Overview of legislation changes - March 2023

Overview of the most important legislation changes – March 2023

Profit tax

Correction period for errors in profit tax

In general, errors (distortions) that have overstated revenues or understated expenses in tax accounting should be corrected in the period to which they relate (paragraph 1 of article 54 of the Tax Code of the Russian Federation). Errors in the declaration can be corrected in the current period if the following conditions are met:

the declaration for the current period is “profitable”, not “loss-making”;
the errors made led to an overpayment of tax;
as of the date of submission of the declaration for the current period, no more than three years have passed since the payment of tax on the declaration with an error. The possibility of recalculation of the tax base in the period of error detection does not depend on the financial result obtained in the period of its occurrence. The value of the error’s impact on the state of settlements with the budget in this or subsequent periods before the period in which the recalculation is claimed is significant. For example, if a loss was incurred in the period of error, and in subsequent periods, an overpayment of tax occurred because the amount of the carried forward loss was understated due to the error, the error can be corrected in the period in which it was identified. To correct errors, the amount of unrecorded expenses and overestimated revenues must be reflected in lines 400-403 of Appendix N 2 to sheet 02 of the declaration for the current period.

How can the norm of paragraph 1 of article 54 of the Tax Code of the Russian Federation be applicable to unrecorded expenses due to receiving primary documents in late periods? According to the Ministry of Finance (letter of April 13, 2016 N 03-03-06/2/21034, letter of April 6, 2020 N 03-03-06/2/27064), failure to reflect expenses that arose in previous tax periods, but were identified in the current reporting (tax) period as a result of receiving primary documents, for tax purposes is a distortion of the tax base of the previous tax period; therefore, the provisions of article 54 of the Tax Code of the Russian Federation apply to these operations. That is, these expenses can be taken into account in the current tax period if the above conditions are met. It will be necessary to confirm the date of receipt of such documents in the current period. It is not recommended to “artificially” transfer expenses to other periods without reason in order not to show losses in the declaration.

Paragraph 10 of the Review, approved by the Letter of the Federal Tax Service of July 28, 2021 No. BV-4-7/10638; Letter of the Ministry of Finance of August 8, 2022 No. 03-03-06/1/76519.

Accounting for exchange rate differences

By the end of 2022, it became clear that the temporary procedure for accounting for exchange rate differences for liabilities expressed in foreign currency, introduced by Law No. 67-FZ, was not ideal. Federal Law No. 523-FZ of December 19, 2022 had to smooth out the inconsistency in accounting for positive and negative exchange rate differences for liabilities not repaid as of December 31, 2022.

Federal Law No. 523-FZ of December 19, 2022 gives organizations the right not to include in the expenses of 2022 the amounts of negative exchange rate differences from the revaluation of receivables and liabilities not repaid as of the end of 2022 (new sub-clause 6.2 of clause 7 of article 272 of the Tax Code in the version of Law No. 523-FZ). In this case, the specified expenses will be considered deferred until the debt is repaid. If an organization decides to defer expenses, it should:

make changes to its accounting policy for tax purposes, according to which the negative exchange rate difference that arose in 2022 in relation to an outstanding currency receivable or liability as of December 31, 2022, is recognized as an expense only on the date of its termination (fulfillment);
notify the tax inspection in an arbitrary form of the choice of such an accounting option for the specified negative exchange rate differences no later than the submission of the tax declaration for 2022 (i.e., by March 27, 2023, inclusive). The decision made cannot be changed.

Alternatively, according to the letter of the Federal Tax Service of Russia dated December 26, 2022, No. СД-4-3/17561@, the financial result for the profit tax for 2022 must be adjusted by combining exchange rate differences in relation to each outstanding debt as of the end of 2022, as a result of which the excess of negative exchange rate differences over positive ones is recognized as expenses, and the excess of positive differences over negative ones is carried over to the future.

Regardless, at the end of the year, it was necessary to recalculate exchange rate differences. The Ministry of Finance warned that organizations that do not comply with the temporary rules for accounting for exchange rate differences for 2022-2024 are at risk of fines for violating the rules for accounting for tax revenues and expenses. For organizations, the fine is up to 10,000 rubles (Article 120 of the Tax Code of the Russian Federation) + a fine for underpayment of tax.

Law No. 523-FZ of December 19, 2022; Letter of the Federal Tax Service of Russia dated December 26, 2022, No. СД-4-3/17561@

Exemption of debts under a loan agreement

Retrospectively, forgiven debts under a loan agreement were excluded from income, for which the lender as of March 1, 2022, was a foreign company or foreign citizen. In 2022, the income could be excluded from both the principal amount of the debt and the unpaid interest.

