Federal Law No. 102-FZ of 01.04.2020, adopted on March 31, 2020, regulates the introduction of significant amendments by the Government of the Russian Federation with regard to many procedural actions of the tax legislation, in particular: suspension or postponement of tax control measures, tax payment deadlines, submission of tax declarations, changes in the terms of non-application or specifics of application of the methods of ensuring the performance of the duty to pay taxes, dues, insurance premiums. The new law strictly regulates the priority of government acts over the Tax Code. Resolution of the Government of the Russian Federation No. 409 dd. 02.04.2020 developed anti-crisis measures aimed at maintaining the financial stability of taxpayers of small and medium-sized businesses, as well as companies and private entrepreneurs involved in the industries most affected by the consequences of the pandemic, the list of which is established by the Government Commission on Resolution No. 434 dd. 03.04.2020. Let us focus on the most significant tax amendments.
Presentation of tax and insurance holidays for certain categories of taxpayers
When considering new measures for the presentation of tax holidays, it is necessary to delimit the scope of taxpayers' activities. For companies included in the list of the government commission, as well as those related to small and medium-sized businesses, there is a deferred payment of taxes and contributions, the period of transfer to the budget which falls on the period until May 1. This measure provides for a six-month delay in the payment of income tax, taxes under special regimes of the simplified tax system and the Single Agricultural Tax, advance payments of taxes (excluding VAT) for the 1 quarter of 2020. With regard to advance payments on taxes for the 2nd quarter and the first half of 2020, the deferral is 4 months. For individual entrepreneurs in this industry a 3-month postponement of personal income tax payments for 2019 is also provided.
For the entities included in the list of the government commission, but which are micro-enterprises, additional support is provided in the form of a deferred payment of insurance premiums, including accident insurance for the period from March to May 2020 - up to 6 months, for payments in the period from June to July 2020 - by 4 months.
The submission of deferred tax payments (installments) is also provided for companies included in the list of the government commission, but in this case we are talking about all businesses, not only small or medium businesses. In order to receive a deferred payment or payment by installments, it is sufficient to fulfill one of the following criteria: reduction of income by more than 10% (including operations taxed at 0% rate), receiving a loss in 2020, if there was no loss for the previous period. The maximum period for submitting a deferred payment is from 3 months to one year, with installments ranging from 3 to 5 years depending on the decline in financial and economic performance.
The Government provides for a simplified procedure for the submission (deferral) of installments that do not require the submission of documents of pledge, surety or bank guarantee if the deferral is planned for less than 6 months. When granting a deferred (deferred) installments, prohibitions, restrictions and conditions established by the tax legislation are not applied, in particular, if a criminal case has been initiated against the organization for violation of the legislation on taxes and fees, or a case of administrative violation in the field of taxes, fees, insurance premiums and customs payments is under way. In particular, when submitting a deferral (installment) on taxes and advance payments, there is no provision for the accrual of penalties, except for cases when the results of tax control will reveal violations of the conditions for obtaining a deferral (installment) in terms of incorrectness of reflected indicators of financial and economic activity of the applicant.
In order to stabilize the financial position of this category of taxpayers, a delay is also provided for the period from 01.04.2020 to 01.10.2020 for the payment of rent payments on real estate owned by the state and municipalities. In order to obtain a deferral it is necessary to draw up an additional agreement with the lessee, providing for the following conditions:
— rent arrears are payable not earlier than 01.01.2021 and not later than 01.01.2023.;<\p>
— the postponement is presented in the amount of monthly rent for the period of validity of the high availability regime and in the amount of 50% of rent for the corresponding period from the date of termination of the high availability regime (emergency situation) until 01.10.2020;
— no fines or other liability measures are applied in connection with the violation of payment of rent payments.
Restrictions on measures of tax control, on application of measures of bringing to responsibility for tax violations
The Government of the Russian Federation extends until June 1, 2020 the measures on some procedural actions set out in the Order of the Federal Tax Service of Russia from 20.03.2020 № ED 7-2/181@, in particular:
— no on-site tax audits are scheduled;
— open field audits are suspended, including all actions related to the registration of the results of tax audits (issuance of the act, decision on the results of the tax audit);
— suspension, until June 1, 2020, of the appointment and carrying out of the checks on the observance of the foreign exchange legislation, except for the cases when the limitation period for bringing to administrative responsibility for the already started checks on the observance of the foreign exchange legislation expires;
— no decision is made to suspend operations on bank accounts under Art. 76 of the Tax Code in case of failure to submit tax returns;
— it is excluded to hold the taxpayers administratively liable in case of failure to meet the requirements for submission of documentation necessary to control the correctness of calculation and payment of taxes, fees and insurance premiums in the period from 01 to 31 May 2020;
— the deadlines for submission of claims for payment of taxes, fees, insurance premiums, fines and penalties increased by 6 months.
