The Order of the Federal Tax Service as of 10.10.2016 № ММВ-7-11/551@ has approved the form “Report on insurance contributions”, submitted to the FTS not later than the 30th day of the month following the reporting (calculation) period.

Starting from the first quarter of 2017 “Report on insurance contributions” shall be submitted to the Federal Tax Service within the following deadlines:

for the 1st quarter - not later than may 2, 2017;
for the 1st half-year - not later than July 31, 2017;
for 9 months - not later than October 30, 2017;
report for year 2017 - not later than January 30, 2018.

Payment of insurance contributions

Starting from 01.01.2017 payment of insurance contributions shall be made:

to IFTS at the location of a company – insurance contributions for compulsory pension, medical and social insurance;
to a department of the Social insurance fund – insurance contributions against industrial accidents and occupational diseases.

Separate subdivisions shall pay insurance contributions to IFTS at its’ location, if they are vested with powers to accrue payments and other compensations to the benefit of natural persons (cl.11 of art.431 of the RF Tax Code).

Company is obliged to notify the tax authorities at its’ location on vesting the separate subdivision incorporated on the territory of the Russian Federation with powers (on termination of powers) to accrue payments and other compensations to the benefit of natural persons (it.7 of cl.3.4 of art.23 of the RF Tax Code).

The term of notification of tax authorities – within a month from the day of taken decision on the separate subdivision with the mentioned powers or on termination of such powers.

Fine for failure to send the notification amount to 200 rub. for a company (cl. 1 of art. 126 of the RF Tax Code) and from 300 to 500 rub. for directors (art. 15.6 of the RF Administrative Offences Code).

The deadline for payment of insurance contributions hasn’t been changed – till the 15th day of the month, following the calculation one.

Payment of insurance contributions shall be made in rubles and kopecks.
If the average number of employees for the previous reporting/calculation period is above 25 people, the “Report on insurance contributions” shall be submitted to the FTS solely in electronic format. If the average number of employees is 25 people and less, the Report may be submitted in hard copy (cl.10 of art.431 of the RF Tax Code).

Fine for violation of the way of submission of the “Report” is 200 rub. (art.119.1 of the RF Tax Code).

Starting from 01.01.2017 for payment of insurance contributions to IFTS new WBS codes* have been approved.

For payment of insurance contributions against industrial accidents and occupational diseases to Social insurance fund WBS code has remained the same - 39310202050071000160.

For the periods after 31.12.2016:

18210202010061010160 – compulsory pension insurance (RF PF);
18210202101081013160 – compulsory medical insurance (FFOMS);
18210202090071010160 - compulsory social insurance (SIF).

For the periods till 01.01.2017:

18210202010061000160 – compulsory pension insurance (RF PF);
18210202101081011160 – compulsory medical insurance (FFOMS);
18210202090071000160 - compulsory social insurance (SIF).

* Order of the Ministry of Finance as of 07.12.2016 № 230n

Reporting to SIF and RF PF

The new form 4-FSS (approved by the order of SIF as of 26.09.2016 № 381) shall be filled-in only for industrial accidents and occupational diseases:

on insurance contributions accrued and paid;
on expenses for payment of insurance coverage.

The following chapters shall be also filled-in in 4-FSS:

of the insurers, sending temporarily their employees under the agreements on provision of employees’ (staff) to work for another legal entity or individual entrepreneur;
of the results of special assessment of working conditions carried out (results of the assessment of working conditions at work places).

Starting from 01.01.2017 the following forms of reporting shall be submitted to the RF Pension fund:

SZV-M “Data on the insured persons” – on monthly basis;
SZV-STAZH “Data on pensionable service of the insured persons” – on annual basis.

Deadline for reporting submission to SIF and RF PF

Deadlines for submission of reporting to the extra-budgetary funds:

1. for RF Social insurance fund the deadlines for reporting submission remained the same;

2. since 01.01.2017 the deadlines for monthly reporting submission to RF Pension fund have been changed.

