Corporate Tax 2010 - BMR Advisors

Pepeliaev, Goltsblat & Partners
Russia
Russia
210
deemed to be an income for tax purposes (Article 251).
There are some deductibility requirements for expenses for
corporate profit tax purposes. The expenses must be documented
and economically justified. The requirement on the “economic
substantiation of expenses” was one of the most disputed issues
prior to the issue of Judgment No. 320-O-P of the Russian
Constitutional Court dated 4 June 2007.
The Constitutional Court ruled:
“Economically substantiated expenses” are understood to mean
“the costs connected to business and profit”; the Tax Office is not
allowed to assess whether costs are expedient or inexpedient (only
the business owner may determine the expedience of the expenses);
and the Tax Office is responsible for providing the burden of
evidence.
There are two types of non-deductible expenses: expenses that are
not documented or economically substantiated; and the expenses
listed in Article 270 of the Tax Code (for example, a penalty paid to
the government).
4.4 If it otherwise differs from the profit shown in commercial
accounts, what are the main other differences
The main difference is that there is a separate rule for calculating
profit for tax purposes (see question 4.3 above). Taxpayers
maintain independent Analytical Tax Accounting Registers for tax
purposes. The main differences are the following: is the RF Tax
Code contains a list of non-deductible expenses; some expenses
(such as certain advertising expenses) may be permitted within
certain limits; some incomes are not incomes for tax purposes; the
rules on depreciation differ for accounting purposes and for tax
purposes (for example, there is no depreciation for tax purposes
when a taxpayer hands over property to another person for
gratuitous use); and costs for tax purposes may be permitted in
another period in financial accounting, etc.
4.5 Are there any tax grouping rules Do these allow for relief
in Russia for losses of overseas subsidiaries
The Tax Code does not contain special tax grouping rules. The rules
do not allow a parent company to account for the losses of its
subsidiaries in its own accounts independently of the type of
subsidiary - home or overseas. Each company estimates the tax base
independently. The following rules are effective at present, however:
a) if the ownership interest in a subsidiary is more than 50%,
the property received for no consideration from one company
to another would not be treated as profit;
b) the tax authorities are entitled to check the prices applied in
the transactions between a parent company and subsidiary
(see question 3.7 above);
c) three months in tax arrears of a subsidiary can be collected
from the parent company if the profits of the subsidiary are
credited to the parent company’s bank account and viceversa;
and
d) a Russian recipient of dividends may apply 0% tax in certain
conditions (see question 3.6 above).
Planned amendments to the RF Tax Code refer to the concept of a
“consolidated taxpayer”. A draft law on “consolidated taxpayers”
elaborated by the Ministry of Finance is being discussed at present.
In particular, the current draft law provides for the consolidation of
the profits and losses of “parents” and subsidiaries and appears to
resolve key transfer pricing issues for holding companies, but only
within Russia and only with respect to the biggest Russian holdings.
4.6 Is tax imposed at a different rate upon distributed, as
opposed to retained, profits
The Russian profit tax rate is applied to a Russian corporate
taxpayer’s taxable profit, irrespective of whether that profit is
distributed or retained.
4.7 What other national taxes (excluding those dealt with in
“Transaction Taxes”, above) are there - e.g. property taxes,
etc.
There is a closed list of taxes that can be imposed in the Russian
Federation (those listed in Articles 13, 14 and 15 of the Tax Code).
These are:
Nine federal taxes: VAT; excise taxes; personal income tax; unified
social tax (to be abolished from 1 January 2010, see below);
corporate profit tax (corporate tax); mineral extraction tax
(severance tax); water tax; fee for the right to use fauna and aquatic
biological resources; and state duty.
Three regional taxes: corporate property tax; tax on the gambling
industry; and transport tax.
Two local taxes: land tax; and individual property tax. We have
already mentioned some federal taxes. As for the other major taxes,
personal income tax is levied at a rate of 13% for residents and 30%
for non-residents.
As of 1 January 2010 the unified social tax will be abolished and
replaced by insurance contributions to extra-budgetary funds. The
insurance contributions will be remitted separately to the RF Pension
Fund, the RF Social Security Fund and the compulsory medical
insurance funds. In addition, as was the case in the past, companies
will have to make compulsory insurance payments covering
employment injuries and occupational disease, as well as payments for
compulsory medical insurance contributions for the non-working
population governed by ad-hoc federal laws. According to analysts,
the replacement of the unified social tax with insurance contributions
will increase the tax burden of most companies.
4.8 Are there any local taxes not dealt with in answers to
other questions
As mentioned above, there are three regional taxes and two local taxes.
Recently, one Russian region (Velikiy Novgorod) completed an
experiment involving the replacement of property taxes (corporate
property tax, individual property tax and land tax) with a real estate tax.
Information about property taxes:
Corporate property tax. The property recorded in financial
accounting as fixed assets is subject to this tax. The maximum rate
is 2.2%.
Individual property tax. Real estate (for example, flats, houses) is
subject to this tax. The rate is progressive (from 0.1% to 2%).
Land tax. A person (organisation or individual) that owns land (or
has the right to use it, except by lease) has to pay this tax. The
maximum rate is 1.5% or 0.3%, depending on the land category.
5 Capital Gains
5.1 Is there a special set of rules for taxing capital gains and
losses
Companies. There are no special rules for calculating capital gains
and losses. A net capital gain must be included in the tax base.
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