Review of Regulatory Documents Concerning Taxation over November-December L. Anisimova 1. According to the letter by the Ministry of Finance of the Russian Federation from 3 November 2007 No 03-03-06/1/767 the issue on calculation of profit tax is clarified in connection with the increase of the assets original cost subjected to ascription as production cost through amortization from RUR 10 thousand to RUR 20 thousand from 1 January 2008.
The Ministry of Finance clarifies that assets purchased by organization is ascribed for the taxation purposes according to the procedure that was in effect at the moment of putting assets into operation. That means that the property worth RUR 10 thousand to RUR 20 thousand is to be included into depreciable assets and to be written off as organization’s expenses at a time.
2. According to the letter by the Ministry of Finance of the Russian Federation from 29 October 2007 No 03-03-06/1/737 the issue on the procedure of net assets cost calculation for limited liability companies, that was apportioned as a result of a joint-stock company reorganization in order to calculate profit tax is explained.
The ministry of Finance adjusted the use of the Order of the Ministry of Finance of the Russian Federation and Federal Security Commission from 29.01.2003 NN 10н, 03-6/пз "On establishing the procedure for estimation of net assets cost of joint-stock companies" for limited liability companies (companies carrying out insurance and banking activities are subject to this Order).
3. According to the letter by the Ministry of Finance of the Russian Federation from 30 October 2007 No 03-03-06/1/745 in response to a private enquiry of an organization is elucidated that due to the absence of the definition for the term “beautification” in the existing legislation expenses made by organization to beautify the territory adjacent to the organization buildings – trees planting, lawns and flower beds making etc. – are not to be included in the list of depreciable assets. The reasons for this are provided by subparagraph paragraph 2 clause 256 of the Tax Code of the Russian Federation. In the opinion of the Ministry of Finance of the Russian Federation the expenses for territory beautification should be referred to as the expenses that are not connected with organization’s commercial activity and are aimed at creation of comfortable, equipped from both practical and aesthetic point of view area in the territory of the organization.
This opinion is not indisputable. Any construction project envisaged expenses for the territory beautification around the object to be constructed as a part of estimate expenses. Thus the maintenance of the territory adjacent to the building in a proper state is defined by the requirements of the town planning legislation and design and estimate documentation of the object put into operation. In such a context territory beautification is a compulsory requirement for business activity conduction and should be treated as business expenses.
Such disputes between Federal Tax Service bodies and tax-payers are usually settle judicially.
4. According to the letter by the Ministry of Finance of the Russian Federation from 2 November 2007 No 03-04-06-01/375 the issue that even in case dividends sent to a share holderby with post order by a jointstock company to the address given by a share holder are returned due to the actual absence of a share holder, tax agent is to pay natural person’s income tax of the dividend sum to the budget. Date of profit payment when profits are sent by a postal order is defined as the day of order mailing. So the tax agent is to transfer the sum of the tax deduced from the profits paid to the corresponding budget no later than on the day following the day of mailing.
5. According to the Federal Law from 30 October 2007 No 240-ФЗ changes and addenda are made to the Federal Law from 22 July 2005 No 116-ФЗ "On special economic zones in the Russian Federation". For instance, the notions of special port economic zones and special tourism and recreation zones are introduced.
Exemption from VAT and excise payment (or compensation of the sums of these taxes paid) applies only in case if such and exemption, compensation or repayment is envisaged by Russian Federation legislation on taxes and payments for actual import of goods from the territory of the Russian Federation as well as concerning Russian goods declared by customs declaration submission and practically subject to the customs regime of free customs zone.
It is undoubtedly favorable change that the statute according to which excisable goods produced as a result of procession in the territory of the special port economic zone and exported from it are subject to excises notwithstanding whether the goods they were produced from were of Russian or foreign origin, excisable or not at the moment of their admission to the customs regime of the free customs zone was legislatively confirmed. Corresponding changes are made to the Tax Code of the Russian Federation.
6. According to the Federal Law from 4 November 2007 No 255-ФЗ changes are made to the Tax Code of the Russian Federation owing to the specification of the procedure of VAT tax rate of 0% application by taxpayers, carrying out activity connected with production and service of space technical equipment.
The definition of goods (jobs, services) in the field of space activity is presented in the Tax Code of the Russian Federation. For instance, the following is attributed to the latter: space technical equipment, space objects, objects of space infrastructure, that are to be compulsory certificated in compliance with the legislation of the Russian Federation in the field of space activity, including jobs (services), made (rendered) with the use of equipment which is based in the space itself, including from the surface of the Earth and (or) from the Earth atmosphere; preparation and (or) auxiliary (accompanying) land-based works (services), caused by or necessary because of technology and directly linked with execution of work (services rendering) on the space exploration and (or) conducting of work (services rendering) with the use of equipment, which is based in the space itself.
In addition specifications concerning the list of documents submitted for zero VAT tax rate application are made.
7. According to the letters by the Ministry of Finance of the Russian Federation from 19.06.2007 N 03-0708/160 и ФНС РФ от 22 October 2007 No ШТ-6-03/809@ the issue on the field tax audit on the value added tax of foreign company’s branches, operating in the territory of the Russian Federation through its branches, carried out by taxation bodies is clarified. It is elucidated that a taxation body is authorized to conduct independent field audit of branches and representatives of foreign organizations on the subject of correct calculation and timely payment of regional and (or) local taxes by the place of their registration in taxation bodies of the Russian Federation.
8. According to the letters by the Ministry of Finance of the Russian Federation from 15.10.2007 No 0307-15/146 and by the Federal Tax Service of the Russian Federation from 24 October 2007 No ШТ-603/819@ the issue on tax exemption from value added tax of production and mending of spectacles optics (excluding sun-protecting) by organizations, that are not pharmaceutical organizations, and individual entrepreneurs on the condition on them having corresponding licenses, as well as of mending of hearing-aids and prosthetic and orthopedic devices is elucidated.
