On July 21, 2023, the State Duma adopted in the third reading the draft law "On the Windfall Tax". Recall that the bill provides for the obligation of large businesses to pay tax on excess profits.

In the new issue of TAX podcast No. 5,  Tax Compliance senior tax consultants Alexey Stanchin and Ivan Tsvetkov will analyze the draft law in more detail.

Earlier we wrote  about the consideration of this bill. With the adoption of the bill, many provisions have become clearer.

Who are the payers:

• Russian companies;
• Permanent representative offices of foreign companies;
• Foreign companies are tax residents of the Russian Federation.

At the same time, it is important to note that these categories do not pay tax if they were created after 01.01.2021 (except in cases of reorganization).

Who are not payers:

1. SMEs as of 31.12.2022;
2. Hydrocarbon and coal producers in 2022;
3. Oil refiners who produced products for at least 6 months in 2022;
4. LNG producers-exporters;
5. Single agricultural taxpayers continuously in 2018 – 2022;
6. All CT participants in which the persons specified in clauses 2 and 4 were members in 2022;
7. Persons who provided oil refining services as of 31.12.2022 to customers who are also persons specified in clauses 2 and 4;
8. Parent companies of the persons specified in clauses 2 and 4, with a share of at least 75% as of 31.12.2022;
9. Persons without income from sales for 2018-2019;
10. Financial institutions to which bankruptcy prevention measures have been introduced as of 01.01.2023;
11. Developers using escrow accounts that did not pay dividends in 2021-2022

How is the tax base calculated?

((profit 2021 + profit 2022)/2)) – ((profit 2018 + profit 2019)/2))

If the arithmetic average of profit for 2021 and profit for 2022 turned out to be no more than 1 billion rubles, then the tax base is assumed to be zero.

What is the tax rate and payment terms?

The tax rate is set at 10 percent. The tax is payable no later than January 28, 2024. However, if half of the calculated tax amount is paid in October-November 2023, the obligation to pay the remaining amount of tax will be considered fulfilled through the tax deduction mechanism.

The full text of the Draft Law adopted in the 3rd reading can be found here.