TC tax consultant Ekaterina Kopylova commented on the main amendments and their impact on business in the Pravo.ru article. 

After the next draft of amendments finally completed substantive consideration of a voluminous bill aimed at fine-tuning the current Tax Code of the Russian Federation, the implementation of certain provisions of the main directions of tax policy (ONNP).

One of the key draft laws contains a number of measures of the legislator's response to objective factors, such as economic sanctions and existing law enforcement practice.

The draft law contains many diverse amendments ranging from lowering the thresholds for potential participants of tax monitoring, clarification of «technical» norms, in particular, regarding the procedure for determining the aggregate indebtedness on the Unified Tax System, obtaining extracts from the Unified State Register of Taxpayers, up to point optimization of tax administration, for example, extending the «preferential» procedure for calculating penalties for organizations.

The proposed changes, perhaps, are not «revolutionary» in nature, but play an important role in the large-scale modernization of the tax system.

At the same time, the novelties contained in the draft law concern a wide range of issues (from procedural to the procedure for calculating personal income tax, income tax and insurance contributions), and are likely to affect the majority of taxpayers, and therefore should not be ignored by them.

Let us note only some of them.

1. retroactive effect of the amendments

A number of tax amendments have been given retroactive effect. It is important for taxpayers to timely utilize the opportunities provided by the draft law as a kind of measure of state support.

The retroactive effect was given to the order of application of the reduced amount of penalty for organizations, which applies to legal relations arising from January 1, 2024: the rate of penalty for organizations continues to be 1/300 of the key rate of the Central Bank of the Russian Federation.

The provision of personal income tax deduction for interest on long-term bank deposits (more than 15 months) and the procedure for determining the tax base for income from the sale of immovable property taking into account expenses calculated on the basis of information received by tax authorities within the framework of interdepartmental interaction (from registration authorities) apply to income and expenses received (incurred) from the beginning of 2023.

From the beginning of 2024, a material benefit from savings on interest for the use of borrowed funds is received provided that such funds are received from an interdependent legal entity or from an employer, or as material assistance. Savings received as part of state support are not recognized as income.

Some new VAT preferences are also given retroactive effect. 

From the beginning of 2024, VAT exemption will apply to transactions involving the transfer of property by charitable foundations to educational organizations, for children, including orphans and disabled persons, while the right to deduction will apply only to those transactions for which accounting records were kept no earlier than 2024.

From the beginning of 2020, VAT exemption is applicable to the leasing of ambulances with crews and drivers, their transportation of ambulance crews and medical evacuation of citizens, if such services are provided to organizations of the state health care system.

2. Expansion of tax monitoring

The lowering 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 lowered financial thresholds in advance.

Consistent reduction of financial thresholds is implemented in accordance with the Federal Tax Service's plan to increase the number of tax monitoring participants by 20% or more each year. At the same time, the list of categories of organizations - potential participants in tax monitoring - for which financial thresholds do not apply (residents, TORs, SEZs, industrial clusters, etc.) is also being expanded

Tax monitoring provides a number of advantages that are relevant for organizations of any scale. The tax monitoring system helps the taxpayer and the tax authority to harmonize their positions without bringing the relationship to a tax dispute. For example, the absence of 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 application of tax monitoring will be mandatory.

3. Regulation of TCO

The termination of interstate exchange of information with the Russian Federation and the absence of authorized access to foreign databases by the Federal Tax Service are shifting the burden of proof to taxpayers, the Federal Tax Service is applying new methods of TCO and adjustments, and using additional sources of information.

Thus, officials of territorial tax authorities may be involved in conducting TCO audits (Clause 2 of Article 105.17 of the Tax Code of the Russian Federation).

In the conditions of sanctions restrictions relentlessly expanding the boundaries of control in TCO, taxpayers should expect an increase in the number of TCO audits.

4. Temporary anti-sanctions measure: establishment of a special procedure for accounting for income in the form of sanctions recovered from foreign organizations (or their joint and several defendants) on the date of actual receipt of money on the accounts of a Russian organization and a mirror rule with respect to relevant expenses

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

In other words, an organization must include in income the amounts of sanctions recognized by a counterparty (awarded by a court), even if the prospect of their actual receipt is doubtful. Such debts may subsequently 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 these debtors.

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

Extension until the end of 2027 of the preferential provisions regarding the procedure for recognizing exchange differences at the date of termination of obligations seems reasonable, otherwise starting from 2025 taxpayers would return to recognizing differences on a monthly basis.

5. Limiting the circle of persons in a group with an IT company exclusively to Russian organizations and citizens for the application of a reduced rate of corporate income tax

The explanatory note to the draft law explicitly states that the change is being introduced in order to stimulate IT activities of Russian organizations directly.

Formally, the considered benefit in the form of 0% profit tax is valid only until the end of 2024, after which the rate will increase to 3%.

Taking into account the specifics of entry into force of the proposed change (not earlier than January 1, 2025), it should be concluded that the abolition of the exemption for IT-businesses «connected» with foreign persons is provided for in case of possible extension of this benefit. Similar changes have been made with regard to insurance contributions for IT organizations.

Earlier representatives of the Ministry of Finance and the Ministry of Finance reported that a positive decision on this issue will depend on the economic situation and real possibilities of budgets, including regional budgets.

In any case, the adoption of the changes will have a significant impact on the activities of IT companies with foreign participation and should be taken into account by them when planning their activities.