RS Law digest Main changes in the Law of the Russian Federation from January 24, 2012 to April 18, 2012

Main changes in the Law of the Russian Federation from January 24, 2012 to April 18, 2012

1. List of R&D has been updated

Starting on January 1st, 2012 by the Government Ordinance No. 96 dated February 16th, 2012 the list of research and development projects whose actual expenses (for profit tax purposes) will be calculated with a coefficient of 1.5 was changed.

The list can be found in the new text and contains explicit descriptions of a greater number of research projects and developments. The list can be divided into the following enlarged categories: 'The Nanosystem Industry', 'Information-telecommunications Systems', 'Sciences about Life' (biotechnology, medicine, veterinary science) 'Rational Natural Resource Use', 'Transport and Cosmic Systems', 'Energy Efficiency, Energy Saving, Nuclear Energy'.

2. Agreement about avoidance of double taxation discussed in a new manner

The Protocol on making amendtments to the Agreement between Russia and Cyprus dated December 5th, 1998 about avoidance of double taxation on income and capital taxes was ratified.

The Protocol clarifies a few terms used in the Agreement (income from international transport, dividends, interest) and Agreement statutes dealing with conducting consistency procedures and consultations by the countries’ authorised organs, including controversial cases concerning an effective place for managing legal entities.

The following significant amendtments have been made to the Protocol:

  1. Income from selling a company's shares (of which more than 50% of the cost is property in the Contracting State) is taxed at source in that country.
  2. According to the country's legislation where a company is a resident paying out dividends (even if they are in the form of interest), income subject to the same kind of taxation as share income is now considered dividends. Also, these dividends are no longer considered 'interest'.
  3. Income received by means of a real estate mutual fund or similar collective forms of investment created primarily for property investment is taxed at source as income from property.
  4. New editions of article 26 'Information Exchange' and article 27 'Tax Collecting Assistance' of the Agreement have been introduced; thereby opening up new opportunities for exchanging information and collecting taxes in both the Russian Federation and Cyprus.
  5. It is specified that the decreased 5% tax rate on dividends will be applicable if the person/legal entity bearing the actual right to these dividends directly invested at least 100,000 euros (in its equivalent) in the company's capital (earlier this amount was no less than 100,000 US dollars).
  6. A clarification has been added to Article 4 of the Agreement about defining residency stating that if the place of lean leadership by a legal entity cannot be determined then the authoritative bodies of the Contracting States should strive to come to a mutual agreement regarding the place of lean leadership in every particular case, by taking into consideration all the relevant factors.
  7. A provision is to be included noting that after consultations the parties come to the conclusion that the organisation-resident was established to receive allowances based on the Agreement, these allowances are not to be granted.
  8. The criteria for setting up a permanent establishment of the company for tax purposes in the case of rendering services in a different Contracting State through a person other than an agent, broker or other person with an independent status has been clarified.

3. The Federal Tax Service (FTA) keeps currency operations in check

Order No.123n of the Ministry of Finance of the Russian Federation dated October 4th, 2011 outlines the rights and duties of Federal Tax Service employees while conducting audits for controlling currency operations by residents and non-residents who are not credit organisations or currency exchanges.

The object subject to control is the adherence by residents and non-residents to currency legislation of the Russian Federation and acts of currency regulatory bodies.

In an effort to check adherence to the established requirements tax authority employees have the right to:

  • control adherence to currency legislation by residents and non-residents;
  • check the fullness and authenticity of financial accounting and reporting on currency operations;
  • request and receive documents and information which deal with conducting currency operations, opening and maintaining accounts.

Receipt of documents or information directly or indirectly pointing to the fact that the resident (or non-resident) could possibly break currency law regulations by tax inspection employees can serve as a basis for starting the aforementioned procedures. Documents and information regarding conducting currency operations, opening and maintaining accounts (deposits) in banks outside Russian Federation territory, providing financial and accounting documents about currency operations are analyzed during the audit.

4. 'Safe by-laws' will take effect in the Customs Union countries starting in 2015

Starting January 1st, 2015 new technical by-laws called 'On wheeled transport safety' (TR TS 018/2011) approved by the Resolution of the Customs Union Commission dated December 9th, 2011 No. 877 will take effect.

The technical by-laws will cover the following objects of technical regulation:

  • wheeled transport (categories L, M, N and O) designed for use on public roads and also chassis;
  • transport components that are pivotal for ensuring the vehicle’s safety.

Up to July 2016 it is acceptable to produce and release into circulation products in accordance with the mandatory requirements, earlier established regulations under the Customs Union or the legislation of the government (member of the Customs Union), if these products have the relevant documentation confirming that they meet the specified mandatory requirements issued or passed before the Technical by-laws took effect.

