The subtleties of tax maneuvers

The subtleties of tax maneuvers


Last year, the government unveiled its first package of business support measures for the IT industry. It included tax incentives, among them:

- reduction of social contributions for IT companies from 14 to 7.6%;

- A reduction in income tax from 20 percent to 3 percent;

- zeroing of the VAT rate.

Companies can get a tax reduction of 6% for mandatory pension insurance, 1.5% for mandatory social insurance in case of temporary disability and maternity - and 0.1% for compulsory health insurance.

At the end of December 2020, the Ministry of Finance and the Federal Tax Service gave clarifications on the taxation of companies as part of the tax maneuver in the IT-industry. All of these benefits apply mainly to software (software) manufacturers.

However, marketplaces are not entitled to preferences even if they sell or license software that allows them to place offers to buy and sell products on that marketplace as well as participate in trade and purchase procedures and conclude deals based on their results.

At the same time, a company may qualify for the exemption. But only if it owns the exclusive rights to the software supporting the operation of the electronic document management system and sells licenses to use that software.

It is also important to keep in mind that the benefits in the information technology industry do not apply to transactions involving the transfer of rights to programs and databases. Particularly if those rights are in the form of an opportunity:

- Distribute promotional information,

- post offers for the purchase and sale of merchandise,

- Seek information about potential buyers and sellers.

A number of conditions must be met for benefits to be likely:

- The company must have state accreditation.

- Revenues from the activities mentioned in the law must account for at least 90% of total revenues.

- The number of employees must be at least seven.


Let me remind you, the second package of support measures included 64 proposals, broken down into 9 blocks of directions. Including the possibility of exempting Russian IT-companies from scheduled inspections by fire supervision, Rospotrebnadzor, the Social Insurance Fund, labor inspection and other organizations. As a result, it is expected to significantly reduce the administrative burden on IT companies.

It is also proposed to amend tax legislation to expand the possibility of benefits for:

- organizations engaged in activities in the IT sphere, by taking into account the income from the sale, installation, testing and maintenance of partner domestic products;

- Russian Internet companies by taking into account their income from advertising and other activities (provision of socially significant services) provided that the company has its own technical platform as well as its own information resources (websites, mobile applications).

The expected effect of the proposed measures would be to increase the attractiveness of Russian jurisdiction for IT-companies, creating conditions for the accelerated growth of the industry and increasing investment in domestic solutions.

It is assumed that the second package of assistance to the industry will include subsidies for domestic developments. However, the document has not yet been approved for economic reasons.

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Despite the appeal of innovations, there are a number of challenges that can arise in their implementation that are important to anticipate:

- If the conditions for accreditation are not met or if the benefit is applied without proper accreditation, the company could be at risk of additional tax assessments.

- The exemption will not apply to players who have violated the conditions or deadline for inclusion in the register of Russian software. In particular, at the Expert Council for Software under the Ministry of Digital Economy it was indicated that now a new application for inclusion in the list must be submitted if the exclusive rights to versions of the software belong to different right holders.

- In order to move to the reduced tariffs from the new year, operating IT-companies determine the income and number of staff for the first nine months of the previous year. Thus, the company could be at risk of losing the benefit due to incorrect calculation of the revenue share and the average and average number of employees.

- In some cases, there is concern that the exemption will be invalidated if the IT department is separated into a separate organization. A hint of the norm is contained in a letter from the Federal Tax Service of Russia dated 21.01.2021 № SD-4-2/561. To minimize this risk, it is necessary to determine the commercial purpose of such a separation.

- Incorrect qualification of software. In order to eliminate this difficulty, it is necessary to prepare documents confirming that the software is the company's own development, as well as to check the qualification.


You can read the full article at Radiochastotnyj Spektr.