VAT on electronic services provided by foreign companies to Russian customers
Electronic services provided by foreign companies in Russia are subject to VAT. In order to exercise tax control over such transactions, the tax legislation provides for the obligation to tax register foreign organizations that are providers of electronic services or intermediaries involved in settlements.Read more
State Duma of the Russian Federation adopted in the first reading the draft law "On Amending the Federal Law "On State Registration of Legal Entities and Individual Entrepreneurs" and Article 3 of the Federal Law “On Limited Liability Companies"
The draft law allows founders (members) to liquidate a non-functioning organization in a simplified manner. According to the information from the Ministry of Economic Development, which developed this bill, at the moment the procedure for liquidating a business takes up to a year, and the new procedure can reduce the liquidation process by almost three times - up to 3.5 months.
If the draft law is finally adopted, the law may enter into force on July 01, 2023.
The draft law proposes to introduce a simplified procedure for excluding small and medium-sized businesses from the Unified State Register of Legal Entities.
Members of limited liability companies will be able to decide on the termination of activities and send an application for exclusion from the Unified State Register of Legal Entities to the registering authority, and the mere resolution of members will be sufficient.
To submit an application, it will be possible either to notarize the authenticity of the signature of the legal entity members, or send an application to the registering authority in the form of an electronic document signed with enhanced qualified electronic signatures of all members.
The registering authority, within five business days from the date of receipt of the application, will decide on the upcoming exclusion and make an entry about the upcoming exclusion of the legal entity from the Unified State Register of Legal Entities, if at the time of making such a decision the following conditions are simultaneously met:
information about the legal entity is included in the unified register of small and medium-sized businesses;
a legal entity is not a VAT payer or is exempt from its calculation and payment;
the registering authority does not have information on the existence of settlements with creditors that have not been completed by the legal entity;
the Unified State Register of Legal Entities does not contain information about the legal entity in respect of which an entry was made about its unreliability;
the legal entity does not have an unfulfilled obligation to pay taxes, fees and other obligatory payments;
the legal entity does not own real estate and vehicles;
the legal entity is not in the process of liquidation, reorganization, exclusion from the Unified State Register of Legal Entities by decision of the registering authority.
In case of non-compliance with any of these conditions, the registering authority will notify applicants that it is impossible to exclude the legal entity from the Unified State Register of Legal Entities.
The decision on the forthcoming exclusion shall be published in the press.
Objections with supporting documents attached may be sent or submitted to the registering authority no later than three months from the date of publication of the decision on the forthcoming exclusion.
If no objections are received within the prescribed period, the legal entity will be excluded from the Unified State Register of Legal Entities.
A draft law has been published establishing control over compliance with anti-crisis measures and liability for their violation
According to the draft Federal Law "On Amendments to Article 4.2 of the Federal Law "On Measures to Influence (Counteract) the Unfriendly Actions of the United States of America and Other Foreign States" and Article 2 of the Federal Law "On State Control (Supervision) and Municipal Control in the Russian Federation" (prepared by the Ministry of Finance of Russia, project ID 02/04/09-22/00131470) (not included in the State Duma of the Federal Assembly of the Russian Federation, text as of September 16, 2022), it is planned:
- From July 01, 2023, to empower the Federal Tax Service and the Federal Customs Service with the authority to exercise control in the field of anti-crisis measures, in particular, to request documents for control. The control procedure and the procedure for submitting documents will be approved by the Government.
- To grant the authority to the Central Bank to control banks, non-credit financial institutions, etc.
- To establish penalties for violating the procedures established by anti-crisis measures: 20% to 40% of the amount of the transaction carried out with violations. If the transaction does not have a monetary value, the fine will be up to RUB 30 thousand, depending on the subject of the offense.
The Government Commission allowed the implementation of transactions for the alienation of real estate to foreign legal entities associated with unfriendly states
The Government Commission for the Control of Foreign Investments in the Russian Federation decided to allow residents to carry out (execute) transactions (operations) for the alienation of real estate:
to foreign legal entities associated with unfriendly states;
to legal entities that are under the control of foreign entities associated with unfriendly states, regardless of the place of their registration or the place of their primary business activities.
The permit is valid without a time limit.
Extract from minutes No. 85 of the meeting of the subcommittee of the Government Commission for the Control of Foreign Investments in the Russian Federation dated September 07, 2022 (communicated by the Ministry of Finance of Russia on September 13, 2022 No. 05-06-10/ВН-46769)
Conclusions from judicial practice on the payment of the employee's working time
As indicated by the courts of appeal and cassation (Resolution No. 88-15334/2022 of the Third Court of Cassation of General Jurisdiction dated September 05, 2022 in case No 2-52/2022), if an employee is forced to perform labor functions during a lunch break due to the inability to leave the workplace due to the peculiarities of the labor process, this time shall be recognized as working and shall be paid, regardless of whether the employer has officially established continuous production.
