Support of enterprises in the context of coronavirus pandemic: legislative developments
The main bill regulating the adoption of these amendments is bill № 862653-7 «On amendments to parts one and two of the Tax Code of the Russian Federation and to Certain Legislative Acts of the Russian Federation», which is being considered by the Council of Federation.
According to the text of the bill, the Government of the Russian Federation is vested with special powers to adopt tax regulations for the period from January 1 to December 31, 2020 (inclusive) in the following fields:
- the terms of tax control measures;
- terms of taxation, fees, contributions, sending claims for payment;
- terms for providing of tax and accounting reports and other documents and responsibility for non-provision of such reports;
- terms, procedure, conditions for tax deferral (installment plan), insurance premiums, penalties, fines, interest;
- features of methods for ensuring the fulfillment of tax obligations’ application
It is noted that acts of the Government in these matters will take precedence over the provisions of the Tax Code of the Russian Federation. In addition, the allocation of «preferential» categories of taxpayers will take into account the main types of economic activities as of 01.01.2020.
Insurance premiums for small and medium enterprises
The bill provides for the procedure and form of contributions for small and medium businesses from April 1, 2020:
- the amount of payments up to the minimum wage (on the 1st day of the month) is taxed at a rate of 22%, and the amount in excess of the minimum wage at a rate of 10%;
- Since 2021, the contribution rates for payments above the minimum wage, but until the limit for the base for calculating contributions is reached, will be similar to those that are applied today to the base in excess of this limit: 10% for pensions, 5% for compulsory health insurance, 0% on compulsory social insurance in case of temporary disability. However, social accident insurance is not covered by these developments.
Deferrals for small and medium enterprises
The Decree of the Government of the Russian Federation «On measures ensuring the sustainable development of the economy» provides for corresponding deferrals for legal entities listed in the unified register of small and medium-sized enterprises and operating in sectors of the Russian economy that are most affected by the spread of COVID-19 as of March 1, 2020:
- the term for paying income tax, simple taxation system (STS) and single agricultural tax for 2019 is extended for 6 months;
- the term for paying taxes (advance payments), except for VAT, for reporting periods falling to 6 months is extended per 1st quarter of 2020
- the term for the payment of taxes (advance payments), except for VAT, for reporting periods falling for the half year (2nd quarter) of 2020 is extended for 4 months.;
- the terms for the payment of advances for transport, land and property taxes for organizations for the 1st quarter of 2020 are extended until 30.10.2020; the terms for the 2nd quarter of 2020 until 30.12.2020.
Suspension in debt enforcement
According to the letter of the Federal Tax Service of March 25, 2020, the debt enforcement from small and medium businesses and organizations listed as the most affected sectors to which these support measures will be extended is suspended.
Tax Audit Measures
According to the Government Decree «On measures ensuring the sustainable development of the economy» in the field of tax audits, the following measures are introduced:
- Suspension of the decision on the appointment of tax audits and inspections in the field of transfer pricing, as well as the suspension of inspections that had already begun until 01.06.2020;
- Suspension of the terms provided for by the Tax Code of the Russian Federation related to these tax audits, as well as the procedures provided for in Articles 100, 101, 101.4 of the Tax Code until 01.06.2020;
- Suspension of audits in the field of currency control until 01.06.2020, if the period of limitations for prosecution does not expire before that date;
- Three-month extension of the term for tax reporting (except for VAT returns), that should be provided is March-May, 2020, as well as the suspension of decisions on suspending of accounts operations because of the failure in providing declarations or non-delivering of receipts on submitting of documents via telecommunicating services until 01.06.2020;
- Extension the terms for provision of information (documents) on the requirements of the tax authorities, if the deadline for their submission is March-May 2020 by 20 business days; Exemption from liability under article 126 of the Tax Code for failure to provide documents during this period.
