TC Senior Tax Consultant Fyodor Petrik and TC Tax Consultant Ekaterina Kopylova commented on the proposed major changes to the draft law for Kommersant.

Expansion of tax monitoring parameters

The reduction of financial thresholds for joining tax monitoring was first announced by representatives of the Federal Tax Service in the summer of 2023, so organizations planning to switch to tax monitoring from 2025 took into account the reduced financial thresholds in advance. Consistent reduction of financial thresholds is implemented in accordance with the plan of the Federal Tax Service to increase the number of participants in tax monitoring by 20% or more annually. At the same time, the list of categories of organizations for which financial thresholds do not apply (residents, TOR, SEZ, industrial clusters, etc.) is also being expanded

Tax monitoring provides a number of advantages that are relevant for organizations of any scale. For example, no fines and penalties, reduction of the period open for audit to 1 year and 9 months. Many companies are not ready to allocate significant resources to implement the necessary IT solutions. However, in the long term, the transition to tax monitoring allows to significantly modernize the tax function and minimize costs. Tax monitoring participants are actively sharing positive feedback on the application of this regime in the business community, and the process of transition to tax monitoring is becoming standardized and more accessible. Therefore, we expect further growth in the number of tax monitoring participants and expansion of the categories of organizations for which the use of tax monitoring will be mandatory.

The Tax Compliance team offers a modern and technological approach to working with the tax authority - Tax Review (Tax Monitoring) data showcase. Our IT product will give access to the optimal solution of tax issues, and TC specialists will support the company in the process of transition to the tax monitoring regime. 

Changes in accounting for income for tax purposes

As a general rule, the date of receipt of income in the form of penalties (fines, fines) for breach of contractual obligations is the date of their recognition by the debtor or the date of entry into legal force of the court decision (subparagraph 4, paragraph 4, Article 271 of the Tax Code of the Russian Federation).

That is, the organization is obliged to include in income the amounts of sanctions recognized by the counterparty (awarded by the court), even if the prospect of their actual receipt is doubtful. Subsequently, such debts may be recognized as uncollectible in accordance with paragraph 2 of Article 266 of the Tax Code of the Russian Federation.

Starting from the spring of 2022, business has faced numerous restrictions that significantly complicate settlements with foreign counterparties and actually exclude the possibility of collecting sanctions from such debtors.

Given this state of affairs, the proposed change in the accounting procedure for cash receipts appears to be a rational response and will allow for a fairer accounting of the real income of Russian companies.

Regions will be able to reduce the minimum time limit for owning real estate in order to obtain a personal income tax exemption regardless of the grounds for its acquisition

It can be assumed that some regions will use this authority to stimulate investment in real estate among citizens. However, such a decision will depend on many factors, including economic ones. 

The current wording of item 6 of Article 217.1 of the Tax Code of the RF already stipulates the right of the regional legislator to reduce the maximum holding period for certain objects or for certain categories of taxpayers. As can be seen, in practice only 17 constituent entities of the Russian Federation have used this right. Therefore, at the moment there is no reason to believe that with the adoption of the new law this practice will expand and become widespread.

In general, the amendments proposed by the draft law under consideration do not seem to be of significant importance and are rather a "fine-tuning" of certain situational issues, especially against the background of the recently announced by the President of the Russian Federation plans for a large-scale modernization of the tax system. However, the listed novelties are positive in nature and therefore we evaluate them positively.