Specifics of the tax accounting of funds granted in accordance with the legislation on the protection of consumer rights
As follows from the conclusions set out in Letter No. 03-11-11/80779 of the Ministry of Finance of Russia dated August 18, 2022, in a number of cases, a legal entity is entitled to payments granted in accordance with consumer protection legislation, for example, when public associations of consumers (their associations, unions) or local governments act in protection of consumer rights, they have the right to give a fine in the amount of 50% of the unfulfilled requirement on the basis of Part 6, Article 13 of Law No. 2300-1 of the Russian Federation dated February 07, 1992 "On Protection of Consumer Rights"
According to the agency, in accordance with Clause 1, Article 346.15 of the Tax Code of the Russian Federation (hereinafter referred to as the Code), taxpayers applying the simplified taxation system (hereinafter referred to as the STS) shall take into account income determined in the manner established by Clauses 1 and 2, Article 248 of the Code when determining the object of taxation. According to Clause 1, Article 248 of the Code, income includes income from the sale of goods (works, services) and property rights and non-operating income, determined in accordance with Articles 249 and 250 of the Code. At the same time, the income specified in Article 251 of the Code is not taken into account. Due to the fact that the sums of money awarded by a court decision in favor of the plaintiff are not named in Article 251 of the Code, these funds shall be taken into account as non-operating income for tax purposes for tax paid in connection with the application of the STS.
The Central Bank of Russia has published clarifications regarding the application of certain existing financial restrictions
1) Banks do not have the right to conduct operations, the implementation of which must be carried out only with the permission of the Government Commission. If such permission exists, the Bank shall have information about its publication, or a copy
2) The current restrictions on transactions stipulated by the Decrees of the President, exceeding RUB 10 mln per calendar month or the equivalent in foreign currency, shall apply, among other things, to payment through a letter of credit.
3) The current restrictions do not prohibit non-residents from repaying debt and interest to residents under loan agreements
4) Residents have the right to issue foreign currency loans to non-residents, if the non-resident is not a person from the country committing unfriendly acts.
5) A resident's application for opening a type "C" account in the name of a non-resident may be submitted to any bank, and not only to the one in which the resident has an account.
Draft amendments to the Federal Law on Foreign Investments
Since August 17, the State Duma has been considering a draft law on amending the Federal Law "On Foreign Investments in the Russian Federation" and the Federal Law "On Protection of Competition". The main purpose of the draft law is to strengthen control over foreign investment.Read more
A new Presidential Decree has been published imposing additional restrictions on the corporate sector
In accordance with Decree No. 618 of the President of the Russian Federation dated September 08, 2022 “On Special Procedure for the Implementation (Execution) of Certain Types of Transactions (Operations) Between Certain Persons”, a special procedure has been established between residents and non-residents from unfriendly countries for transactions (operations) entailing, directly and (or) indirectly, the establishment, change or termination of the rights of ownership, use and (or) disposal of shares in the authorized capital of limited liability companies (with the exception of credit institutions and non-bank financial institutions) or other rights that make it possible to determine the conditions for managing such limited liability companies’ liability and (or) conditions for their entrepreneurial activities. From September 08, 2022 such transactions may be carried out (executed) only on the basis of permits issued by the Government Commission for Control over Foreign Investments in the Russian Federation and, if necessary, containing conditions for the implementation (execution) of such transactions (operations). As an exception, only certain transactions with shares in the authorized capital of users of subsoil plots are defined.
The Bank of Russia has confirmed the prohibition on the dividends transfer in foreign currency on Russian companies` shares to residents` foreign accounts
According to the conclusions from the Official Explanation of the Bank of Russia dated 05.09.2022 No. 9-OR, subparagraph "b" of paragraph 1 of Decree No. 430 prohibits residents from enlisting foreign currency received in the form of shares dividend of Russian joint-stock companies to accounts opened in banks and other financial market organizations located outside the territory of the Russian Federation. This prohibition extends both to enlisting foreign currency received in the form of Russian joint-stock companies shares dividend to residents` foreign accounts as a result of the subsequent transfer of such funds previously enlisted to the Russian credit institution account, and to enlisting such foreign currency directly to foreign accounts of residents, avoiding the Russian credit institution account. The authorized bank, as a currency control agent, in the case of transferring funds in a foreign currency by a resident from his accounts opened with this authorized bank to foreign banks accounts, must verify, on the basis of information provided by the resident, whether the transferred funds are dividends or not. The relevant information can be obtained by an authorized bank from a resident in any form.
If the specified funds are received as a result of shares dividend payment of Russian joint-stock companies, the authorized bank refuses to carry out such operation as contrary to the requirements of subparagraph "b" of paragraph 1 of Decree No. 430.