In particular, according to the order of the Federal Tax Service of Russia from 20.03.2020 № ED 7-2/181@ the higher tax authorities are instructed to review the complaints (appeals) under paragraph 2 of Art. 140 of the Tax Code without the participation of the applicants.
Extension of submission and reporting deadlines
— the terms of submission of tax returns for all taxes (except VAT), accounting reports, which fall on March - May 2020, have been extended for 3 months. Thus, the declaration campaign for the submitted 3-NDFL declarations will last until July 30, 2020. The tax calculated in the declaration has to be paid until July 15, 2020.;
— The deadline for submitting VAT declarations and settlements of insurance premiums for the 1st quarter of 2020 have been extended until May 15;
— The deadline for submitting the application for tax monitoring for 2021 has been extended by 3 months;
— The deadline for submission by banks of information on accounts of non-residents for 2019 and previous years has been extended for 3 months at the request of the supervisory authority;
— The deadline for submission of documentation required to control correct calculation and payment of taxes, fees and insurance premiums at the request of the tax authority has been extended for 20 working days if the claim is received between March 1 and May 31, 2020. In particular, the extension of the deadline for submission of documents is provided for the desk audit of VAT declarations - by 10 working days.
Introduction of new tax objects, as well as change of tax rates from 2021
— It is planned to include in the personal income tax base at the rate of 13% of the income of individuals on interest from deposits with credit institutions. The formation of the tax base and, accordingly, the payment of tax will depend on the amount of the key rate set by the CBR on the first day of the tax period. The amount of the tax base will be calculated based on the excess of interest received by the taxpayer over the amount of income calculated as a product of the CBR key rate and RUB 1 million. The above calculation rules do not apply to interest income on escrow accounts as well as on ruble accounts where the interest rate does not exceed 1% per annum. For foreign currency deposits, interest for tax calculation will be recalculated in roubles at the date of actual receipt of income, as income in the form of foreign exchange differences is not subject to taxation.
— It is planned to revise the agreements on the application of preferential taxation concluded with offshore jurisdictions in order to increase the tax rate of 15% on dividend income as well as on income in the form of interest on debt obligations sent to foreign beneficiaries. This measure is also aimed at eliminating the possibility of schemes for intentional re-qualification of transactions for intra-holding payments in order to obtain illegal tax savings.
Clarifications on the tax implications of distance working arrangements
Numerous amendments to tax laws, as well as changes in the organization of work regulations in companies due to the pandemic, raise questions about the need to register a remote employee's workplace with the tax authorities as a separate subdivision. However, this position is erroneous, because the place of performance of the labor function is not recognized as a separate subdivision in accordance with the provisions of Art. 209 of the Labor Code. The above conclusions were also repeatedly explained in Letters of the Ministry of Finance of the Russian Federation No. 03-02-07/1-269 dated 01.08.2011 and No. 03-02-07/1-265 dated 28.07.2011. With regard to emerging issues on the procedure for taxation of property that is not actually used due to the introduced remote working mode, currently no tax preferences have been introduced. Property tax is paid in accordance with the general procedure from real estate objects recorded on account 01 and 03, regardless of the use of these objects in the financial and economic activities of the company.
Thus, the approved anti-crisis measures with regard to the most affected sectors of the economy will allow for the duration of the emergency regime to support the financial stability of companies by deferring tax liabilities and lease expenses during the period of reduced consumer demand. However, it is not excluded that the government list of the most affected sectors of the economy, as well as measures taken during the emergency period, will soon be supplemented and expanded, due to insufficient internal reserves of companies for business recovery. The government plans to bring the volume of anti-crisis support to small and medium businesses up to 4-6% of GDP, in particular, to provide for the payment of subsidies to cover the priority needs of companies in special economic segments, as well as to provide additional tax deferrals.