We would like to introduce you to the new standard FAS 27/2021 “Documents and document flow in accounting”, approved by Order No. 62n (registered with the Ministry of Justice on 07.06.2021).

The standard introduces new concepts and legislative norms that significantly change the order of document flow and storage of companies’ documents (except for organizations in the public sector).

The new standard regulates such things as the procedure for signing documents, the date of documents, the language of documents, making corrections and other aspects mandatory for local accounting services in Russia after the introduction of the standard. For your convenience, we have prepared a consolidated overview of the main changes introduced by the new FAS (the overview is available in Russian at the link).

Special attention of foreign companies operating in Russia deserves paragraph 25 of the standard:

Storage of accounting documents
An economic entity must keep accounting documents as well as data contained in such documents and locate the databases of such data in the territory of the Russian Federation.

If the laws or regulations of the country – the place of business outside the Russian Federation – require storage of accounting documents in the territory of this country, such storage should be ensured.

The paragraph about the need to keep accounting registers in the Russian Federation raises the most questions from foreign companies.

Many international companies (especially those using SAP, Navision and other international accounting systems) often use servers outside the Russian Federation, which are shared by the group of companies, so the requirement to store registers within the country may entail significant structural changes.

At the moment, however, there is no direct indication in the standard (paragraph 25) as to whether the primary accounting registers should be stored in Russia or whether it will be sufficient to ensure the storage of a copy of the registers to meet the requirements of the new FAS.

In this connection, collective appeals by international business associations to the Ministry of Finance requesting the necessary clarifications are currently being prepared. We are closely monitoring the situation and will be happy to offer updates on this topic should further information become available.

We will be glad to answer your questions!

Recently, there have been an increasing number of cases in which Russian companies that are part of an international group of companies have been asked to submit the global documentation (so-called master file) to the Russian tax authorities, especially in the context of the formation of the regular transfer price declaration and documentation.

As a reminder: the global documentation (master file) must be provided to the supervisory authority upon their request within 3 months fr om the date of having received an according notice. The file is to be provided in Russian language.

The master file may be requested not earlier than 12 months and no later than 36 months after the end of the reporting year, so e.g. starting from 01.01.2022 till 31.12.2024 for the year 2020. The documentation must comply with the requirements of Article 105 16-4 of the Russian Tax Code.

Please note that the violation of the rules of the Tax Code – failure of the taxpayer to submit global documentation in time (paragraph 2 of Article 129.11 of the Tax Code) may result in a fine in the amount of 100,000 rubles.

From 2020 onwards, the benefits of the so-called “Transitional period” (2017-2019), for which no fines were imposed, no longer apply. From 2020, failure to comply with the requirement to submit the master file to the authorities upon request can result in a maximum amount of fine.

In order to provide the required information to the tax authorities on time, if requested, we recommend the Russian member companies of international company groups to fulfill the following steps in advance:

• request the Global Documentation from the parent company,
• check it for compliance with the requirements of Article 105 16-4 of the Tax Code of the Russian Federation and, if necessary, supplement the File;
• translate the Global Documentation into the Russian language, if applicable.

Expert comment

Eugenia Chernova, Project Leader at swilar: “Not every taxpayer who is a member of an international group of companies may be required to provide global documentation. The existing limits are bound to the total revenue of the group. The lim it depends on the country of residence of the parent company.” If you have any questions about the necessity of global documentation for your company, swilar specialists will be happy to give you qualified advice.

The Ministry of Labor and Social Protection of the Russian Federation has prepared a draft of amendments to Federal Law № 125-FZ dd. 24.07.1998 and Federal Law № 255-FZ dd. 29.12.2006, which will come into force from January 1, 2021 in terms of payment of benefits for temporary disability, maternity and childhood.

 “Direct payments” is a project implemented by the Social Insurance Fund of the Russian Federation since 2011. During this time, 77 regions of the Russian Federation have already joined it. The remaining 8 largest regions (Moscow, St. Petersburg, Krasnodar and Perm, Moscow, Sverdlovsk and Chelyabinsk regions, the Khanty-Mansi Autonomous District) will move to direct payments from January 1, 2021.

Thus, the system of “direct payments” will be effective throughout the Russian Federation from January 2021.

The point of the amendments is that from 1 January 2021 all benefits (with few exceptions) will be paid directly to employees by the Social Insurance Fund (FSS).

Besides, employers will transfer insurance payments to FSS (including contributions for accidents at work and occupational diseases) in full, i.e. without reducing the amount of benefits paid to employees.

Direct payments of employee benefits from the Social Insurance Fund, which are considered in the draft, include:

Temporary disability benefits for the first 3 days of an employee’s illness will be assigned and paid, as before, only by the employer.

With subsequent reimbursement from the Social Insurance Fund, the employer will assign, and pay to working citizens the following types of benefits (the mechanism remains the same):

The mechanism of direct payments is as follows:

1. The employee must submit to the employer:

• a certificate of the amount of earnings (if he/she worked for other (other) employers during the calculation period);

• confirming documents (certificate of disability for work, certificate of registration at a medical institution in the early stages of pregnancy, certificate of birth of a child, etc.);

• application, wh ere details for the transfer of the allowance are specified.

Please be awared, that allowance will be paid by FSS only to the card of payment system MIR.

