Tax Compliance tax consultant Ekaterina Kopylova analyzed the main tax events in the past month in the Pravo.ru digest.

The plan of realization of the Russian President's message has been approved

Event:

On February 29, in his Address to the Federal Assembly, the President drew attention to the need to modernize the tax system and instructed the State Duma to prepare a «concrete set of proposals». The working group of the State Duma at the meeting approved the plan of realization of the President's Address, within the framework of which the deputies discussed the work in the part of the progressive personal income tax scale and income tax rates. In turn, the Russian Government is preparing changes to personal income tax and profit tax rates.

Significance of the event:

The projected growth of the burden on quite a wide strata of the population also causes the growth of the number of taxpayers willing to look for new ways of optimization. The key issue on the agenda of many taxpayers will be the search for systemic tax inefficiencies given the planned changes.

The government has approved the creation of three new special economic zones (SEZs)

Event:

Prime Minister Mikhail Mishustin has also signed decrees on the creation of new special economic zones (SEZs) in Mordovia, Rostov and Tver regions. They plan to expand the existing SEZs in Kaluga and Lipetsk regions.

Significance of the event:

The creation of new SEZs demonstrates that the government continues to pay increased attention to favorable business treatment for the development of certain regions and industries.

Price to VAT ratio

Event:

On March 27, the Supreme Court of the Russian Federation considered the case of NVision Group JSC regarding the recovery of VAT amounts in favor of a software supplier due to changes in legislation. NVision Group JSC and VTB Bank entered into an agreement in 2019, under which the Company granted the Bank the right to use Microsoft software for 2019-2021. The dispute arose in connection with the determination of the moment of determining the VAT tax base when granting the rights to use the software.

The Bank paid the amount of remuneration for each license year on an annual basis. At the time of conclusion of the agreement and during the first license year, in accordance with the tax legislation in force in 2019-2020, the sale of rights to computer programs was not subject to VAT under subparagraph 26 p. 2 of Art. 149 of the Tax Code of the Russian Federation. 2 of Article 149 of the Tax Code of the Russian Federation, which was additionally specified in the agreement between the Company and the Bank.

In 2020, the federal law established that from January 1, 2021 VAT exemption applies only to the sale of rights to computer programs and databases included in the register of Russian computer programs.

Significance of the event:

The position of the Supreme Court of the Russian Federation will be taken into account in all situations where changes are made to legislation that significantly affect the contractual obligations of the parties. It should not be forgotten that VAT as an indirect tax is a price-forming factor, so as the Supreme Court rightly noted: when determining the contract price, the risk of VAT errors lies with the seller, while the buyer faces the risk of an increased tax burden in addition to the seller's errors.