21.11.08

Compensation paid for the use of personal transport for business trips is calculated as part of profit tax rather than as employee compensation. The Ministry of Finance of Russia indicated this in a letter dated from October 15, 2008 # 03-03-07/24.

The amount that can be deducted from profit tax for this purpose is capped by Russian law: for passenger cars with engine capacity of up to 2000 cubic centimeters are allowed 1200 rubles per month; more than 2000 cubic centimeters, 1500 rubles per month; for motorcycles, 600 rubles per month.

However, the legislation does not cap the amount of compensation that can be paid to employees. That amount should be determined by written agreement between employee and employer (Article 188 of the Labor Code).

In its letter, the Ministry of Finance of Russia also suggests how to record the full amount of the compensation if it is more than the cap stated for profit taxes. To do so, the employer may sign a civil law contract with the owners of the vehicles used for business purposes. Expenses as registered in such contracts can be fully deducted, providing that all the requirements of paragraph 1 of Article 252 of the Tax Code are met.

Read More about Accounting Services from Alinga Consulting Group

Source: РНК