08.04.08

Only permanent improvements of leased property, related to reconstruction, modernization and/or technical upgrade may be accounted as amortization expenses. When expenses directed to the current maintenance of property assets in operating condition, these expenses must be included with miscellaneous expenses as a repair cost.

The Ministry of Finance explains this tax regulation (established by Tax Code) in letter # 03-03-06/1/159 of March 7, 2008.

The same document also suggests the lessee to record reimbursement funds received from a lessor for repair or permanent improvements of leased property as sales revenue without additional comments.

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