30.03.2022 Александр Сологуб

News Digest: Tax Law

Dear colleagues and partners! Due to the complicated economic situation in Russia in February – March 2022, deputies of the State Duma, the Government and the President proposed a number of initiatives aimed at supporting business in the sanctions environment. A number of draft laws suggest changes in the tax legislation. We hereby present the overview of the legislative changes.

Income Tax

The term of Income Tax

The Government has extended the term of Income Tax advance payment until April 28, 2022 (instead of March 28, 2022).

The Resolution № 470 of the Government of the Russian Federation dated March 25, 2022 “On Changing the Term of Monthly Advance Payment of Corporate Income Tax in 2022”.

The reporting (tax) period

Taxpayers who make monthly advance payments in the 2022 tax period during the reporting (tax) period have the right to switch to making monthly advance payments based on actual profit before the end of the 2022 tax period. For exercising this right, the taxpayer is obliged to notify the tax authority.

Federal Law № 67-FZ dated March 26 2022 “On Amendments to Parts One and Two of the Tax Code of the Russian Federation and Article 2 of the Federal Law “On Amendments to Part Two of the Tax Code of the Russian Federation” (hereinafter referred to as Federal Law № 67-FZ dated March 26, 2022).

The rules for income and expenses accounting

The following amendments have been made to the rules for income and expenses accounting, when calculating the tax:

  •  when calculating the tax base, income in the form of amounts of liabilities terminated in 2022 under the loan agreement concluded before March 01, 2022 with a foreign organization or a foreign citizen who decided to forgive the debt, or on demand conceded to the organization or the citizen before March 01, 2022, is not included in the base among others;
  • income in the form of positive exchange rate difference that arose in 2022-2024, is accounted for based on the date of termination of claims (liabilities) denominated in foreign currency;
  • expenses in the form of negative exchange rate difference received in 2023-2024, are also accounted for on the date of termination of claims (liabilities) denominated in foreign currency.

Federal Law № 67-FZ dated March 26, 2022.

Benefits and preferences for accredited organizations

The President has signed the Decree that provides benefits and preferences for accredited organizations, as well as for their employees to carry out promising developments in the field of information technology.

So, for the period of next three years, for accredited companies, the income tax rate will be 0%, the companies will be exempted from the tax, currency and other state and municipal control.

The Presidential Decree dated March 02, 2022 “On Measures to Ensure Accelerated Development of the Information Technology Industry in the Russian Federation”.

Value Added Tax (VAT)

The VAT refund application procedure

The list of taxpayers entitled to use the VAT refund application procedure has been expanded.

In 2022-2023, the following taxpayers also have the right to use the VAT refund application procedure:

  • the taxpayers that are not in the process of reorganization and liquidation;
  • the taxpayers that are not under insolvency (bankruptcy) proceedings.

Federal Law № 67-FZ dated March 26, 2022.

Confirm the zero VAT rate on export transactions

The draft law simplifying the procedure for taxpayers to confirm the zero VAT rate on export transactions has been submitted to the State Duma. The draft law allows taxpayers to provide all the necessary data electronically in form of information registers. If adopted, the law is assumed to come into force on October 01, 2023.

Draft Law № 90752-8 “On Amendments to Chapter 21 of Part Two of the Tax Code of the Russian Federation”.

Individual Income Tax (NDFL)

The list of income not subject to taxation has been expanded. These include:

  • income in the form of property and property rights received by the taxpayer from a controlled foreign company in 2022, subject to two conditions: the transferred property / property rights belonged to the foreign company as of March 01, 2022; when filing the tax return, the taxpayer applied for exemption from income taxation;
  • income in the form of material benefits received in 2021-2023;
  • income in the form of interest on deposits in banks, received in 2021-2022.

Federal Law № 67-FZ dated March 26, 2022.

Controlled foreign companies (CFC)

The following amendments have been made to the provisions of the tax legislation on controlled foreign companies:

  • applying investment tax deduction by one of the parties does not constitute grounds for recognizing the transaction made in 2022-2024 as controlled;
  • transactions with foreign counterparties will be recognized as controlled if the amount of income from such transactions exceeds 120 million rubles per calendar year;
  • penalties are not applied if the controller of the foreign company is unable to confirm the company’s profit (loss) in 2020-2021, when submitting the CFC notification;
  • taxpayers are exempted from the 40% fine for controlled transactions that do not meet market conditions and were concluded in 2022-2023.

Federal Law № 67-FZ dated March 26, 2022.

Tax Crimes Investigation

In accordance with Paragraph 1.3 of Article 140 of the Criminal Procedure Code of the Russian Federation, the only reason for initiating the criminal case on crimes provided for in Articles 198-199.2 of the Criminal Code of the Russian Federation is materials sent by the tax authorities under the legislation on taxes and fees, for the purpose of resolving the issue of initiating the criminal case.

Thus, the investigating authorities do not have the right to initiate cases under these Articles independently, until the end of the tax audit.

Federal Law № 51-FZ dated March 09, 2022 “On Amendments to Articles 140-144 of the Criminal Procedure Code of the Russian Federation”.

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