Russian Tax Code amendments offer support to SME

On April 1, the President signed the Federal Law N 102-FZ on Amendments to the RF Tax Code, which provides for a number of anti-crisis measures and gives the Russian government additional powers. The main provisions of the law are below.

1. The Law empowers the Government of the Russian Federation to issue normative legal acts for the period from January 1 to December 31, 2020:

• The possibility for suspension, cancellation, or postponement of tax control measures, as well as suspension of the terms established by the RF Tax Code
• prolongation of tax payment terms (advance tax payments), including those provided for by special tax regimes, fees, and  social contributions,
• prolongation of the terms of advance payments for transport tax, property tax, and land tax,
• prolongation of terms for submission of tax declarations (calculations), accounting (financial) statements and/or other documents (information) to the tax authorities,
• prolongation of the terms for sending and executing claims for payment of taxes, fees, insurance premiums, penalties, fines, interest, as well as for deciding on a collection of taxes, fees, insurance premiums, fines, and interest,
• in 2020, additional grounds for granting deferral (instalments) on payment of taxes, social contributions, fines, penalties, interest, as well as changing the procedure and terms of its granting,
• grounds and conditions of non-application or altered application of methods to ensure payment of taxes, fees, and social contributions,
• grounds and conditions for non-application of liability for failure to submit (or late submission) tax declarations (calculations), accounting (financial) statements and/or other documents (information) to the tax authorities.

2. The Law provides that when calculating the terms of tax and legal relations, non-working days also include the days declared non-working on the basis of the acts of the President of the Russian Federation. This norm actually legalizes the postponement of reporting due to the announcement of a non-working week (March 30-April 3, 2020) by the President of the Russian Federation.
3. It provides for the taxation of personal income in the form of interests at a 13% rate if the total amount of bank deposits or investments in individual debt securities exceeds 1 million rubles. In this case, if the interest rate does not exceed 1%, the income will not be taxed.

Information on deposits will be sent to the tax authorities by banks no later than February 1 of the year following the year of income receipt. In this case, the bank will not act as a tax agent. The tax will be payable no later than December 1 of the year following the year in which the income was received on the basis of the tax notification on tax payment sent by the tax authority.

4. From April 1, 2020, social contributions for small and medium-sized enterprises¹ will be reduced from 30% to 15% (10% for pension fund + 5% for medical fond + 0% for social insurance fund). This reduced rate will apply to the number of salaries per month exceeding the minimum monthly wage.

At the moment, the Government of the Russian Federation is preparing to adopt a resolution which, based on the powers granted by law, introduces additional measures to support the economy during the crisis. We will acquaint you with it in our next review.

The adopted law is aimed at implementing those measures which were announced by the President of the Russian Federation on March 25, 2020, in his address to the Russian people which we commented in the previous review.

The employees of SCHNEIDER GROUP’s tax practice are ready to consult you on the application and implementation of measures aimed at supporting the economy during the coronavirus crisis.

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¹Small and medium-sized enterprises (SMEs), as well as microenterprises, include organizations where at least 51% of the authorized capital belongs to individuals, organizations, subjects of SMEs. The share of organizations not belonging to the SME should not exceed 49%, and the share of the state or non-profit organizations should not exceed 25%. In addition, restrictions must be observed on the size of revenues and the number of employees:

• Revenue for microenterprises should not exceed RUB 120 mn and the number of employees should not exceed 15
• Revenue for small enterprises should not exceed RUB 800 mn, and the number of employees should not exceed 100
• Revenues for medium-sized enterprises should not exceed RUB 2 bn, and the number of employees should not exceed 250

In addition, small and medium enterprises include those persons who meet the above requirements, which are entered in the register of small and medium enterprises based on indicators of the previous year. Read more about it in our next review.