If after March 1, a foreign lender transferred the right to demand a debt to a Russian company or citizen of the Russian Federation, and someone had already forgiven the debt by December 31, 2022, the amendments also apply, and there will be no taxable income.

The amount of such forgiven debt is included in Appendix No. 1 to the profit tax declaration for 2022 with income code 616.

In Appendix No. 1, it is necessary to indicate not all incomes exempted from taxation under Art. 251 of the Tax Code of the Russian Federation, but only those for which there is a code.

Letter of the Ministry of Finance of October 18, 2022, No. 03-03-06/1/100754

Accounting for material assistance

The expenses of an organization for material assistance to mobilized citizens can be accounted for in non-sales expenses. Such assistance is exempt from personal income tax and insurance contributions. The action is legitimate and was introduced retrospectively from January 1, 2022.

The condition is that the assistance must be targeted to an individual and requires supporting documents confirming the expenses: an application (which can be written by a relative), a copy of the summons or contract. The possibility of payment must be provided for in the organization’s local act.

Federal Law of November 21, 2022, No. 443-FZ, para. 92, Art. 217 and Art. 265 of the Tax Code of the Russian Federation.

The list of documents for confirming the duration of a business trip has been clarified

In the absence of travel documents to confirm a business trip, the duration of the trip is confirmed by documents related to the rental of accommodation, namely a contract, a cash receipt, or a billing statement. Previously, in paragraph 3 of clause 7 of the Regulations on the features of sending employees on business trips, documents confirming the provision of hotel services were specified as “receipt (voucher) or other documents confirming the conclusion of a contract for the provision of hotel services.”

Resolution of the Government of the Russian Federation dated March 1, 2023 No. 329

New deadlines for submitting the Profit Tax Declaration: for the 1st quarter of 2023, the declaration must be submitted no later than April 25th.

VAT

Starting from January 1, 2023, the procedure for VAT refund has changed. There will no longer be a familiar procedure for returning VAT in cash. The amounts subject to reimbursement are included in the single tax payment (ENP). Such amounts of ENP will form the ENP balance on the day the tax authority makes a decision on VAT reimbursement. The mechanism for VAT refund from Article 176 of the Tax Code of the Russian Federation has been removed. The taxpayer can return a positive ENP balance, which includes the reimbursable VAT, to their settlement account under the general rules for returning a positive balance (Article 79 of the Tax Code of the Russian Federation). To do this, it is necessary to write an appropriate application. Its form and format are approved by the order of the Federal Tax Service dated November 30, 2022 No. ED-7-8/1133@ (paragraph 1 of Article 79 of the Tax Code).

Paragraph 1 of Article 11.3 of the Tax Code of the Russian Federation

Anti-crisis measures

Until 2030, the moratorium on scheduled inspections under the Law on State Control and the Law on Protection of the Rights of Legal Entities and Individual Entrepreneurs has been extended. Exceptions include:

enterprises and organizations whose control objects belong to the categories of extremely high and high risk;
hazardous production facilities of II hazard class;
hydraulic structures of II class;
inspections under the Law on Protection of the Rights of Legal Entities and Individual Entrepreneurs without a risk-based approach. Until 2030, the moratorium on scheduled inspections of state and municipal kindergartens, primary and secondary schools has been extended if their control objects have a category of extremely high and high risk. Instead of scheduled inspections, one-day preventive visits may be carried out. An additional control measure has been introduced for the period up to 2030 – a preventive visit on the instruction of the President, the Prime Minister, or his deputies. The subject of the visit cannot refuse such a visit (unlike a regular preventive visit).

Government Decree of the Russian Federation No. 372 dated March 10, 2023.

Drafts

The Ministry of Foreign Affairs and the Ministry of Finance have proposed suspending the operation of agreements on the avoidance of double taxation with “unfriendly countries”. If the proposal is supported, the application of reduced tax rates at the source (tax exemptions) in relation to income covered by the agreements will be suspended from the date of the decree.

Personal Income Tax

The possibilities and consequences of raising personal income tax to 18 percent for individuals with an income of over 50 million rubles per year are being assessed.

Letter of the Federal Tax Service of March 13, 2023 No. KV-4-1/2801

Unified Tax Account

The President instructed the Federal Tax Service to organize feedback with taxpayers and solve all problems in the shortest possible time by April 15. The Federation Council proposes to freeze the mechanism of the unified tax account until at least January 1, 2025. The moratorium would allow for further development of the UTA system and help solve accumulated problems.

The unified account creates many problems for companies, but regional leaders also complain. They reported a decrease in revenues due to the introduction of the UTA, under which tax authorities are entitled to offset debts for federal taxes at the expense of local and regional taxes. For example, PIT debts are paid by offsetting them with VAT. In addition, regional budgets suffer from late payment of taxes on the 28th day and the lack of information about upcoming revenues.

