Benefits and tightening 2021: What tax changes remain in effect
Benefits and tightening 2021: What tax changes remain in effect

Benefits and tightening 2021: What tax changes remain in effect


The economic instability in the country <...> prompted the state to make changes in fiscal policy.

During the spring self-isolation and the next few months it was about supporting the population and companies in the affected industries. Then it was about developing a fiscal policy for 2021 aimed at making up for the budget deficit. We are talking about increasing the tax burden on foreign beneficiaries, the introduction of a progressive taxation scale, as well as creating more attractive tax conditions for those sectors of the economy which are able to attract foreign capital in the future.

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Here are the two most significant changes in Russia's tax policy in 2020-2021.

1. Tightening of tax administration

The latest amendments adopted by the Russian government concern revision of double taxation treaties and introduction of a flat tax on CFC profits. They are primarily aimed at deoffshorization of economy, i.e. removal of the levers that the beneficiary taxpayers had previously used to save on taxes and hide or transfer incomes to the states with more attractive taxation conditions.

That is, in fact the preferential treatment of international investment (double taxation treaty - DTT) has been abolished and the rates under the legislation of Russia in respect of dividends and interest have been equalized - 15% and 20% respectively.

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Development of IT-technologies and integration of more and more countries in the process of increasing transparency in the tax sphere accelerates automation of tax information exchange between the states. In the future fictitious business will be reported to the countries where the beneficiary is registered and/or resides, which will prevent the withdrawal of income.

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In addition, the State Duma in the second and third readings adopted a law which tightens control over cash transactions from 600 thousand rubles. This is necessary to exclude the risk of cash-out when forming schemes of illegal tax optimizations. The control also implies that the information will be forwarded to tax authorities for further, more thorough check if the transfers do not correspond to the company's economic activity.

So far the control function is the responsibility of banks. They have to inform Rosfinmonitoring about all transfers to or withdrawals from the account of a company exceeding that threshold. It does not matter what kind of business activity the company is engaged in. And financial transactions amounting to more than 600 thousand rubles in lease payments or depositing or withdrawing from an account (deposit) of a foreign entity without a legal entity are subject to even stricter control of the government. This toughness is expressed not only in control over transactions but also in the possibility that the operation will be suddenly interrupted, up to blocking accounts. Entrepreneurs can protect themselves if they provide documentary evidence of the source of their income.

In this case it is taken out of control:

- The exchange of banknotes of one denomination for another;

- Transfer of money abroad to the account of an anonymous recipient and the receipt of money from this account.

Also there will be no control over money transfers, which are performed by non-credit institutions on behalf of the client. But there will remain control over the provision of property under a leasing agreement, while the very receipt of property under such an agreement is removed from the control.

In addition, on January 1, 2021 there will be introduced compulsory control over postal money transfers and return of the unused balance paid as advance payment for communication services if the amount of such transactions exceeds 100 thousand rubles.

2. Tax allowances for individual sectors of the economy

From January 1, 2021 a new package of tax benefits for IT-companies has been put into effect. The main difference of this maneuver from the current tax regime in the industry is the change in the order of VAT taxation of income from software sales.

According to the law, transactions for the transfer of rights to any software and to any database on the basis of license agreements were exempt from value added tax. <...> Since the beginning of 2021 the value added tax exemption is not available for any software and trading platforms that have advertising banners or other opportunities to promote products and services.

There was also a significant reduction in the income tax rate for certain categories of companies and organizations in the IT-industry. Instead of 20% it became 3%.

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As of January 1, 2021, IT companies are allowed to pay premiums at a reduced rate. There is an indefinite reduced rate for organizations:

- for social insurance - 1.5%;

- Health insurance - 0.1%;

- for pension insurance - 6%.

Total - 7.6%. For comparison, before the changes, contributions for "IT workers" were at 14%. These benefits should help to attract other companies to work in the Russian Federation.

Also, the government plans to review the tax burden in other sectors of the economy. For example, in the oil industry. <...> The Ministry of Finance estimates that in 2021 the federal budget will receive additional revenue of 80.4 billion rubles.

The mineral extraction tax exemption for extra-viscous oil will be abolished. <...> Also in 2021 more than 20 privileges for tax on extraction of hydrocarbons will remain in force.

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The changes in this sphere imply that the tax benefits will be granted if oil prices exceed the base mark set by the BC RF. The changes will increase the efficiency of the tax on additional income from hydrocarbon production and mineral extraction tax, as well as prevent a further decline in federal budget revenues.

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Read the full article at RBC Pro .


Mikhail Begunov Mikhail Begunov

Mikhail Begunov

Major specialisations

Manufacturing companies, FMCG, Information technology, Pharmaceuticals

Member of the Chamber of Tax Consultants, Lawyer at the Moscow Chamber of Advocates

Biography