Accounting

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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
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