The Federation Council believes that Personal Income Tax should be excluded from the unified tax account. The Chairman of the Federation Council, Valentina Matviyenko, stated that such a decision has already been practically made. Because Personal Income Tax is now part of the UTA, both companies and the budget are suffering. Accountants find it difficult to adjust to the new complex rules, leading to systematic errors in the payment of Personal Income Tax. As for the budget, it has been found that this tax is labor-intensive to distribute among budgets.

Other

2023 Accounting Policy

There are few changes in legislation that require reflection in the accounting policy for 2023. The main ones are the transition to the Uniform Payment Document (ENP) and the merger of the Pension Fund and the Social Insurance Fund into a single Pension and Social Insurance Fund. In connection with this, new sub-accounts need to be added to the chart of accounts: a sub-account on account 68 for the unified tax account and a sub-account to account 69 for contributions to the Federal Tax Service at a single rate.

Form P-6

Starting with the report for January-March 2023, an updated form of information on financial investments and obligations is submitted. The circle of respondents in the report has been adjusted: the condition of having financial investments or borrowed funds has been removed.

Rosstat Order No. 536 of July 29, 2022

The court allowed inspections not to accept the declaration on the last day of the quarter

The Federal Tax Service refused to accept reporting, and the court supported them in this.

Decision of the Supreme Court dated February 1, 2023 No. 305-ES22-25615

Unified tax payment

The tax service indicated the rules for bringing the OKTMO code in the payment document. “0” is indicated in field “105”. If the code is reflected in 8 digits, the money will still be accounted for on the unified tax account.

Unified tax payment deadline

Starting from 2023, a single deadline for payment of all taxes is introduced. This deadline will be the 28th of the corresponding month. In order not to miss the payment deadline, the company must ensure that there are sufficient funds in its account by the specified moment to pay a particular tax. If there are insufficient funds in the organization’s ENP, the necessary funds must be transferred no later than the maximum tax payment deadline.

New edition of Art. 287 of the Tax Code of the Russian Federation.

Tax	Deadline for payment in 2022	Deadline for payment in 2023
VAT	In equal installments no later than the 25th day of each of the three months following the end of the tax period	In equal installments no later than the 28th day of each of the three months following the end of the tax period
Profit tax	Advance payments based on the results of the reporting period – no later than 28 calendar days from the end of the corresponding reporting period.
	Monthly advance payments – no later than the 28th day of each month of this reporting period.
	Tax for the tax period – no later than March 28th of the year following the end of the tax period.
Tax on profit paid to foreign organizations	No later than the day following the day of payment (transfer) of funds to a foreign organization or other receipt of income by a foreign organization	No later than the 28th day of the month following the month of payment (transfer) of funds to a foreign organization or other receipt of income by a foreign organization
Simplified tax	Advance payments of tax for the 1st quarter, 1st half of the year, and 9 months – no later than the 25th day of the month following the reporting period.	Advance payments of tax for the 1st quarter, 1st half of the year, and 9 months – no later than the 28th day of the month following the reporting period.
	Year-end tax:	For organizations, no later than March 28 of the year following the reporting year.
	For organizations, no later than March 31 of the year following the reporting year.	For individual entrepreneurs (IEs), no later than April 28 of the year following the reporting year.
	For IEs, no later than April 30 of the year following the reporting year.
Personal income tax withheld by tax agents	Repeatedly, no later than the day following the day of payment of income to the taxpayer.	The amount of the calculated and withheld tax for the period from the 23rd of the previous month to the 22nd of the current month, no later than the 28th day of the current month;
Personal income tax withheld by tax agents		The amount of the calculated and withheld tax for the period from January 1 to January 22 – no later than January 28; for the period from December 23 to December 31 – no later than the last working day of the calendar year.
Insurance premiums	No later than the 15th day of the following calendar month	No later than the 28th day of the following calendar month
Corporate property tax	For reporting periods – no later than the last day of the month following the end of the reporting period; For the tax period – no later than March 1 of the year following the end of the tax period.	For reporting periods – no later than the 28th day of the month following the end of the reporting period; For the tax period – no later than February 28 of the year following the end of the tax period.
Vehicle tax	For reporting periods – no later than the last day of the month following the end of the reporting period; For the tax period – no later than March 1 of the year following the end of the tax period.	For reporting periods – no later than the 28th day of the month following the end of the reporting period; For the tax period – no later than February 28 of the year following the end of the tax period.
Land tax	For reporting periods – no later than the last day of the month following the reporting period; For the tax period – no later than March 1 of the year following the tax period	For reporting periods – no later than 28th day of the month following the reporting period; For the tax period – no later than February 28th of the year following the tax period

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