The Ministry analyzes the need to adjust the calculation of personal income tax (PIT) on payments to employees in the Far North. After the introduction of a five-step scale, the procedure for calculating tax on certain payments to northern employees entails additional labor and financial costs for business. 

In RBC's article, Ekaterina Kopylova, Tax Compliance tax consultant, analyzed the difficulties for companies and possible solutions. 

How urgent is the problem with northern payments for business?

Our expert notes that the problem is really relevant for companies operating in the Far North and equated areas. The uncertainty in the issue, theoretically resolved through the publication of clarifications by the Federal Tax Service, initially required serious study within organizations and the involvement of consultants.

The introduction of separate accounting of northern allowances became possible due to serious organizational and technical efforts: companies had to modify their accounting systems (1C, SAP and similar) with the installation of template solutions offered by these developers and their own additional adjustments implemented by internal IT departments. At times, the services had to introduce additional control procedures and temporarily increase the volume of manual operations.

Some companies managed to automate this process, which minimized current labor costs, but the situation looks different for many representatives of small and medium-sized businesses. Some companies have not been able to fully implement separate accounting, having to apply conservative approaches to calculating personal income tax even in the conditions of a positive position of the authorized body for business.

Thus, while for some organizations the main costs were of a one-time nature, others continue to face constant difficulties in accounting.

Is there a ready solution now?

The prospect of a complete withdrawal of northern allowances from taxation seems unlikely, since difficulties of a technical nature are traditionally not considered a sufficient basis for granting tax benefits. Moreover, such an approach does not solve the systemic problem - the need to develop a methodology for calculating average earnings, which would exclude the problem with northern allowances.

At the same time, it is obvious that the solution should be found taking into account the interests of taxpayers, who already bear a significant administrative burden.