11.05.08

Due to recent legislative changes, more and more small businesses in Russia are being reorganized from ZAO (joint-stock company) into OOO (limited liability company). This process is usually followed by a host of technical problems. For example, if the process of reorganization was finalized in the middle of a month, and work contracts with employees were not terminated, there is some confusion as to what the proper method for calculating salary expenses for tax purposes, if salaries are calculated on the last day of the month.

The Ministry of Finance gives an answer to this problem in the Letter # 03-03-06/1/182 from March 17, 2008. For tax purposes these expenses are calculated under the methods prescribed in and subject to the conditions of Chapter 25 of the TC. The expenses for the reorganized company are calculated based on data and tax documents as of the date of completion of reorganization process.

The letter also states that for mergers this is calculated from the date of termination of activity of each legal entity according to the official record. The time of specific expenses, recognized for tax purposes prior to or after the reorganization, is determined based on Article 272 of the TC.

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Source: Российский налоговый портал