Deferrals (instalment plans) for the payment of taxes and insurance contributions to social welfare funds as measures of overcoming the economic implications of the new coronavirus

Pepeliaev Group advises that the government is examining proposals aimed at overcoming the implications of the new coronavirus infection

Many national governments are now considering whether to impose measures to directly counteract the pandemic, as well as to overcome the economic consequences that the situation has caused. For instance, the OECD has published suggestions on the measures to be taken to support taxpayers under the circumstances of the pandemic. Such measures include, among others:

• cancelling or delaying the payment of taxes connected with salary (social insurance contributions);
• granting a deferral or exemption from taxes charged on a tax base that does not depend on the economic cycle, such as property taxes.

The Russian Federation is also following these worldwide trends. The Russian Government has developed and approved a Plan of Primary Measures (Actions) for Ensuring the Sustainable Development of the Economy in Conditions of a Downturn Caused by the Spread of the Coronavirus Infection (approved by the Government on 17 March 2020) providing that items of legislation will be developed in various areas regulated by the Government.

In terms of taxation it is proposed, among other things:

• that a (three-month) deferral will be granted with respect to tax payments in those industries adversely affected by the spread of the coronavirus infection. This measure presupposes that the Government will adopt the relevant legal act, which will come into force on 30 March 2020;
• that, starting from March of the current year, micro enterprises (with staff not greater than 15 persons and annual income from entrepreneurial activity not exceeding RUB 120 million) will be granted a three-month deferral for paying social insurance contributions. This measure will require that a Federal Law be adopted for which the deadline has been set as 15 April 2020;
• that the Government will have the power to establish procedures for receiving the deferral (instalment plan) with respect to payments of taxes and social insurance contributions, including the corresponding qualification requirements and periods for which these benefits will be granted, as well as the power to extend the deadline for filing tax returns (calculations). This measure will also require that a Federal Law be adopted for which the deadline has been set as 30 April 2020;

In his Address dated 25 March 2020[1], the President also announced a six-month deferral with respect to all taxes, except VAT, which will be granted to SMEs working in the “industries most affected by this difficult situation”. As for micro enterprises, it is proposed that they should also be granted a deferral for paying social insurance contributions.

What to think about and what to do

A certain time is required for all the proposed measures to be taken and for them to start to apply in practice. In addition, it follows from the President’s Address that only small and medium-sized business and those companies working in the industries listed by the Government will qualify for the state support in the form of the deferral.

Consequently, those companies that cannot use these special measures of support but are also affected by the actions aimed at counteracting the pandemic are advised to try to apply for a deferral based on the existing rules for determining grounds on which a deferral / instalment plan may be granted with respect to fiscal payments.

Help from your adviser

Our lawyers are ready to analyse each specific situation in terms of whether there are grounds for a deferral / instalment plan with respect to the payment of taxes and social insurance contributions. They will provide comprehensive legal support in drafting the required applications for tax support to be filed with tax and other state authorities. Moreover, we have developed general recommendations for obtaining deferrals / instalment plans for the payment of social insurance contributions and property tax. If you would like us to share them with you, please send a request to the contact persons stated below.