9. According to the letter by the Ministry of Finance of the Russian Federation from 16.10.2007 N 03-0715/151 and by the Federal Tax Service of the Russian Federation from 31 October 2007 No ШТ-6-03/839@ the issue on VAT taxation of the operations of transport vehicle (sea craft) sale, which is based outside the territory of the Russian Federation is clarified.
The place of sea craft sale, whose place of registration is a port in the territory of the Russian Federation, which is at the moment of start of shipping and transportation outside the territory of the Russian Federation, is not the territory of the Russian Federation and, correspondingly, operation on sale of such goods are not subject to VAT taxation in the territory of the Russian Federation.
It is necessary for a taxpayer to ha present documents that certify that the place of sea craft sale is not the territory of the Russian Federation.
Taking into account that the Russian Federation does not have agreements on elimination of double taxation of indirect taxes with other state, it is difficult to estimate the consequences of VAT undersubmission to the budget of the Russian Federation as a result of the Federal Tax Service and Ministry of Finance of the Russian Federation position. It is probable that this issue is to be additionally considered at the legislative level, since similar situation can arise with respect to aircrafts and spacecrafts.
10. According to the Federal Law from 30 October 2007 No 239-ФЗ changes are made to clause 217 of the Tax Code of the Russian Federation, namely the list of prizes for outstanding achievements in the field of arts and mass media that are exempt from taxation is broadened.
11. According to the Federal Law from 8 November 2007 No 258-ФЗ changes are made to a number of Federal Laws, in particular the version of paragraph 1 clause 333.25 part 2 of the Tax Code of the Russian Federation is adjusted.
12. According to the letters by the Ministry of Finance of the Russian Federation from 16.10.2007 N 0307-15/153 and by the Federal Tax Service of the Russian Federation from 31 October 2007 No ШТ-603/844@ the issue on deduction of VAT sums paid from their own funds by Russian organizations that are tax agents by goods (jobs, services), purchased from foreign persons that are not registered at taxation bodies as tax-payers is clarified.
It is explained that if the agreement with the tax-payer, that is a foreign person that sells goods (jobs, services), does not envisage the sum of value added tax that is to be paid to the Russian budget, Russian taxpayer should determine the tax base for VAT payment on his own, i.e increase the cost of goods (jobs, services) purchased by the sum of the tax.
VAT sums paid are to be deduced from Russian taxpayer after taking purchased goods (jobs, services) on books.
13. According to the letter by the Ministry of Finance of the Russian Federation and by the Federal Tax Service of the Russian Federation from 25 October 2007 No ГИ-8-04/692@ the issues on tax exemption of compensation payments are clarified. In particular, the exemption from single social tax of compensatory sums for unused holiday leave in case of dismissal of a person that was deputized for government official in connection with reduction of staff number even if compensatory payment is established not by the federal legislation but by legislation of a subject of the Russian Federation, but within the norms, established in compliance with the legislation of the Russian Federation.
14. According to the letter by the Ministry of Finance of the Russian Federation from and by the Federal Tax Service of the Russian Federation from 22 October 2007 No 02-6-10/325 it is explained that the activity carried out by insurance agents and insurance brokers on the basis of agreements made with insurers (reinsurers, insured) on commission or agent work or any similar agreements is to be considered as subsidiary activity in the field of insurance business, and insurance agents and insurance brokers themselves as mediators (trustees) in the legal relationships between insurers (reinsurers) and insured. Since subsidiary function in the field of insurance business in compliance with chapter 26.2 of the Code is not regarded as entrepreneurial activity that is not subject to simplified taxation system, in the opinion of the Federal Tax Service, insurance agent, acting on behalf and on commission of the insurers, as well as insurance brokers, acting in the interests of and on commission of insurers (reinsurers, insured) have a right to transfer to simplified taxation system on grounds common with other taxpayers.
15. According to the letter by the Ministry of Finance of the Russian Federation from and by the Federal Tax Service of the Russian Federation from 22 October 2007 No 02-7-11/405@ it is clarified that from 01.01.2008 the system of taxation in the form of single tax on imputed income for some kinds of activity is not applied to some kinds of entrepreneurial activity in case they are conducted by taxpayers that are ascribed to the category of the biggest taxpayers according to clause 83 pf the Code.
According to the order of the Federal Tax Service of Russia from 16.05.2007 N ММ-3-06/308@ the Criteria for ascription of an organizations, legal entities, to the category of biggest taxpayers that are subject to tax administration at regional and federal levels are defined.
The data on the registration of one of the biggest taxpayers are included in the Single government register of taxpayers and corresponding Notification are sent to such a taxpayer. Having such a Notification on registration at a taxation body is compulsory for all the taxpayers that answer the Criteria, notwithstanding of their registration at interregional bodies of the Federal Tax Service of the Russian Federation or at bodies of the Federal Tax Service of the Russian Federation by its actual whereabouts.
Consequently, the taxpayers that meet the Criteria of the biggest taxpayers but do not possess the Notification on registration as a biggest taxpayer at a taxation body by 01.01.2008 are not subject to limitations on single tax on the imputed income application.
The right to be exempted from the application of the taxation system in the form of single tax on the imputed income is given to such taxpayers only from the moment of their receiving Notification at a taxation body.
Review of the Budgetary Legislation over October M. Goldin In November 2007 the development in the field of the budgetary legislation was the changes made to the Statute on the Investment Fund of the Russian Federation that specify the directions for the use of the means of the Investment Fund of the Russian Federation while fulfilling of the investment programs.
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