Form of report	Deadline for reporting submission
Form of report	In hard copy	Electronically
4-FSS	20th day of the month following the reporting quarter	25th day of the month following the reporting quarter
SZV-M for reporting periods 2017	Every month not later than the 15th day of the month following the reporting one: not later than February 15; March 15; April 17; May 15; June 15; July 17; August 15; September 15; October 16; November 15; December 15; January 15.
SZV-STAZH for year 2017	March 1 of the year following the reporting one (01.03.2018)

Fine for failure to comply with the procedure of submission to the RF PF of data in the form of electronic documents starting from 01.01.2017 equals to 1 000 rub. (art.17 of the law 27-FZ).

New codes of tax deductions

New deduction code	Description	Deduction amount
Deduction for a parent, a spouse of the parent, an adoptive parent, who supports the child
126	For the first child under the age of 18, as well as for every full-time student, postgraduate, specialty trainee, intern, college student, cadet under the age of 24 years old	1 400 rub.
127	For the second child under the age of 18, as well as for every full-time student, postgraduate, specialty trainee, intern, college student, cadet under the age of 24 years old	1 400 rub.
128	For the third and every later child under the age of 18, as well as for every full-time student, postgraduate, specialty trainee, intern, college student, cadet under the age of 24 years old	3 000 rub.
129	For a disabled child under the age of 18 or a full-time student, postgraduate, specialty trainee, intern, college student, cadet under the age of 24 years old, who is a disabled person of group I or II	12 000 rub.
Deduction for a guardian, trustee and a foster parent, a spouse of the foster parent, who supports the child
130	For the first child under the age of 18, as well as for every full-time student, postgraduate, specialty trainee, intern, college student, cadet under the age of 24 years old	1 400 rub.
131	For the second child under the age of 18, as well as for every full-time student, postgraduate, specialty trainee, intern, college student, cadet under the age of 24 years old	1 400 rub.
132	For the third and every later child under the age of 18, as well as for every full-time student, postgraduate, specialty trainee, intern, college student, cadet under the age of 24 years old	3 000 rub.
133	For a disabled child under the age of 18 or a full-time student, postgraduate, specialty trainee, intern, college student, cadet under the age of 24 years old, who is a disabled person of group I or II	6 000 rub.

Income codes were supplemented by new codes:

New income code	Description	Income code till 01.01.2017
2002	Amounts of bonuses, paid for business performance and other similar figures, stipulated by Russian statutory provisions, labour agreements (contracts) and/or collective agreements	2000
2003	Amounts of compensations, paid out of net profit of the company, special-purpose funds or receipts	4800

Starting from 01.01.2016 codes of deductions for children have been replaced by new ones depending on the recipient of deduction:

for parents and adoptive parents;
for guardians, trustees and foster parents.

New deduction codes should be reflected in 2-NDFL certificates for year 2016.

* Order of FTS as of November 22, 2016 № MMB-7-11/633@

Changes in granting social tax deductions for PIT

Since 01.01.2017:

A new social deduction has been introduced (cl.6 of art.219 of the RF Tax Code) * – in the amount paid by a tax payer for passing through an independent assessment of his/her qualification for compliance with the requirements to qualification. In 2-NDFL certificate the deduction is reflected with the code 329. The deduction is provided by tax authorities upon submission of tax return by a tax payer.
Social deduction for voluntary life insurance (deduction code 327) can be provided by employer upon tax notice, if a tax payer has himself/herself paid contributions under the agreements of voluntary life insurance (cl.2 of art.219 of the RF Tax Code) **.

* Federal law as of 03.07.2016 № 251-FZ.

** Federal law as of 30.11.2016 № 403-FZ.

Rates and limiting value of the base on insurance contributions

Resolution of the RF Government as of November 29, 2016 № 1255.

Starting from January 1, 2017 rates of insurance contributions will remain unchanged.

The Law* retains current rates of insurance contributions till 2019 for the main categories of payers of insurance contributions:

RF PF – 22% (when limiting value of the base is exceeded - 10%);
FOMS – 5.1%;
FSS – 2.9% (from compensations to the benefit of foreign citizens, temporarily staying in the RF – 1.8%).

