Legislation News II

The personal income tax rate may be increased

In November the draft law envisaging a raise in the rate of the personal income tax was passed in the third reading. From 1 January 2021, the tax rates will be as follows:

• 13 %, if the tax base is less or equal to RUB 5,000,000,

• RUB 650,000 + 15 % of the amounts in excess, if the income exceeds RUB 5,000,000.

During the transition period (in 2021 and 2022), the new personal income tax rate will be applied to each tax base separately, including salaries, income from securities transactions, dividends on shares, and lottery prizes. At the same time, nonrecurring income (sale of property or insurance payments) is still subject to 13 % personal income tax.

A special budgetary classification code will be registered for paying the increased personal income tax rate in the near future. If the tax agent makes a mistake in calculating the tax amount at the new rate for the first quarter of 2021, they will not be subject to any fines or penalties, but the required amount shall be transferred to the budget before 1 July.

The government plans to use the funds received for targeted assistance to children suffering from severe and rare diseases.

Updated form for calculating insurance payments

Order of 15.10.2020 n ED-7-11/751@ approves the following changes in the calculation form:

1. The title page shall contain information about the average staffing number.

2. Additional codes of the payer’s rate are added:

• 20 — for SMEs

• 21 — for entities with zero contribution rate for the second quarter of 2020

• 22 — for tax agents engaged in the development and design of electronic components and radio-electronic products.

3. Insured person’s category codes are added.

4. Barcodes and e-format of calculations will be changed.

5. From the first quarter of 2021, developers of electronics, software, and databases shall also complete new Appendix 5.1.

New 6-NDFL form

Order No. ED-7-11/751@ dated 5 October 2020 approved new 6-NDFL form, which shall be submitted from the first quarter of 2021.

Now 6-NDFL form is the only document that is submitted to the Tax Inspectorate and includes personal income information. The form shall be accompanied by a certificate of income and tax amounts, and 2-NDFL form, which the employer compiled annually for each employee, is completely canceled (it shall be submitted in 2020 for the last time).

Recognition of expenses has been adjusted due to pandemia

Letter of the Ministry of Finance No. 03-03-06/1/83636 datted 24 September 2020 explained how to account for VAT renting out the trading objects.

1. If the company did not suspend its operations, expenses are accounted for in a standard manner, regardless of the nature of the employees’ work (office or remote working).

2. If the company had to declare a downtime, then expenses (including the salary for the period of non-working days) shall be recorded as non-operating, in order to reduce the taxable profit.

The following expenses preventing COVID-19 infecting can be recorded in the “Other” category of tax accounting:

• Thermometers, disinfectants, masks;

• The cost of testing employees for coronavirus infection;

• Mobile partitions for the office (if required by the regional authorities, otherwise expenses should be classified as usual furniture).

Fines for incorrect storage of documents have been increased

Federal Law No. 341-FZ of 15 October 2020 amends Article 13.20 of the Code of Administrative Offences. These amendments provide for imposing sanctions for improper storage of documents not only on officials, but also on companies in the amount of:

• from RUB 3,000 to 5 000 on officials;

• from RUB 5,000 to 10 000 on companies.

The list of documents and terms of their storage have been approved by Order of Rosarkhiv No. 236 dated 20 December 2019.

New tax benefits

Federal Law No. 320-FZ dated 15 October 2020 added new tax benefits for companies.

1. New small and medium-sized enterprises operating in crisis-affected industries were exempt from paying taxes for the second quarter of 2020 (excluding VAT). They were also set to zero tax rate for this period.

The right to write off taxes is granted to companies established from 1 December 2018 to 29 February 2020 and included in the Register of SMEs. The company can check for the tax benefits available at the FTS website.

2. From 1 January 2021, goods, works and services manufactured or rendered after the company was declared bankrupt are no longer subject to VAT. Only the sale of property and property rights of debtors were exempt from VAT before.

New rule of the personal income tax payments for the owners of controlled foreign companies

In 2021, individuals, controlling the foreign companies, will be able to choose between paying personal income tax calculated according to the General Rules and a fixed payment of 4 999 8005RUB for 2020 year, 4 420 000 RUB for 2021 year. They shall notify the Federal Tax Service about its transition to the new regime within the following period of time:

• until 1 February 2021 — for those wishing to transit from 2020;

• until 31 December 2021 — for those wishing to transit from 2021.

If the individual switches to paying a fixed tax within the specified period of time, it will only be able to change the tax regime and return to the standard calculation of personal income tax in 3 years. If he switches to a fixed tax in 2022 or later, it will be possible to change the tax regime in 5 years.