We would like to bring to your attention that the order of the Ministry of Finance dated 30 May 2022 N 86n approved the new standard FAS 14/2022 “INTANGIBLE ASSETS” (registered with the Ministry of Justice of Russia 28 June 2022, no. 69031).

The beginning date of application of the standard is the accounting period of 2024, with early application permitted.

Simultaneously with the adoption of the new standard, RAS 14/2007, “Accounting of intangible assets”, will be discontinued with effect fr om 1 January 2024.

Before adopting the new standard, we recommend the following actions:

• Conduct an inventory of the organisation’s intangible assets (hereinafter, IA) that could be classified as IA in accordance with FAS 14/2022;
• Establish a limit on the value of IA in order to classify acquisition and creation costs as IA, or recognise them as expenses for the period;
• Make changes to the company’s accounting policies;
• Determine the useful life expectancy of IA and the terms of annual useful life assessment for relevance;
• Choose the method of subsequent accounting of IA (after initial recognition), at initial or revalued cost (applicable if there is an active market for IA in accordance with IAS 38);
• Determine the residual value of IA on the company’s balance sheet and the terms of its annual valuation;
• For the method of valuation of IA at revalued cost, determine the frequency of revaluation for each group of IA;
• Reflect changes in the organisation’s balance sheet as at 01.01.2024 using incoming adjustments;
• Disclose information in the notes to the company’s accounting (financial) statements.

What does this mean in practice?

For accounting purposes, intangible assets are to be classified by type (electronic computer programmes (ECPs); databases; inventions; utility models; industrial designs; production secrets (know-how); selection achievements; licences and permits) and group.

The unit of accounting for intangible assets is an inventory item.

An inventory object of intangible assets is a set of rights to it arising in accordance with contracts or other documents confirming the existence of the organisation’s rights to such an asset.

A complex object that includes several protected results of intellectual activity (e.g., a multimedia product, a single technology) may also be recognised as an inventory object of intangible assets.

Under the new standard, an entity has the right to independently set a value lim it on the attribution of an item to either IA or expenditure for the period upon completion of capital expenditures related to the acquisition, creation of the assets (paragrath 7   FAS 14/2022).

The standard introduces the concept of residual value – the amount that an organisation would receive if the item were disposed of. The residual value of an IA is deemed to be zero, except in the following cases:

• a contract requires another party to purchase the intangible asset from the organisation at the end of its useful life;
• there is an active market for the item, from which its residual value can be determined;
• it is highly probable that an active market for the item will exist at the end of its useful life.

(paragraph 36 FAS 14/2022).

Depreciation elements such as the residual value, useful life and depreciation method should be reviewed systematically (at least at the end of each year) for changes and, if necessary, adjusted (paragraph 42 FAS 14/2022).

Transition period

Under paragraphs 52-54 of FAS 14/2022, the effects of a change in accounting policy arising from the adoption of the new standard should be recognised retrospectively – as if the standard had been applied from the start of the acquisition of IA.

However, an organisation has the option not to restate comparative amounts for periods prior to the reporting period, but to reflect the changes in carrying amounts resulting from the adoption of the standard through the organisation’s retained earnings.

Prospective application of the standard, without incoming adjustments at the beginning of the year is only possible for organisations that have the right to apply simplified accounting methods, including simplified (financial) reporting (paragraph 55 of FAS 14/2022).

to help keep an overview of what is important for doing business in the vast flow of information, we have summarised the news and practical advice essential for foreign businesses in Russia on payments, deliveries of goods and other aspects to pay attention to. 

More detailed and up-to-date information is regularly posted on swilar’s Telegram channel t.me/swilar.

The information is posted in Russian, but with the translation function in Telegram you have access to the most up-to-date news in the language of your choice.

DELIVERIES

List of goods restricted for export

As a reminder, with the imposition of sanctions, a large number of goods have become restricted both for export fr om the EU territory and for export fr om the territory of the Russian Federation.

