The Russian Ministry of Economic Development has formed a register of socially oriented not-for-profit organisations that will be provided with additional measures of support.

As we informed earlier,[1] on 2 June the Federation Council (the upper chamber of Russia's parliament) approved the Federal Law “On amendments to part two of the Tax Code of the Russian Federation” (published on 8 June - Federal Law No. 172-FZ dated 8 June 2020).

The law provides, among other things, for the right to deduct expenses on property transferred for no consideration to socially oriented not-for-profit organisations included in the special register of socially oriented not-for-profit organisations that, starting from 2017:

• receive grants from the President of the Russian Federation;
• receive subsidies and grants within the scope of programmes implemented by federal executive bodies of constituent entities of the Russian Federation, or by local authorities;
• are suppliers of social services;
• are suppliers of services that are useful for the public.

The procedure for maintaining this register and the executive body that will maintain the register must be determined by the Russian Government. At present, there is no such regulatory act in force.

However, the Ministry of Economic Development has already formed a register of socially oriented not-for-profit organisations[2]. It is expected that this register will also be applied for other purposes in addition to reducing the taxable profit by the amount of expenses incurred for assisting not-for-profit organisations. The not-for-profit organisations included in the register will also be able to obtain such types of support as:

• loans on beneficial terms (with 2% interest rate) for paying salaries;
• a 6-month extension of the payment terms for insurance contributions and advance tax payments, except for VAT (the Russian Government’s Resolution No. 685 dated 15 May 2020);
• an exemption from taxes, advance payments of taxes and corporate profit tax levies to the extent of monthly advance payments becoming due in the second quarter of 2020 (Federal Law No. 172-FZ dated 8 June 2020).

At the same time, with respect to the practical use of this register it should be borne in mind that to date the Government has not yet approved the Ministry of Economic Development as the federal executive body responsible for the keeping of such register of not-for-profit organisations and nor has it approved the procedure for keeping the register. In view of this we believe that the lawfulness of the deduction of expenses on transferring property to organisations included in the Ministry of Economic Development’s register before the Government has published the relevant regulations may give rise to disputes.

In addition, also pending approval are the Register of not-for-profit organisations most affected by the deteriorating situation caused by the spread of the new coronavirus infection and the Register of socially oriented not-for-profit organisations receiving support on account of restrictive measures being introduced in connection with the spread of the new coronavirus infection provided for by the Government’s Resolution No. 685 dated 15 May 2020.