5. New form for VAT (Value Added Tax)

Government Ordinance of the Russian Federation No. 1137 dated December 26th, 2011 outlines the new forms of documents applied for VAT calculations.

In the new form of the accounting journal for incoming and outgoing invoices information is coded based on operation types.

6. Mandatory certification has been suspended

The Government Ordinance of the Russian Federation No.982 'About approving a unified list of products subject to mandatory certification and a unified list of products whose adherence to requirements is confirmed in the form of passing a declaration of conformity' dated December 1st, 2009 is suspended until January 1st, 2014 by the Government Ordinance of the Russian Federation No.39 dated January 27th, 2012 in the part of certain types of products, in particular different types of electrical and trade equipment, certain computer parts, some types of household appliances and numerous ordinances pertaining to the quality of low-volt equipment.

7. Recalculation of insurance contributions

A new form for calculating insurance contributions for compulsory social insurance is to be introduced starting in the first quarter of 2012 (form 4FSS).

Adjustments made to the procedure for calculating and paying insurance contributions are factored into the new form. So, in particular, tables for calculating the conditions for applying reduced rates have been added and also a corrected directory for insurance contributionpayer code numbers has been included due to the broadening of insurance contributionpayer categories entitled to reduced rates.

8. The Tax Code gave the regions additional power

Amendments to the Tax Code of the Russian Federation have been made (Federal Law No.19-F3 dated March 30th, 2012) according to which Russian regions are given the authority to establish additional grounds and conditions for providing investment tax credit, including setting the term and interest rate for the investment tax credit for organisations' profit tax paid to the budgets of Russian regions.

Additionally, these amendments call for a special procedure for paying corporate income tax by organisations. Organisations owning sites within the United Gas Supply System (relating to legal relations starting as of January 1st, 2012) are a liable participant of a consolidated group of taxpayers.

9. Transport tax declaration set to change

Starting with 2012 accounting reports a new form of transport tax declaration (including the fact that it is in electronic form) comes into effect.

Adjustments made to the procedure for calculating and reporting on the transportation tax are factored into the new declaration form. In particular, starting in 2011 one no longer had to show tax calculations for advances paid on the transportation tax.

10. Retail only for Russian citizens

The Government Ordinance of the Russian Federation No.1086 dated December 22nd, 2011 states the allowable fraction (for 2012) of foreign workers utilising by commercial entities for retail trade and sport in the Russian Federation:

The following allowable fractions of use by foreign workers in the Russian Federation in retail trade and sport have been established:

a) retail sale of alcoholic beverages, including beer—0 percent out of the total workforce utilised by commercial entities;

b) retail sale of pharmaceutical products—0 percent out of the total workforce utilised by commercial entities;

c) retail trade in tents and at markets—0 percent out of the total workforce utilised by commercial entities;

d) other retail trade outside of stores—0 percent out of the total workforce utilised by commercial entities;

e) other activities in sport—25 percent out of the total workforce utilised bycommercial entities.

The Government Ordinance of the Russian Federation No.1086 dated December 22nd, 2011 does not pertain to foreign citizens temporarily or permanently living in the Russian Federation.

11. Procedure for claiming intellectual property rights to become easier

Certain procedures for claiming intellectual property rights and the means of individualisation (Government Ordinance of the Russian Federation No.183 dated March 3rd, 2012) have been simplified.

The applicant for transferring exclusive rights without an agreement as a result of legal entity reorganisation, unlike before, does not have to submit to the Russian Agency for Patents and Trademarks (RAPT) a statement from the Unified State Register of Legal Entities (USRLE) for government registration of this transfer for the following: an invention, a useful model, an industrial sample, a trademark, a service mark, stating the place of origin of the product, a topologically registered integral micro-computer system and a data base. If the applicant does not provide a statement from the USRLE, then information about making adjustments to the USRLE regarding legal entity reorganisation is presented to RAPT by the Federal Tax Service by means of an interdepartmental request.

A legal norm eliminating (in certain cases) the need for confirming payment of government customs will come into effect on January 1st, 2013. This law states that if a document is not attached confirming customs payment, information about customs payment shall be provided to RAPT by an interdepartmental request from the Federal Treasury to an application for government registration of transferring the exclusive rights of the enumerated types of intellectual property and means of individualisation without any agreement or the government registration of a few agreements (in particular, the alienation or claiming of the exclusive rights to an invention, useful model, an industrial sample, granting their right to use, etc.) RS