To view the current list of EU restrictions on the export of goods, please click here. To check whether your goods are subject to restrictions, you can contact your Chamber of Commerce and/or the responsible approval authority (BAFA, SECO or other, depending on the country of residence of the sender).

The Russian Federation has also imposed export restrictions on a number of goods in recent months. The latest Resolution of the Government of the Russian Federation No. 850 of 11 May 2022 (published on 12.05.2022) clarifies the list of goods restricted for export from the Russian Federation. Some of the previous restrictions have been lifted, and the customs codes (TN VED codes) of the EAEU for commodity items from Resolutions No. 311, 312, 313 have also been clarified. 

To find out whether your goods can be exported from the territory of the Russian Federation under this regulation, you need to check whether your TN VED code is in the list of customs codes in the regulation.

Licences, certificates and permits for importing goods into the Russian Federation

Government Resolution No. 353 of 12.03.2022 extends the validity of a number of permits and licences and simplifies the conditions for importing and certifying products in the Russian Federation:

– It postpones the need to undergo periodic conformity assessment for products for a year in many industries;

– It also makes it possible to use documents from foreign certification bodies or foreign laboratories as proof that products are safe.

To find out whether you can benefit from this measure, you should check whether your licences and certificates are included in the list of permits renewable under the Resolution.

Please note that the Resolution applies only in the Russian Federation and not in other EAEU Member States.

Permission of parallel imports

On 19.04.2022 the Ministry of Industry and Trade signed Order No. 1532 approving the list of goods for which the protection of the exclusive rights to the results of intellectual activity expressed in such goods and the means of individualization with which such goods are marked will not be applied (the Order entered into force on 07.05.2022). A list of goods provided for inclusion in the list of parallel import authorisations can be found here.

The list contains both customs codes and names of specific brands/trademarks. The ministry suggested that more than 50 groups of goods should be sold without the permission of the rights holder. In total, the document contains about 200 items.

According to further comments from the Ministry of Industry and Trade it is understood that the list may be updated: foreign brands that continue to operate on the Russian market may be excluded from the list.

INTERNATIONAL PAYMENTS

In the list of frequently updated restrictions, it is not easy to pick out important details. For your convenience, we have compiled an overview of the experience we have gathered with regard to the payment situation.

As a reminder, 7 Russian banks have been cut off from SWIFT. The latest (6th) sanctions package also includes new restrictions on the banking sector. The list of banks to be excluded from SWIFT was extended by 3 Russian banks: Sberbank, Rosselkhozbank and Moscow Credit Bank, which will be cut off on 14.06.2022.

On the side of the EU

Other than this, there are no current EU restrictions on payments to counterparties in the Russian Federation. However, the majority of payments are processed manually by banks in Europe and/or include additional compliance checks to avoid money transactions involving sub-sanctioned individuals or entities. The sender/receiver of a payment from the Russian Federation may therefore need to provide additional explanations, disclose more detailed information and the processing of the payment may be delayed.

On the side of the Russian Federation

The Russian Federation has introduced a number of restrictions that need to be taken into account when planning payments.

In particular, there are restrictions on (the list is incomplete and is based on the most frequent questions from companies):

• the refunding of loans and interest to foreign legal entities from unfriendly countries (carried out in rubles, for amounts exceeding 10 million rubles per month a special type C account must be opened and authorised by a special Government commission).

• purchase of currency by foreign residents in the Russian Federation and transfer of foreign residents’ own funds abroad (representative offices and branches are restricted from transferring funds to the head office).

• Payment of dividends from both AOs and OOOs. According to Presidential Decree No. 254 of 04.05.2022, dividends are subject to the same regulation as loans (see above).

• Payment of royalties and remuneration for the use of intellectual property/individualisation tools. Presidential Decree No. 322 of 27.05.2022provides that in relation to this type of payments to foreign right holders who meet certain criteria (e.g. who have ceased business in Russia) payments will have to be made in rubles using a special type O account.