Important! The term for submission of the sick leave and other documents confirming the occurrence of an insured event is 6 months after the sick leave is closed.

2.The employer within 5 calendar days sends a package of documents to the FSS.
3. The FSS within 10 calendar days checks the documents provided by the employer and makes a decision on the assignment or refusal to pay the allowance.
4. If the decision is positive, the allowance is transferred to the employee’s current account or sent by mail.
5. If the documents are insufficient or incorrect, the FSS sends a notification to the employer. Within 5 calendar days the insured is obliged to replace them, or provide the missing documents.

The way of sending data to the FSS depends on the average number of employees:

The amount and methodology of benefit calculation remain the same.

 Monthly child care allowance awarded in 2019-2020 and continuing into 2021 are paid as follows:

• The employer pays the December 2020 allowance to the employee in the regular order;

• To process an allowance payment from 2021 directly from the FSS:

·         the employee must submit to the employer an application for the allowance directly from the regional branch of the FSS in the standard form and the necessary documents;

·         the employer within 5 calendar days is obliged to transfer the data (inventory, application and documents from the employee or register) to the FSS.

The monthly child care allowance will be transferred from the 1st to the 15th of the month following the month for which the allowance is paid. The allowance for care of the child till 1,5 years at transition to direct payments from FSS, is not subject to recalculation, the sum of the allowance appointed till 01.01.2021, does not change.

We will be happy to answer your questions!

In the conditions of the current world crisis and increasingly strict measures to combat the virus, business is much more than usual counting on assistance and support measures from the state.

At the moment, many support measures are being developed and implemented in Russia, starting from the postponement of reporting deadlines and preferential lending up to measures to reduce the tax burden (in particular, insurance premiums). A significant part of these measures is aimed at supporting small and medium-sized businesses.

Briefly, let us remind you that the status of SMEs and the criteria are prescribed in the Federal Law No. 209-FZ dated 07.24.2007 with subsequent amendments.

Meaning has:

the size of the average number of employees for the previous calendar hour (up to 100 people for small enterprises; up to 250 people for medium-sized enterprises);
the amount of income from conducting business activities for the preceding calendar year (up to 800 million rubles for small enterprises; up to 2 billion rubles for medium-sized enterprises);
To obtain SME status, the company must also be entered in the appropriate register (https://rmsp.nalog.ru/).

For a long time, the status of an SME was closed to companies with a large share of foreign capital, since in addition to the threshold values ​​indicated above, there was a restriction on the share of Russian capital at a minimum of 51%.

Does this mean that subsidiaries of foreign founders will not be able to take advantage of the benefits and preferences offered by the government?

We remind you that December 1, 2018 certain clauses of the Federal Law No. 313-FZ “On Amendments to the Federal Law “On the Development of Small and Medium Enterprises in the Russian Federation” entered into force, according to which the criteria for the status of an SME subject were changed. We wrote about this in our review 02/2018 dated 08/22/2018. After the entry into force of these amendments, the status of an SME became available to those companies in which the share of foreign participation exceeds 49%.

At the same time, a necessary condition is the compliance of the parent company with the criteria of small and medium business established in the Russian Federation.

However, Russian companies with more than 49% foreign participation will be able to be entered into the Register (see above), that is, to officially receive SME status, only after the reporting of their parent organizations is checked for compliance with the SME criteria in force in Russia.

Authorized auditing organizations, entered in the control copy of the register of auditors and auditors, carry out similar checks organizations

Olga Grigoryeva, general director of Shternhoff Audit LLC, comments:

“According to part 6.2 of article 4.1 of the Law on SMEs, the source of such data for maintaining a single register of small and medium-sized enterprises are auditor organizations. This authority is implemented in the following order:

1) the auditing organization provides auditing services (at the initiative of the economic entity) to economic entities interested in including information about them in the unified register of SME entities. The service consists in confirmation by the auditing organization of the compliance of the participants of the economic society – foreign legal entities with the above criteria (confirmation is carried out annually).

This audit service is provided by audit organizations in accordance with:

Part 6.2 of Article 4.1 of the Federal Law “On the Development of Small and Medium-Sized Entrepreneurship in the Russian Federation” (as amended by Federal Law dated August 3, 2018 No. 313-ФЗ);
The international standard, which provides confidence (MSZOU) 3000.

2) in order to confirm the indicated compliance, the auditing organization compares the data on the amount of income per hour and the average number of employees of the foreign legal entity with the above criterion. For comparison, the company-customer of the service must present to the auditing organization the report of the foreign legal entity for the corresponding year, submitted to the tax authority of the country where the entity is established;

3) based on the results of the provision of this service, the auditing organization forms a list of companies that were created before December 1 of the year preceding the current calendar year, and whose participants are foreign legal entities that meet the criteria described above;

4) the auditing organization sends a list of such companies to the Federal Tax Service of Russia. The list is presented in the form of an electronic document, signed with an enhanced qualified electronic signature, using the official website of the Federal Tax Service of Russia. The deadline for submitting the list is from July 1 to July 5.”

According to the currently presented explanations and comments, only companies with official status, that is, entered in the register, will be able to take advantage of the proposed preferences for SMEs in the Russian Federation.

It is not yet clear whether this regulation will be clarified. In this regard, we recommend checking the relevance of the procedure described above for your company.

We will be happy to answer your questions on this and other topics!