19.12.06

An Overview of Legislative Changes
affecting the tax code of the Russian Federation
into the new year of 2007

by Ilnar Saifutdinov
Assistant Auditor, Allinga Consulting Group

In the summer of 2006, a significant number of amendments were introduced into the Tax Code of the Russian Federation.  These amendments will go into effect January 1, 2007, with certain provisions taking effect January 1, 2008.

The Federal Law N. 137-F3 will affect almost every article in the first part of the Tax Code.  For example, Article 21, which regulates the rights of taxpayers, was substantially changed.  The responsibilities of tax payers, which are listed in Article 23, were also subject to change.  In addition, there is an updated version of Article 58, which regulates the procedure for paying and collecting taxes.  The procedure for charging extra fees and fines, established in Article 61, was changed as well.  The scope of the changes also affected the procedure for conducting a tax audit.

In the second part of the Tax Code, the implementation of several laws will bring about change immediately.  These laws included the previously mentioned Law N. 137-F3 and the important amendments to the law in Chapter 21, which concern VAT.  Chapter 23 concerning personal income taxes, Chapter 24 concerning common social tax, and Chapter 25 concerning profits tax were also modified.  All these changes were established by Federal Law N. 144-F3.  It is important to note that Federal Law N. 119-F3 established changes to Chapter 23, which are small but important for individual tax payers. 

The purpose of the following article is to inform you of the most recent changes, which will be important and relevant to the work of both accountants and managers. 

Note: The following are English language synopses of the original Russian version. For the full description in Russian, click "Russian version" in the top left corner of this page.  

THE NEW 2-NDFL Form

On 13.10.2006, the Minister of Law of Russia passed an order of the FNS of Russia, N. SAE-Z-/04/706@, which established a new format and procedure for submitting the Form 2-NDFL.

CHANGES MADE ON CLASSIFICATION OF FIXED ASSETS

On 18.11.2006, The Government of the Russian Federation enacted regulation N. 697, which established changes in the Classification of Fixed Assets included in depreciation groups. The original version of the given classification, which was established by the resolution N.1 of the government of the Russian Federation on 01.01.2002, was changed. 

INTERPRETATION OF THE MINISTER OF FINANCE

From January 1, 2007, amendments to the first part of the Tax Code will go into effect.  These changes outline the Russian Minister of Finance’s duty to interpret all questions concerning the application of tax legislation. 

LARGE ORGANIZATIONS REPORT ONLY THROUGH THE INTERNET

Starting in January of 2007, organizations, which have a workforce of greater than 250 people, will be obliged to maintain all records of tax declaration and accounts during the tax period on an electronic Internet resource.

VAT TAX DEDUCTION FOR PROPERTY SALES

Starting in 2007, buyers, who pay for the sale (work, services) of a property (including securities), will be eligible to receive tax deductions if they have documents confirming that they paid VAT tax on the purchase of property to the seller. 

CHILDCARE BENEFITS TO INCREASE

Starting on January 1, 2007, there will be a new procedure for calculating the monthly childcare benefits for working women with children younger than 18 months. 

INCREASED COVERAGE FOR MEDICAL LEAVE

In 2007, the maximum benefit for maternity leave will increase from 15 thousand to 16,125 rubles. 

NEW FORMS FOR PERSONAL ACCOUNTANTS

New forms have also been introduced to calculate personal accounts for the governmental retirement insurance plan.

NEW FORMS FOR STATISTICAL RECORDING

From January 1 to April 20 of 2007, the Government of Moscow will require all accountants of small businesses to provide the district departments of the Federal Management Services with statistics and data concerning the working conditions and level of safety for laborers in Moscow-based organizations for 2006. 

DECLARATIONS ON EXPORTING

Export operations involved in trade (work, services) will not have to submit a separate tax declaration to the tax agency.

Any questions?  Ask the Expert!