It should be taken into account that the restrictions, however, do not apply to payments for goods under supply contracts. With regard to foreign currency payments, significant relaxations have been introduced in the currency control regulations of Russian banks.

For payments for services, there is a lim it on prepayments (not more than 30% of the total amount to be paid). However, the lim it does not apply to a certain list of services or to contracts of less than USD 15,000 (or its equivalent in another currency).

The regulation on compulsory sale of foreign currency earnings introduced in February (initially 80% of incoming funds were to be sold within 3 days of crediting; later the regulation was gradually relaxed to 50% within 120 days) was officially abolished starting from 10.06.2022. The decision was taken by a sub-committee of the governmental commission for the control of foreign investments in Russia, which was authorised to do so by a Presidential Decree of 09.06.2022.

FORCE MAJEURE

At the moment there is no clear understanding as to whether the current restrictions on both parties constitute force majeure.

That said, under the general procedure in Russia, the parties concerned (the party to the contract who has not fulfilled/unduly fulfilled the obligation) are entitled to apply to the Chamber of Commerce and Industry of the Russian Federation (or the subject of the Russian Federation) to obtain an opinion on force majeure circumstances occurring in the territory of the Russian Federation.

In this case the decision on the acceptance/non-acceptance of the received opinion will be made by the counterparty independently. If the counterparty disagrees, the dispute will be resolved in court, with the CCI opinion being one of the pieces of evidence of the party’s inability to meet/properly meet its obligations.

Information on how to apply, deadlines and fees, as well as all contact details are available on the official website of the Chamber of Commerce and Industry of the Russian Federation.

If the foreign supplier company can produce a force majeure certificate from its authorised body, the Russian buyer will not need to apply to the CCI of the Russian Federation separately. A foreign certificate of force majeure can also be presented in the Russian Federation.

OTHER

Moratorium on bankruptcy

С From 1 April to 1 October 2022 there is a moratorium on initiating bankruptcy proceedings at the request of creditors in Russia. The moratorium applies to all companies as well as sole proprietors with the exception of property developer debtors.

Companies covered by the moratorium are prohibited from:

• paying out dividends,

• paying out the actual value of shares,

• repurchasing own shares,

• terminating monetary obligations by setting off a counter claim of the same kind (if this violates or is likely to violate the order of priority for the satisfaction of creditors’ claims).

These restrictions can be avoided by submitting a simple waiver of the moratorium by the company through a personal account on the Fedresourcewebsite.

Business support measures in the Russian Federation

The Russian Federation has introduced a number of both tax and non-tax related support measures for businesses.

The measures include:

• deferral of the payment of insurance premiums;

• special treatment of exchange rate differences for the period 2022-2024;

• accelerated VAT refund procedure;

• and others.

A summary overview of support measures in Russian can be found on the Russian Government website. More information is also available on our website.

Transactions with shares in Russian companies

In a number of cases, transactions with shares (sale, withdrawal of a participant, call option) may require authorisation from a special Government Commission.

However, this rule does not apply to all transactions: a number of exceptions have been named in the Presidential Decree of 04.05.2022. There are also differences in the regulations for joint stock companies and limited liability companies.

We are actively working with these issues for our clients and will be happy to provide further information on request. We make every effort on our part to help keep processes stable for our clients, and we always stay in touch.

More up-to-date information in our Telegram channel.

During the spring of 2022, Russia developed and implemented measures to support small and medium-sized businesses in response to the global situation.

swilar specialists have selected the novelties that are relevant for businesses with foreign capital and have prepared a digest of the measures taken.

The full list can be found on the support measures summary page of the Russian Government website. 

Tax support measures

1. Income tax measures:

• Organisations have the right to switch to monthly advance payments based on actual profit, starting from an accounting period of three months, four months and so on until the end of 2022 (applicable from 01.01.2022).

• Foreign exchange gains arising between 2022-2024 and foreign exchange losses arising between 2023-2024 are only taken into account when settling foreign currency claims that have arisen. Prepayments are not subject to this rule (in force from 01.04.2022).

