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About Alinga | |
 07.04.10
Two ways to optimize business are often overlooked.
First, your internal accounting policy should be critically reviewed. A well-considered policy can optimize taxes, strengthen financial reporting, and minimize problems with the tax authorities. Comparatively few businesses take full advantage of this. You should.
Second, parallel accounting and conversion services can help attract investors and help managers make better decisions. Convert your RAS financial sheets to IFRS and/or GAAP – or maintain them simultaneously with parallel accounting! Get the most accurate financial information any time you need it.
See our latest Market Update for more information. Contact us to implement these ideas!
If you have comments, questions, or suggestions on other ways we can improve our site and newsletter, please contact the editor! To subscribe to this newsletter, send an email with "Subscribe Alinga" in the subject field to our editor.
Developing An Internal Accounting Policy: Contents And Principles Unfortunately, the habit of neglecting internal accounting policy, or giving it token shrift, has taken rather firm root in Russia. However, internal accounting policy is an instrument for increasing the efficiency of company resources. This policy allows you to regulate many of the processes of your business, to take advantage of the rights granted to business by the government and, as a result, to save time, energy, and money. How does one conduct accounting? – In accordance with the Accounting Policy Regulations. How does one pay taxes? – In accordance with the Tax Code. It seems straightforward. However, the provisions of APR and the Tax Code allow the company to choose from a number of options established by the Law. These choices must be spelled out in the company's internal accounting policy.
Value Of Ministry Of Finance Letters The Ministry of Finance has stated in a letter that its letters are of value only to those whom they directly address. Such letters are issued in response to specific questions posed by specific tax payers. The Tax Code grants the Ministry of Finance the authority to provide taxpayers with written explanations of tax legislation and its implementation. The written explanations are not regulatory legal acts, therefore they are not subject to mandatory official publication. These letters are not officially published in mass media and in legal information systems. The letters only help those who directly posed the question. If the Ministry of Finance's advice is incorrect, then Tax Code laws are applied but there are no penalty fees for back taxes accrued, or blame for a tax violation, when following Ministry of Finance advice.
VAT Deductions For Imported Goods Now Safer According to Ministry of Finance Letter #03-07-09/10 from February 19, 2010, suppliers have the right to give customers invoices listing goods' countries of origin and the numbers of their cargo customs declarations. Customers can then record the invoice in their purchase ledgers and deduct the necessary VAT.
There is much more "Accounting and Payroll" information available in the Russian version of this same newsletter!
Review Of Recent Changes To Tax-Related Legislation In The Russian Federation This monthly Russian-language service from Alinga and regular feature of the Alinga Market Update is designed to bring your financial personnel a broad view of recent changes to the Russian Tax Code. Forward this link to them!
Retaining foreigners under contract for performing jobs or rendering services does not increase an organization's tax burden if such work or services are performed outside Russia. If a foreign national works in his own country under contract with a Russian company, and his pay is transferred from Russian bank accounts, he owes no taxes in Russia. This is according to Letter #03-04-06-01/328 from the Russian Ministry of Finance, dated December 12, 2009. The Tax Code specifies that compensation for completed work or other duties such as services rendered or work performed outside of Russia are treated for tax purposes as income received from a source outside Russia. Thus, the place where the work is performed is the deciding factor. Considering that foreign employees are often not tax residents, they are not obligated to pay PIT to the Russian Treasury. The foreign citizen only has to pay taxes in his home country according to tax rates there.
In Russia, bank interest earned above 9% per annum on foreign currency deposits is subject to PIT. This rule applies regardless of whether the bank is located in Russia or not. Interest earned at 9% per year or below, is disregarded in determining the PIT tax base. This is according to the Ministry of Finance Letter #03-04-05/6-10 from January 20, 2010.
Tax Amendments Might Lead To Dishonest Business The majority of investments and credits coming from abroad are from Russian businessmen reinvesting funds from the tax havens of Cyprus, Austria, Luxemburg, the Netherlands, Switzerland, and a number of Caribbean islands. Major Russian companies, as well as ordinary taxpayers, also use similar schemes. Edward Savulyak, director of the Moscow office of Tax Consulting U.K, an international consulting firm, believes that the amendments, as prepared by the Tax Department at the request of the President, and which limit the privileges specified in the double taxation agreements might lead to an escalation of dishonest business dealings. Savulyak, in the article "October 2010. Tax Code Amendments Led To Dishonest Business" claims that excluding non-resident companies that are controlled by Russian beneficiaries from double-taxation agreements would result in more tax evasion.
Federal Antimonopoly Service Prepares Next Legislation Antimonopoly legislation amendments prepared by FAS will consist of three parts: first—technical amendments aimed at improving current standards; second—recommendations of international experts from the Organization of Economic Development and Cooperation; third—proposals from the Russian Union of Industrialists and Entrepreneurs. Igor Artemyev, head of Russia's Federal Antimonopoly Service, announced this at a press conference. The amendments will more precisely define the concept of lobbying groups, procedures for establishing equal access to markets, the concept of coordinating economic activity, the concept of agreements and partnerships, how to screen financial organizations, etc. Moreover, punishments for price fixing will be strengthened. In addition, FAS intends to introduce the notion of mitigating and aggravating factors when calculating fines for antimonopoly legislation infringement.
PhRMA Urges Support For International Standards In Russian Medicines Law As Russia embarks on legislative reforms to strengthen pharmaceutical regulation, the Pharmaceutical Research and Manufacturers of America's (PhRMA) President of International Affairs Christopher A. Singer called on the Russian government to use the opportunity to align with international standards and obligations on clinical trial regulation and intellectual property rights. The current draft of the Law on the Circulation of Medicines, which has passed its first reading in the Duma, contains provisions that could greatly delay access to new medicines for patients in Russia. As mentioned in a joint letter signed by PhRMA and eight other associations, "The Draft Law currently could require the applicant to re-conduct locally the full cycle of clinical studies, regardless of whether there are existing results from clinical trials that have already taken place elsewhere." Local estimates envision delays of three to ten years resulting from these unneeded trials.
The following resource is meant to quickly introduce the reader to some of the major English-language commentary concerning the current financial crisis in Russia, how that crisis might affect Russia's government and ruling structure, and what the international outlook is for Russian business.
Russia's "Civiliki" Look to Strengthen the Power of Precedent in Law On March 19 Anton Ivanov, the chairman of Russia’s top commercial court, the Supreme Arbitration Court, and a close associate of President Dmitry Medvedev, proposed in a speech at the Constitutional Court in St. Petersburg that Russia introduce the principle of precedent to its legal system, making rulings on selected cases by top judges into binding examples for lower instances to follow. Russia's legal system is based on Roman law, which in its purest form only recognizes the authority of legislation and not previous court decisions.
Too-big-to-fail Russian companies may soon get one more reason to celebrate: a new law on a consolidated taxpayer regime is in the offing. This week, Russia's Ministry of Finance completed work on a draft bill to introduce a consolidated taxpayer regime, which could bolster holdings wanting to ease the profit tax burden and provide them with an alternative to transfer pricing rules. The bill, which is currently being reviewed by the Justice Ministry, is expected to be submitted to the State Duma within weeks.
Audit and Taxation Legal Accounting and Payroll Questions? Ask Alinga's Experts!
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