Russian tax support measures due to COVID-19
Like the rest of the world, Russian authorities have adopted anti-crisis measures to support companies affected by reduced business activity and forced restrictions implemented to stave off the spread of COVID-19.
The first package of tax relief measures in Russia was adopted on 17 March 2020 by the Order of the Chairman of the Government of the Russian Federation No. 2182p-P13, which inter alia provides for a moratorium on tax field audits, allows for a deferral of tax and social security payments for companies engaged in certain industries, and suspension of new bankruptcy proceedings at the initiative of the Federal Tax Service.
What audits does the moratorium apply to?
The following new audits will be suspended:
- On-site tax audits
- Scheduled field customs audits
- Currency control audits, unless already started investigations have identified violations for which the limitation period of administrative liability expires on 1 June 2020
- Audits by of and other agencies regulated by the provisions of Federal Law No. 294-FZ “On Protection of Rights of Legal Entities and Individual Entrepreneurs whilst Exercising Governmental Control (Supervision) and Municipal Control”
The moratorium also applies to on-site tax audits that have already been started (Order of the Federal Tax Service No. ED-7-2/181 dated 20 March 2020).
The moratorium does not apply to:
- Desk audits
- Unscheduled audits in connection with natural and industrial disasters
- Audits for issuing permits, licences, accreditation certificates and other authorisation documents
How long will the moratorium stay in place?
Until 1 May 2020.
Instructions of the Federal Tax Service on the work of the tax authorities
As part of the instructions of the Chairman of the Government, the Federal Tax Service approved on 20 March 2020 the Order No. ЕД-7-2/181@ comprising a number of measures aimed at preventing the spread of COVID-19. In particular, the tax authorities must:
- suspend until 1 May 2020 announcement of new on-site tax audits, as well as suspend the current on-site audits;
- suspend until 1 May 2020 the initiation and carrying out of inspections of compliance with the rules concerning the use of cash register equipment and with currency control law (with some exceptions);
- abstain from tax control procedures involving a personal contact with taxpayers and other persons (interviews, examinations, summoning to the tax authorities, seizures, inventories, etc.);
- allow taxpayers access to case materials concerning tax investigations by telecommunications channels;
- consider complaints (appeals) without personal meetings with the applicant/ petitioner.
Suspension of interest charge, tax holidays
The Federal Tax Service was instructed to suspend charging interest on tax debts and to provide tax holidays for taxes and social security contributions until 1 May 2020 for companies engaged in tourism- and aviation industries.
The Federal Tax Service will also provide tax holidays for paying taxes and social security contributions until 1 May 2020 for taxpayers engaged in sporting and cultural activities.
Starting from March 2020, small and mid-sized enterprises are released for three months from payment of social security contributions, as well as they can apply in 2020 for deferred rent payments for lease of state and municipal real estate.
Further, the Federal Tax Service was instructed not initiate bankruptcy proceedings on account of overdue taxes until 1 May 2020 the.
Among the already announced support measures, it is expected that the Ministry of Finance will exempt from fines businesses that, on the account of COVID-19, violated currency control regulations (e.g. did not receive goods purchased abroad in due time, did not obtain repayment of advance payments for undelivered goods or did not receive the payment in time for the exported goods). The relevant Ministry of Finance letter was published on the ministerial website. At the same time, the letter stresses that each case will be reviewed individually and, if the resident fails to comply with the currency control regulations (so-called “repatriation rules”) due to force majeure, caused by, among other things, the measures taken by foreign countries to combat the spread of COVID-19, the resident could be considered not at fault.
Additional support measures businesses can count on
The business community requested additional protection measures related to their inability to meet tax obligations in compliance with the requirements of the previous business environment.
These measures may include broader tax holidays and deferral of payments; deferred tax reporting; a moratorium on tax control measures such as suspending bank accounts and property seizure; suspension of running of all time periods allowed for the exercise of taxpayers’ rights, including for the use of deductions, refunds and reimbursement of taxes; a moratorium on accruing penalties for non-payment (late payment) of taxes; waiving the 50% restriction on loss carry forward (Article 283 of the Tax Code); temporary acceleration of tax refunds, including VAT refunds; postponement of duty payments on imported goods; a moratorium on the request by the state authorities of documents and information, and other emergency support measures.
Time will show when and to what extent these and other proposals can be implemented in practice.