- The terms for sending claims for payment and making decisions on the collection of taxes, fees, insurance premiums, penalties, fines, and interest are extended for six months
Extension of reporting deadlines
A joint letter of the Ministry of Finance of the Russian Federation and the Federal Tax Service dated 03.03.2020 clarifies the issues of the terms for submitting annual accounting (financial) statements for 2019: the deadline for submitting a mandatory copy of the statements in 2020 is the first business day following March 31, 2020, i.e. April 6, 2020
In addition, according to the Government Decree «On measures ensuring the sustainable development of the economy», tax reporting can be submitted 3 months later and the term for preparation of documents and information in response to tax requirements received from 01.03.2020 to 01.06.2020 is extended for 20 days.
Deferred tax payments
The government proposes to adopt new rules for granting deferrals or installments for tax payments, under which it is proposed not to charge penalties for the period from March to May 2020 for taxes due in 2020 for systemically important enterprises.
According to the draft law, taxpayers will have the right to tax deferral, in case if there is at least one of the following indicators:
1) Reduce of revenue by more than 10 percent;
2) Reduce of revenue from the sale of goods (works, services) from operations subject to zero percent rate of VAT, by more than 10 percent;
3) Obtaining damages with income tax returns for the reporting periods of 2020, provided that there was no damage for 2019;
4) Listing in the register of small and medium businesses as of March 1, 2020 and the application of a special tax regime
An application for deferral or installment plan is considered in case of its’ submission before December 1, 2020. The decision granting tax deferral cannot be taken by the tax authority if the interested person, except of persons listed in the register of small and medium businesses as of 01.03.2020, had a decrease in the level of employment. This decrease takes place with a decrease in the number of insured persons by more than 10 percent.
Measures taken by the Bank of Russia
Bank of Russia letters dated 03/27/2020 stipulate measures to support lending, including the payment of salaries to employees, and reducing the burden associated with servicing existing loans by the business.
Bank of Russia proposes to extend a number of measures adopted earlier for maintaining of lending to organizations of small and medium businesses, transport and tourism (including the hotel business), to an additional list of industries (catering; activities in the field of art, sports and leisure and entertainment; activities on the organization of conferences and exhibitions; educational services; activities for the leasing of own or leased non-residential buildings and premises, retail trade in non-food goods; dental practice).
Bank of Russia provides credit institutions with the opportunity not to degrade the quality of debt servicing until September 30, 2020, regardless the assessment of the borrower’s financial situation for loans to organizations from the sectors listed above restructured in connection with the pandemic. Bank of Russia also gives credit institutions the opportunity to make decisions by September 30, 2020 on non-deterioration of the financial position of the borrower’s assessment in order to creating reserves for losses, in case if the deterioration of the financial position of the borrower occurred after March 1, 2020 due to the spread of the pandemic.
Acts of sub-federal governments through the Example of Moscow
In 2020 the highest executive bodies of state power of sub-federal governments of the Russian Federation are entitled to issue normative legal acts providing for the extension of the terms for paying taxes provided for by special tax regimes from January 1 to December 31, 2020. Thus, a number of measures have already been introduced aimed at supporting small and medium enterprises in Moscow, in accordance with the Government of Moscow Decree No. 273-PP of March 31, 2020
Among these measure
- The term for advance payments for the 1st quarter of 2020 on corporate property tax and land tax for organizations working in the field of public food, tourism, culture, sports, leisure and hotel business was extended until December 31, 2020 (inclusive);
- The term for trade fee payment was extended until December 31, 2020.
- Organizations leasing land and non-residential buildings from city of Moscow that have suspended their activities for the period of high-alert regime are exempted from rental payments (for the period of temporary activity’s suspension);
- The rental deferral for April, May and June to companies operating in the hotel services, catering and tourism sectors and renting land and non-residential facilities near the city is provided. It will be valid until December 31, 2020. A similar deferral will be provided by city enterprises and institutions leasing land plots and non-residential objects.
VALEN monitors the current situation and as well as all the legislative measures and initiatives taken under pandemic conditions.