In accordance with the speeches of President Vladimir Putin (of 25 March, 8 April, 15 April 2020) some measures aimed to help business in the time of crisis caused by coronavirus were announced. Some of them have been already adopted by the Government (which is granted a special power to adopt regulations regarding tax matters for a period of 01.01.2020-31.12.2020) and implemented in legislation:
Support to the industries at risk
The list of areas most affected by the crisis is adopted by the Government and includes aviation, tourism, sport, culture and other industries.
- All the companies operating in spheres most affected by the crisis have the right to apply a tax deferral (from 3 months to 1 year)/ instalment (from 3 to 5 years) regarding taxes, advance payments and insurance contribution that fell due in 2020 (excluding VAT, MET, tax on additional income from hydrocarbon production and excise duty). It also covers companies that are strategic, of system importance, city-forming not operating in affected spheres (except insurance contributions and subject to targeted decisions by the Government).
- Companies are entitled to tax deferral/ instalment when at least one of a list of specified conditions is fulfilled (e.g. reduced earnings of 10%, losses).
- Individual entrepreneurs/ small and medium-sized businesses operating in spheres most affected by crisis are entitled to a one-time payment-in-instalments plan (for a period of up to a year and no later than 1 August 2021) in relation to debt collection regarding taxes, fees and social security contributions in the amount of RUB 15 mln.
- Individual entrepreneurs operated in spheres most affected by the crisis have a right to apply reduced pension contributions for 2020.
Support to the small and midsized enterprises (SME)
All SMEs can apply reduced rates to insurance contributions for salaries exceeding the minimum statutory wage starting from 1 April 2020.
In case the SME operate in areas most affected by the crisis, they can also apply the following measures:
- Delay for the payment of taxes (excluding VAT, taxes paid as tax agents) for the first quarter of 2020 – for 6 months, for second quarter and first half – for 4 months.
- Delay for social insurance contributions for the period March-May 2020 – for 6 months, for the period June-July 2020 – for 4 months.
- Delay for the advance payment of transportation tax, property tax, land tax for the first quarter of 2020 (no later than 30 October 2020) and second quarter of 2020 (no later than 30 December 2020).
- Subsidies received by SMEs will not be included in the tax base (profit tax).
- The prohibition on deducting VAT on goods, work, services and fixed assets acquired using subsidies does not apply to subsidies received by SMEs.
Support to business (measures impacting all taxpayers)
- Taxpayers, that pay monthly advance payments during the 2020 reporting (tax) period, can now switch to monthly advance payments based on actual profits.
- Six months ban for bankruptcy claims against the debtors from creditors or financial lenders extended till January 7, 2021.
Other measures for taxpayers
- Possibility to deduct expenses on property used to prevent COVID , which transferred on a free of charge basis to medical organizations, state and local authorities etc. Such transfer is exempt from VAT with simultaneous reservation of the right to apply input VAT offset;
- Lump sum deduction of expenses on medical devices for the diagnosis and treatment of new COVID, which are listed in the degree of Russian Government;
- For the purposes of deduction interest under ICO loans it is supposed to fix FOREX for thin capitalization rules and expand the limits established for interest rates (draft law).
- Simplified procedure for payment of personal income tax from the profits of a controlled foreign company, which is supposed to be a fix tax payment (draft law).
- Individuals that stayed in the RF for a period between 90 to 182 days during 2020 have a right to apply for RF tax residential status for the purposes of individual income tax for 2020.
- Starting 1 January 2021, for companies in the IT sector, the social security contribution rate will be reduced from 14% to 7.6% and the corporate income tax rate will be reduced from 20% to 3%.
- Amendment of DTT with some countries aimed at increasing to 15% the tax rate for dividends and interest paid out from Russia (with some exceptions).
- In particular, on September 8, 2020, Russia and Cyprus signed a Protocol to the DTT, accordng to which WHT for dividends and interest is increased up to 15% (tax benefits are preserved for a limited category of entities, such as state authorities, pension funds, public companies). Amendment will come into force starting from 2021.
- On October 1, 2020, Russian and Malta signed a Protocol to the DTT, accoridng to which WHT for dividends and interest is increased up to 15% (tax benefits are preserved for a limited category of entities, such as state authorities, pension funds, public companies). Amendment should come into force starting from 2021 provided that the ratification procedures will be finished by the end of year 2020.
- With some countries (Luxembourg, Netherlands) negotiations on tax treaty revision are currently being carried out. Moreover, Russia is considering the possibility of revising the treaty with Switzerland and Hong Kong.
- Increase of personal income tax rate (starting from 2021) from 13% up to 15% for income exceeding 5 million rubles (draft law).
- Increase of MET for ore minerals by 3.5 times starting from January 1, 2021.
- 13% income tax on interest accrued on deposits exceeding 1 million rubles ($12,700) multiplied by the Bank of Russia key rate, starting from 2021.