close
Share with your friends

Russia

Government and institution measures in response to COVID-19.

Government and institution measures in response to COVID-19.

Return to homepage  |  Last updated: 3 June, 2020

Tax measures – Direct and Indirect

(e.g. payment deferrals, rate reductions…)

Click here to see a comprehensive summary of jurisdictional tax measures and government reliefs in response to COVID-19.

Support of the systematic companies

List of the systematic companies is published at the website of Government of RF

The systematic companies can receive special measures of state support:

  • State (via VEB.RF) guaranty for the interest-free loans supporting employment: the company can get 6 months interest-free loan in amount of minimal monthly salary for each employee in case the company does not cut the stuff and keeps people employed
  • Special subsidy for the working capital loans: the state subsidizes part of the interest rate in amount of the “Key central bank rate” and provides (via VEB.RF) the state guaranty covering 50% of the loan amount
  • Tax deferrals, state guaranty and direct subsidies for selected systematic companies (Direction #651 of the Government of RF)

In order to apply for support in accordance with the 651 Direction, the company has to:

  • Belong to the Russian shareholders (individual exceptions are possible)
  • Have no overdue taxes and tax-like liabilities
  • Pass through stress-test and perform analysis of the financial standing and forecast

Based on results of the stress-testing the company are qualified according to their risk level to baskets: low risk, average risk, high risk, extremely high risk

The companies qualified in two latter baskets can apply for the state support, and have to perform the perform analysis of the financial standing and forecast

Financial analysis

The company applying for the state support has to provide the detailed cashflow forecast for next 2 years. Additionally it has to develop the recovery and turnaround plan and the debt restructuring strategy.

Based on results of the analysis the company calculates cash gaps and required amounts of the state support

Decision-making process

Application of the systematic company goes through 4 levels of check, including confirmation of the forecast and financial standing by the VEB.RF

Employment-related measures

(e.g. state compensation schemes, training…)

Labor policy

  • According to the President’s decree, in Russia was established paid non-working period until 30 April 2020 for the employees except for those who are employed in specific organizations (the "SO") (constantly operating organizations, medical and pharmacy organizations, organizations providing people with food and essential commodities, etc.)
  • The measures indicated in the President’s decree could be amended/specified by the decrees of the Heads of the Russian’s regions based on the epidemiologic situation in the particular region. For instance, in Moscow, the employees are entitled to go to office provided the employers ensure the employees’ safety. Therefore, the employment relations in Russia depend on the particular region
  • Remote work (home office) and shorter work week (subject to employees' consent or without the employees’ consent in exceptional justified cases with the prior 2-month employees’ notification)
  • Declaration of downtime (temporary suspension of the work) by SO for reasons of an economic, technological, technical or organizational nature. The employees are paid 2/3 of overage or fixed monthly basic salary during the downtime period

Economic stimulus measures

(e.g. loans, moratorium on debt repayments…)

Monetary policy

  • On 24 April 2020, the Bank of Russia cut the key rate by 50 bp to 5.50% per annum.
  • The Bank of Russia has announced that it is monitoring the situation in financial markets closely. On 10 March and 13 March, it engaged in repo auctions of 500 billion rubbles to ensure sufficient liquidity in the banking sector. It has also engaged in selling foreign currency in the domestic market and foregone scheduled domestic forex purchases. Finally, the central bank has eased some banking regulations, such as loan risk weightings, to ensure that banks maintain lending to producers of pharmaceuticals and medical equipment

Banking regulations

  • Central bank permitted the banks not to increase loan loss provisions if the loan was restructured due to coronavirus consequences
  • Reduction of the regulatory pressure on the financial institutions (prolongation of the deadline for fulfilment of the orders issued by the Bank of Russia, for submission of the mandatory reports, etc.)

Incentives to companies to continue operating

  • Deferral of loan payments for up to 6 months to SME in hard-hit industries (leisure and hospitality, transportation, travel, etc.)
  • Six-month 0% interest loans to businesses in hard-hit industries to pay salaries to the employees
  • 2% interest loans to resumption of activities to businesses in hard-hit industries or in industries requiring support to resume its activities
  • 5% interest loans to 'systemically important' companies (list of these companies is adopted by the Government)
  • 8,5% interest loans to all SME
  • Subsidies to the travel operators to return the funds to the tourists and reimburse travel operators’ expenses to return the tourists from the foreign countries due to the coronavirus outbreak
  • Each Russian region may provide the supporting measures that will apply to the companies of this particular region, e.g. Moscow key measures: i) 8% interest loans to the priority sectors’ SMEs incorporated less than 3 years ago; ii) subsidies to the SMEs exporters, franchisees; iii) partial compensation of expenses for purchase of new equipment (SMEs – hotels and residents of Moscow innovation cluster); iv) partial compensation (up to RUB 700,000 until 31.12.2020) to SMEs for promotion of their commodities and services on online markets; for payment of services of online food delivery services

System-wide measures

  • Creation of a financial reserve in amount up to RUB 300 billion established to support the economy and compensate quarantined citizens for lost income
  • Non-application of penalties for certain government contracts in case of violation of obligations by the contractor due to the consequences of the spread of new coronavirus disease
  • A six-month moratorium on initiating bankruptcy proceedings in respect of the companies and individual entrepreneurs in hard-hit industries (leisure and hospitality, transportation, travel, etc.);  'systemically important' companies; strategic companies
  • Deferral of lease payments under real estate lease agreements until 1 October 2020 for companies and individual entrepreneurs in hard-hit industries (leisure and hospitality, transportation, travel, etc.). The lessee is entitled to a decrease in lease payments for the quarantine period if the lessee could not use the premises due to quarantine measures
  • Covid-19 measures could trigger contract’s force-majeure clause if these measures indeed impact affected party’s ability to perform its contractual obligations
  • Suspension of the inspections to be conducted in respect of SME by the state and municipal authorities according to the Federal Law as of 26.12.2008 No. 294-FZ “On protection of the legal entities in the course of state and municipal supervision” until 31 December 2020
  • Amendments to the corporate legislation in respect of joint-stock companies (conducting of the shareholders’ meetings in a remote environment, deferral of the deadlines for submission and disclosure of the annual and intermediary consolidated financial statements, deferral of the mandatory internal audit for the PJSC until 1 January 2021, etc.)

Customs Measures

Duty relief

  • Exemption from import customs duties for personal protective equipment, disinfectants, diagnostic reagents, certain types of medical equipment and materials. Effective until September 30, 2020. The relevant Decision of the Eurasian Economic Union shall apply to legal relations arising from March 16, 2020

Customs audits

  • Commission of the prime minister: suspension of customs audits (planned on-site customs inspections) until 1 May 2020. With the exception of unscheduled inspections, the basis of which is harm to life, health of citizens, checks which result in the issuance of permits, licenses, etc.

Export

  • Temporary restrictions on the export of medical masks, gloves and goggles, biohazard suits, medical robes, antiviral medicines, gauze and some other products. Effective until June 1, 2020. 

Measures to ease the lockdown

  • Stores are closed, except grocery stores and pharmacies, until further notice. Restaurants may provide delivery services only. Until further notice; Finished school year except for final and first year classes.

Contact us

Tax: Anna Voronkova – avoronkova@kpmg.ru
Restructuring: Andrei Mitrofanov – amitrofanov@kpmg.ru
Legal: Irina Narysheva – inarysheva@kpmg.ru