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Changes in the tax legislation of Russian Federation – summer of 2014

We are informing our readers about the most important changes in Russian legislation: news about VAT, corporate income tax, news in labor legislation, etc.

1. LABOR LEGISLATION: SPECIAL ESTIMATION AND IMPROVEMENT OF WORK CONDITIONS.Amendments to the Labor Code of RF are introduced by the Federal Law of 28.12.2013 No 421-FZ.

According to the legislation (Federal Law of 28.12.13 No 426-FZ) all companies are obliged to conduct special estimation of work conditions every 5 years. This procedure is performed by specialized companies. Special estimation has also be conducted within 6 months after the following occasions:1. creation of new work places;2. receipt of prescription of state labor inspector;3. change in technology, change of production equipment;4. change of composition of used materials and/or resources;5. change of safety means applied individually and collectively;6. accident or professional disease in the company.

Based on the results of special estimation of work conditions work places have to be classified. Depending on the classification of work places rate of additional social contribution (0-8%) is fixed.

Employer has to declare in its web-site results of special estimation of work conditions within 30 days after the approval of the report on special estimation.

Since 08.06.14 upon results of special estimation of work conditions companies have to declare safe work places. Declaration consists of 1 page; within 1 month after the approval of report on special estimation declaration has to be submitted to the State Labor Inspection.

Since 1.1.15 company may be fined in case if it does not conduct special estimation or valuates the rules established for this procedure: amount of fine equals to 60 000 – 80 000 RUR.

Also in the absence of special estimation of work conditions incomes of employees which are entitled for early retirement pension (employees with harmful conditions of work) are subject to additional social contribution (4-6% of salary in 2014, 6-9% of salary in 2015).

Changes introduced in the new edition of the Order of Minsocrazvitia of 01.03.2012 No 181n:

Since 8.7.14 standard expenses for improvement of work conditions may include costs for sport-events (i.e. fitness). According to the Labor Code of RF employers are obliged to incur such expenses in amount of not less than 0,2 % of total production costs. For violation of this requirement of legislation company may be fined up to 50 000 RUR.

2. VATAmendments introduced in the Federal Law of 20.04.14 No 81-FZ:

Since 01.07.14 sale of the object of real estate is liable to VAT since the moment when the object is accepted by the buyer; there is no need to wait till the state registration of ownership for the sold object.

2014_09_25News

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Since 01.01.15 taxpayers are not obliged to keep registers of received and issued facture-invoices.Amendments introduced in the Federal Law of 21.07.14 No 238-FZ:

Since 01.01.15 agents, forwarders and developers are obliged to keep registers of facture-invoices and include data of these registers in the VAT-declarations.In case if the mentioned entities are exempt from taxation, they will be obliged to submit to the tax office register of received and issued facture-invoices concerning agent activity in the electronic format.Since the 1.10.14 companies are not obliged to issue facture-invoices to customers which are not payers of VAT (e.g. customers applying simplified system of taxation, customers paying Singe Tax on Imputed Income, customers exempt from VAT, etc.). This should be fixed in the agreements with such customers.Supreme Arbitration Court of RF issued clarifications which should be used in litigations for cases concerning VAT (Resolution of SAC of RF of 30.05.2014 No 33). Among the clarifications there are the following:

Recoverable VAT may be declared and deducted at any moment within 3 years after the receipt of facture-invoice.In case if the agreement does not specify amount of VAT, it should be considered that sums in the agreement are defined including VAT; VAT should be calculated at the rate of 18/118 applicable to the sums in the agreement.Advance given in non-monetary form, including offset of obligations between the parties, is liable to VAT at the moment of receipt (in the same way as monetary prepayment).Marketing materials given to the buyers (gifts, leaflets, etc.) are not liable to VAT in case if they do not have specific features of goods and cannot be used by the receiving party for other purposes.

3. CORPORATE INCOME TAX.Changes are introduced in the Federal Law of 20.04.14 No 81-FZ.

Since 1.1.15:• The term “sum difference” will not be used. All differences resulted from settlements under the agreements

obligations in which are set in foreign currency (e.g. EUR) are called “currency differences” regardless of the currency of payment (foreign currency or RUR). Taxation of currency differences for agreements concluded before 1.1.15 will be taxed in the currently effective order.

• Loss from cession of debt to the 3rd party, which occurred after the agreed deadline for payment, shall be recognized for the purpose of income tax calculation at once - at the moment of passing of a debt. Now and till 1.1.15: such a loss is accounted in 2 parts: 50% -at the date of cession, 50% - after 45 calendar days after cession.

• Letter of Federal Tax Service of RF of 17.07.2014 No GD-4-3/13838@ “About accounting for negative currency differences”:According to the opinion of Federal Tax Service negative currency differences resulted from re-estimation of obligation for the payment of dividends in foreign currency can be recognized as tax-deductible costs at the calculation of corporate income tax.

4. PROPERTY TAX.Changes are introduced in the Federal law of 02.04.14 No 52-FZ.

Since 1.1.15 companies which pay Single tax on Imputed Income or apply Simplified System of Taxation are not exempt from property tax in respect of objects for which property tax is calculated based on the cadastre value (e.g. administrative business and shopping centers, commercial and industrial premises used for offices, retail facilities, facilities used for catering and consumer services that are included in the list of such objects approved by local authorities).

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5. TAX CONTROLResolution of the Plenum of the Supreme Arbitration Court of RF of 30.07.2013 No 57; Letter of the Federal Tax Service of Russia of 22.08.2014 No CA 4-7/16692:

In case if tax agent (i.e. company paying income to a foreign entity) failed to withhold tax from such payments, tax authorities may collect proper amounts of tax and also penalties for the delay of payment from this tax agent.

6. CASH TRANSACTIONSChanges are introduces in the Notification of Central Bank of Russia of 11.03.14 № 3210-U.

Since 1.6.14:• Companies of small business and entrepreneurs are not obliged to set a limit balance of cash.• Entrepreneurs are not obliged to keep cash book and prepare cash documents.• Directors of the companies are not obliged to sign warrants for spending of cash.

7. BANK OPERATIONSChanges introduced in the Federal Law of 28.06.13 No 134-FZ:

Since 1.7.14 tax authorities have the right to require notifications and information from banks regarding bank accounts and deposits of companies, entrepreneurs and also physical persons. Such requirements to banks are possible not only in case of tax checks of mentioned companies, entrepreneurs and physical persons, but also in frame of tax checks of other taxpayers.

Changes based on Instruction of Bank of Russia of 30.05.14 No 153-I:

Since 1.7.14 signatures in bank cards are not classified as the 1st and the 2nd signatures, but have the same priority. Companies still may have the single signature (by agreement with the bank); maximum amount of signatures is not limited.

8. CURRENCY CONTROLBased on the Information issued by Federal Service of Financial and Budgetary control “About salary payment to physical persons – not-residents of RF”

Companies – residents of RF cannot pay salary to physical persons – not-residents of RF in cash, because such an option is not permitted by Russian currency legislation.

* The articles and information in this newsletter are provided as general guidelines and may be subject to change. They are not intended to act as a replacement or substitute for professional advice. You should contact our Accountor advisors to discuss any actions you may wish to take based on the information included in this publication. Accountor disclaims any responsibility for actions taken on this information alone.