* Article 426 of the RF Tax Code

Insurance contributions	Limiting value of the base 2017	Limiting value of the base 2016
FSS in case of temporary disability and due to maternity	755 000,00 rub.	718 000,00 rub.
RF PF	876 000,00 rub.	796 000,00 rub.
FFOMS	-	-
FSS against industrial accidents	-	-

Calculation of insurance contributions *

The procedure of calculation of insurance contributions in 2017 didn’t suffer significant changes (art. 431 of the RF Tax Code):

the procedure of determination of the base for calculation of insurance contributions set in art.421 of the RF Tax Code is generally identical to the procedure set in art. 8 of the Law № 212-FZ;
the object assessed with insurance contributions (cl.1 of art. 420 of the RF Tax Code) is determined according to the rules, similar to those established in art.7 of the law № 212-FZ;
list of the amounts which are not subject to insurance contributions (not subject to inclusion into the base for calculation of insurance contributions) essentially didn’t change except for per diem expenses.

Starting from 01.01.2017 on the basis of cl. 2 of art. 422 of the RF Tax Code per diem expenses are not subject to insurance contributions only within the limits, established by cl. 3 of art. 217 of the RF Tax Code:

700 rub. per each day of a business trip on the territory of the Russian Federation;
2 500 rub. per each day of an abroad business trip.

In accordance with clauses 1 and 2 of art. 423 of the RF Tax Code the calculation and reporting periods are:

Calculation period – a calendar year
Reporting periods
Quarter
Half-year
9 months.

Costs at the expense of SIF

Refunds from Social insurance fund

Offset on account of future payments and return of payments on insurance coverage will be made by tax authorities on the basis of approval received from SIF.

Payer of insurance contributions shall apply with an application on offset or return of funds on insurance coverage to a territorial office of Social insurance fund (cl.9 of art. 431 of RF Tax Code).

Reduction of insurance contributions by the amount of costs at the expense of SIF

The amount of insurance contributions to compulsory social insurance in case of temporary disability and due to maternity is reduced by payers of insurance contributions by the amount of incurred costs for payment of insurance coverage (cl.2 of art. 431 of the RF Tax Code).

Pilot project of SIF*

The term of the pilot project of SIF is extended till 31.12.2019. Since July 1, 2017 the following regions will be added to the participants of the project:

Republic of Adygeya
Republic of Altai
Republic of Buryatia
Republic of Kalmykiya
Altai Territory
Primorsk Territory
Amur region
Vologda region
Magadan region
Omsk region
Oryol region
Tomsk region
Jewish Autonomous Region.

Electronic sick lists

Starting from 2017 employees will have a choice which sick list to execute – a hard copy or an electronic one. If an employee chooses electronic sick list, then doctor shall visa it with an electronic signature and place it in the base of the fund of UIIS “Sotsstrakh”. The companies will have access to this base, they will be able to complete their part of sick list in the Internet. The pilot projects are already in effect in Astrakhan and Belgorod regions and in Moscow.

* Resolution of the RF Government as of December 22, 2016 № 1427.

Other changes since 01.01.2017

Starting from 01.10.2017 the amount of penalties on PIT and insurance contributions for the late payment period, exceeding 30 calendar days, is increased to 1/150 of the refinancing rate (p. 9 of art. 13 of the Law as of 30.11.2016 № 401-FZ).

Starting from 2017 IFTS will collect arrears on insurance contributions, inclusive of arrears for the previous periods.

The procedure of return (offset) of overpaid insurance contributions for the periods till 01.01.2017 is the following:

To apply to the Fund for return;
The Fund will take decision on return and send it to IFTS;
IFTS will return the amount of overpayment through the Federal Treasury.

Starting from 01.01.2017 for OKVED codes it is required to use the new classifier OK 029-2014.

Starting from the report for January 2017 new form of P-4 has been established (order of the Federal Service for National Statistics as of 02.08.2016 № 379).

Since 06.02.2017 amendments to the form of income certificate 182n shall come into effect (Decree of the Ministry of Labour as of 09.01.2017 № 1n). The amendments are of technical character and are related to transfer of insurance contributions under the control FTS.

Starting from 01.01.2017 administration of PIT on the largest tax payers is transferred to the territorial tax authorities (letter of FTS as of 19.12.2016 № BC-4-11/24349@). Starting from the reporting for year 2016 data in the forms 2-NDFL and 6-NDFL are submitted to the territorial tax authorities , including the updated reporting for the previous tax periods.

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