The new resolution of the government concerning measures in support of taxpayers

On 24 April 2020 the Russian Government adopted Resolution No. 570 which seriously amends Resolution No. 409 dated 2 April “On measures for ensuring the stable development of the economy” and not only to increase support measures. It also reduces the number of already existing measures, which looks surprising in the current economic realities.

The main provisions of the new Resolution are:

• the extension of timeframes for the payment of insurance contributions covers not only micro businesses, but also small and middle-sized businesses that are included in the corresponding register of small and middle-sized businesses from the most affected industries;
• deferred tax payments and insurance contributions when the deferral ends are paid not by a single payment, but by equal instalments over a period of 12 months;
• there is a deferral of payments of taxes (except for excise duties and mineral extraction tax) and insurance contributions the deadline for payment of which expires throughout the entirety of 2020 and such deferral is granted to companies working in these industries. These industries are specified in the new appendix to the Rules for granting a deferral of payment (payment by instalments) with respect to the payment of taxes, advance payments of taxes and insurance contributions.

As compared with Resolution No. 409 the right to deferred payments / payment by instalments with regard to VAT is associated with types of activity carried out by the taxpayer. Types of activity granting the right to deferred payments / payments by instalments are expressly listed in the appendix to the Rules (the “Appendix”). Unlike the current version of the Government's Resolution No. 434 which approves the list of the most affected industries, the Appendix does not contain cinemas, zoos, museums, dental offices and non-food retail, and the list of the affected industries corresponds to its initial version of Resolution No. 434 of the Government. We would like to hope that the preparation of the draft of the Resolution on which we are providing comments had begun before the list of affected industries was amended (by virtue of which the amendments made had not been taken into account) and the current version of the Appendix will be brought into compliance with the list in the nearest future. Otherwise the motives are unclear for a different level of support of taxpayers related to the most affected industries, especially with regard to value added tax, which is the most sensitive from the economic standpoint.

• the remaining organisations having a right to deferred payments (payments by instalments) according to the Rules approved by Resolution No. 409 will not be able to use the deferred payments (payments by instalments) not only with respect to excise duties and mineral extraction tax, but also with respect to VAT, TAI (tax on additional income) and insurance contributions;
• in order to obtain deferred payments (payments by instalments) a company does not need to confirm a decrease of income in quarter 1, but already now, not waiting until the end of quarter 2, to file a petition asking for it to be considered taking into account the decrease of figures in quarter 2;
• a petition for payment by instalments (deferred payments) can be filed both after the necessary tax returns and calculations are filed with the tax authorities, as well as before this. But the timeframe for consideration of the petition is calculated from the date when all the necessary documents have been filed.

PG's comment. Accordingly under the new Resolution, the tax authority cannot return the petition for payment by instalments (deferred payments) or to refuse to grant such payment by instalments (deferred payments) in connection with the petition being filed before tax returns (calculations) are. In addition, taking into account rescheduling provided for by Resolution No. 409 the deadline for the payment of taxes and insurance contributions may expire before the deadline for the provision of tax returns and calculation. For example, the deadline for the payment of VAT is now on 27 April (6 May) and the deadline for filing a VAT tax return is on 15 May. Therefore, a company may file a petition for deferred payments of VAT before filing tax returns for the corresponding periods. But such petition will not be considered before the tax authority receives the tax return which increases the period for which default interest will accrue, if the granting of deferred payments (payments by instalments) is refused in the end. The possible solution in such situation will be filing tax returns and calculation earlier than the established deadlines together with the petition for deferred payments (payments by instalments);

• for taxpayers applying the simplified taxation system, petitions for payment by instalments (deferred payments) may be filed without documents confirming a decrease of income.

The tax authority will check whether the figures declared by the taxpayer for the corresponding quarter are true after the tax return for 2020 is filed. If based on the results of such check it is established that there were no grounds for the granting of deferred payments (payments by instalments), then the decision to grant them will be cancelled, and default interest will accrue from the date of payment of the corresponding taxes and insurance contributions (as provided for by the law).

• deferred payments (payments by instalments) are granted from the calendar date established for payment of the corresponding tax and insurance contributions.