Legislation News

Warning of Freezing an Account

The Ministry of Finance of Russia proposed to make amendments to the Tax Code of the Russian Federation, according to which all tax agents should be informed in advance on the suspension of transactions on their bank accounts if such freezing is caused by failure to submit:

• tax returns;

• calculations of personal income tax amounts;

• insurance contributions.

The amendments suggest that the term for submitting returns and calculations should be materially increased from 10 to 20 days and the tax authorities should be obliged to send notices 14 days before the decision to suspend transactions is made.

Currently:

If the tax agent fails to submit the required documents in due time, the tax authority may freeze the account transactions without any warning.

The legislation provides for the rules for quick release of the freezing in case the violations are eliminated, according to which the taxpayer’s bank should be notified by the tax inspection no later than one day after the decision to release the freezing is made.

If the notice is sent later or the banking transactions are suspended improperly, the tax authority is obliged to pay interest for the days of unlawful freezing.

The Ministry of Finance believes that the advance notification:

• encourages to observe tax discipline;

• minimizes freezing of accounts due to unintentional violations.

The Federal Tax Service Clarified the Rules for Assessing Insurance Contributions for COVID Testing Compensation

The insurance contributions are to be charged if the employer compensates the employee for the expenses incurred for paying for COVID testing at his/her own expense.

The list of amounts that are exempt from insurance contributions of the Tax Code of the Russian Federation does not include compensation for expenses under agreements entered into between company employees and health care facilities, including those for testing employees for coronavirus or immunity thereto.

The insurance contributions are not to be charged if:

• the employer pays directly the health care facility for the services for testing its employees;

• the testing is carried out under voluntary health insurance contracts.

Please note: the employer must pay for COVID testing of its employees in order to comply with particular epidemiologic requirements (e.g. if there is a requirement to test a certain percentage of employees in the region).

The list of invalid forms has been updated(as of September 30, 2020)

Temporary disability leave forms are accountable documents that should be recorded and kept pursuant to special conditions. To prevent unlawful payments of temporary disability benefits due to theft or loss of forms by healthcare organizations, the Social Insurance Fund of the Russian Federation updates the lists of invalid documents on a regular basis.

The forms which numbers are specified in the list are invalid and should not be accepted and paid.

In case such form is submitted by the employee or the document authenticity comes into question, the employer may contact the Regional Branch of the Social Insurance Fund of the Russian Federation at the place of its registration as the insured.

Letter of the Federal Tax Service No. BS-4-11/16741@ dated October 13, 2020

Maximum Contribution Base for 2021

The Ministry of Finance has prepared a draft government decree that sets the maximum base amount for 2021:

• for charging compulsory pension insurance contributions (CPI) in the amount of RUB 1,465,000 (the current figure is RUB 1,292,000);

• in case of temporary disability and motherhood (TDaM) at the level of RUB 966,000 (the current limit is RUB 912,000).

All Regions of the Russian Federation Rank among the “Self-Employed”

Ingushetia joined the experiment to establish the special tax treatment of Professional Income Tax. Now, any resident of the Russian Federation may become self-employed.

The preferential treatment enables to pay taxes at the rates of 4% (if dealing with individuals) and 6% (if dealing with legal entities). In order to register and work, one needs to install the My Tax mobile application.

Currently, the number of taxpayers is more than 1.2 million. The self-employed generated over 160 million receipts, and the average value of service is RUB 1,061.

New taxpayers that have registered this year will obtain a tax bonus of RUB 12,130 in addition to the existing tax deduction of RUB 10,000. The tax assessed for 2020 will be deducted from that amount in full by the end of the year or will be deducted until the bonus is used up.

Rules for Filling in “Budget” Payment Documents have been Changed

The Ministry of Finance has amended Order No. 107N dated November 12, 2013 On Rules for Filling in Payment Orders for Transferring Funds to the Budget.

1. Most of the amendments will enter into force on January 01, 2021. E.g., from the next year, “0” may be entered in the Payer Tax Identification Number line, if this payer is a foreign entity (individual) that is not registered with the tax authority (except for the transfer of payments administered by the tax authorities).

2. A bank account holder will be able to specify someone else’s TIN in the Payer Tax Identification Number line in particular cases specified by the rules (e.g. when the tax is paid for a third party).

3. From October 01, 2021, the list of payment reason codes to be specified in field 106 of the payment order will be reduced. In particular, instead of the TR code (repayment of debt at the request of the tax authority to pay taxes) one will have to specify the ZD code that is used now for voluntary payment of debt only.

Order of the Ministry of Finance No. 199n dated September 14, 2020