Transcript Accounting
Tax and Accounting
Issues in Russia
Ulf Schneider
Managing Partner
RUSSIA CONSULTING Group
Gothenburg, 4th April 2013
Seminar: How to do business with Russia
Content
Tax Legislation
Accounting
Payroll & HR-documentation
IT – ERP for Russian accounting
2
Content
Tax Legislation
Accounting
Payroll & HR-documentation
IT – ERP for Russian accounting
3
Tax Rates
4
Profit Tax (Corporate Tax)
20%
Property Tax (mainly on real estate)
max. 2,2%
VAT
18% / 10%
Payroll Tax (flat rate, few exceptions)
13% / 30%
(tax resident/
most cases of tax non-resident)
Social Taxes
(fully paid by employer)
30% / 10%
(reduction as of 567.000 Rub p.a.)
Development of Taxes - Russia
5
1.
Introduction of Flat Tax Rate of 13%
2001
2.
Abolition of sales tax of 5%
2004
3.
Abolition of trade tax of 5%
2005
4.
Reduction of VAT from 20% to 18%
2005
5.
Reduction of social insurance contributions
2005
6.
Improvement of loss carryforward
2006/07
7.
Decrease of profit tax from 24% to 20%
2009
8.
Extension of VAT payment
2009
9.
Partial rise of social insurance contributions
2010/11/12
10. Partial abolition of property tax
2013
Basics of Russian Tax Legislation
„Bible” is the Tax Code
Non-discrimination and repercussions principles
Proof by tax authorities
Administrative Regulations
Without legal binding force
But Tax Authorities usually apply them
Jurisdiction
No separate fiscal courts
In most cases: taxpayer friendly decisions
6
Profit Tax / CIT
Tax Rate 20%
No profit pooling
Tax losses can be carried forward for 10 years
however, …
Operational cost generally fully deductible,
however, exceptions, e.g.:
Authorities question often whether business related
Expenses without proper documents (also payroll issue)
7
VAT 18% / 10% / 0%
Comparable with EU System
Import-VAT to customs authorities
reverse charge“-Sysem (VAT-Agent)
Invoice from subsidiary to parent company
potentially with Russian VAT, that is not deductible
in other countries.
8
Double Tax Treaty Sweden - Russia
Permanent Establishment in Russia if:
More than 12 month in case of construction
No special terms in case of non-construction
Withholding tax on dividends:
5%, if direct contribution is at least 100 T USD share
capital and amounts to min 30%
5%, if 100% subsidiary of Swedish entity
15% in all other cases
Withholding tax:
on interests 0%
on royalties 0%
9
VAT reimbursement
In the beginning or at large investments
Frequently input-VAT surplus
Legislation
3 months structured tax audit
Thereafter repayment of VAT
Common practice
Small amounts are not requested for payout, but
carried forward
10
Work Permit
Work permit can be obtained faster (appr. 1 Month), if:
Highly qualified experts
Salary in Russia min. 2 Mio. Rouble
For 3 years
13% PIT even for tax-nonresidents
Attention !
Salary payment has to be local
Payment in Russia controlled quarterly
11
Swedish Manager temporary in Russia
12
Manager of Swedish HQ comes for a project to Russia
Subject to PIT only in Sweden, (not in Russia), if:
Manager did not spend more than 183 days within 12
months in Russia
Salary paid by Swedish legal entity
Salary is not charged to a Russian permanent establishment
Content
Tax Legislation
Accounting
Payroll & HR-documentation
IT – ERP for Russian accounting
13
Accounting – Special issues
25 Russian accounting standards
Often similar to IFRS
In practice: Accountants more tax experts
Invoice is not an accounting document
14
Russian accounting documents
Russian Accounting asks for various “strange” documents such as:
Invoice-Faktura
Acceptance protocol
Sales / Purchase ledger
Business trip log
An invoice in itself is only an „invitation
to pay“ – it does not constitute an
accounting document
Outcome in reality:
1. Much more bookings (due to suspense accounts)
2. Much more complex documentation (also due to quarterly reporting duty)
3. This significantly influences the number of employees, personnel expenses
and controlling requirements.
15
Unusual bookings
Stationary capitalized, then based on
special documents amortized
Petrol to be capitalized and written off
in line with real usage
Payments for rendered services often
only booked as prepayments
Revenue first booked with VAT, gross,
later in P&L taken out.
16
Content
Tax Legislation
Accounting
Payroll & HR-documentation
IT – ERP for Russian accounting
17
HR Administration
Important Documents
Working time sheets as basis for monthly payroll
calculation
Internal orders („Prikaz“) required when Hiring,
Retirement, Business Trips, Vacation of employees
Labor book with complete tracking of entire employment
history of each employee
18
Payroll accounting
Salaries to be paid at least 2 times per month
Vacation minimum 28 calendar days
Vacation salary as average of the last 12 month
19
Content
Tax Legislation
Accounting
Payroll & HR-documentation
IT – ERP for Russian accounting
20
What is 1C?
21
95% of all entities use 1C as accounting program
Meets all local legal and tax requirements
Ready-to-use in base version
Permanent update and support according to the changes
in local requirements
Low Cost
Wide range of integration possibilities with all common
used applications
Weaknesses of 1C
Bookings in closed periods are possible
Bookings can be deleted (instead of
storno with new entry)
Source codes can be easily affected by
external programming
Quite some IT-work required to implement
common Western reporting practice
22
Interface 1C - SAP
23
Postings
Russian Accounting
Standards
Interface
IFRS
Options with ITAN
24
Second Chart of Accounts (Mapping)
Transfer of all transactions from RAS
Mangement of different closing dates according to
RAS and IFRS
Provisions only in IFRS
Reports according to IFRS (balance, P&L, cashflow)
Thank you for your Attention!
Accounting Outsourcing
Tax Consulting
IT Services / ERP
Interim Management
Office Sublease
Recruiting
Ulf Schneider
Managing Partner
+7 / 495 / 956 55 57
[email protected]
Outstaffing
Visa and Work Permit
25
Our Offices
Moscow
Ulf Schneider,
Lars Flottrong, Mike Allen
ul. Bakhrushina 32/1
115054 Moscow, Russia
T +7 / 495 / 956 55 57
[email protected]
St. Petersburg
Andreas Bitzi
Finlyandskiy pr. 4a
194044 St. Petersburg, Russia
T +7 / 812 / 458 58 00
[email protected]
Hamburg
Ulf Schneider
Alstertor 15
20095 Hamburg, Germany
T +49 / (0)40 / 226 33 760
[email protected]
Warsaw
Piotr Linke
Al. Jerozolimskie 81
02-001 Warsaw, Poland
T +48 / 22 / 695 03 10
[email protected]
Kiev
Sven Henniger
vul. Shovkovychna 42-44
01601 Kiev, Ukraine
T +38 / 044 / 490 55 28
[email protected]
Minsk
Polina Meleshko
ul. Surganova 29
220012 Minsk, Belarus
T +375 / 17 / 290 25 57
[email protected]
Almaty
Kirill Afanasyev
ul. Zheltoksan 111 A
050000 Almaty, Kazakhstan
T +7 / 727 / 333 44 48
[email protected]
Aktau
Kirill Afanasyev
Mangistauskaya oblast,
District 14, building 61
130000 Aktau, Kazakhstan
T +7 / 7292 / 470038
[email protected]
www.russia-consulting.eu