• When determining the tax base, debts written off by foreign organisations and foreign nationals of Russian organisations under loan and credit agreements concluded before 1 March 2022 will not be taken into account in 2022. No exemption is proposed in relation to debt forgiveness by Russian lenders/creditors.

Undercapitalisation rules will apply a fixed foreign exchange rate as of 01.02.2022.

2. VAT measures:

VAT refunds from the budget on a declaratory basis (i.e. in advance) are possible without a bank guarantee or security if the conditions for the application of the measure are met:

• the organisation is not in bankruptcy, liquidation or reorganisation and

• the amount of the refund claimed does not exceed the aggregate amount of taxes and insurance contributions paid in the calendar year preceding the claim.

The new rules on accelerated VAT refunds will be valid for the tax years 2022 and 2023. The audit of VAT returns has not been abolished, but its completion is no longer a prerequisite for obtaining a refund.

3. Personal income tax measures:

• Income tax is not applied to material benefits, interest on deposits and material support (gifts) received by certain categories of citizens in 2021-2023;

• Controlling persons or founders of foreign organisations (as of 31.12.2021) who have received property or property rights from these organisations in 2022 are exempt from paying personal income tax on this type of income.

4. Other measures:

• Inspections of compliance with currency legislation regarding violations under the Federal Law “On Currency Regulation and Control” have been suspended

• From 09.03.2022 to 01.06.2022, tax authorities have suspended decisions to freeze operations on bank accounts when recovering money from debtors’ accounts (blocking accounts)

• For objects whose cadastral value will increase in 2022 due to the economic situation, the cadastral value as at 01.01.2022 will be taken into account when calculating tax for 2023.

5. “Covid amnesty”

In Moscow, measures have been announced for a so-called “covid amnesty“, which will reimburse previously paid fines for violations of any covid restrictions other than non-compliance with isolation during a COVID-19 infection.

Subsidies will be available to companies and individuals to reimburse previously paid fines.

In order to receive the subsidies, it is necessary to apply to the Moi Dokumenty Centres by 31.12.22 and provide the administrative penalty order and proof of payment of the fine.

The measure can be used from 01.06.2022; application forms are available on the website mos.ru.

6. Moratorium for currency enforcement inspections

The moratorium became effective on 1 June and will run until 31 December 2022. It implies the suspension of most control activities that concern compliance with currency legislation, but will not affect inspections in which violations have already been detected previously, the expiry date of which is 31.12.22.

Also, the moratorium will not affect violations of regulations that were adopted after 27.02.22 as special economic measures in response to the sanctions.

We keep up to date with the latest developments and help our clients to keep their business processes running smoothly.

Dear colleagues! 

In a constantly changing situation, our Telegram channel will allow us to share new information and practical experience with you up to date.

We hope that our recommendations will help you to keep your business processes stable.

The channel is available in Russian.

We would like to remind you that starting fr om December 29, 2021 (with the Federal Law № 274-FZ fr om 01.07.2021 coming into force) the new migration legal requirements, which require foreign citizens to undergo dactylography and photographing as well as a mandatory medical examination. This requirement concerns:
• those arriving in Russia for the purpose of carrying out labor activities and
• foreign citizens arriving to the Russian Federation for other purposes for a period exceeding 90 calendar days.
For your convenience, we have compiled for you the addresses of clinics/stations in Moscow wh ere you can apply to get the necessary procedures.

Dactyloscopy and photography

Duration of procedures:
Within 30 calendar days from the date of entry into the Russian Federation or when applying for a patent or a work permit.

Where you can get it done:
1. At the Multifunctional Migration Center in Sakharovo on the day of the receipt of the work permit.
Address: Moscow, Troitskiy AO, Voronovskoe settlement, Varshavskoe highway, 64th km, bld. 1/47.
Opening hours: from Monday to Sunday from 08.00 to 20.00.
!! Here you can also undergo necessary medical examinations.
2. In the State Budgetary Institution “Migration Center” only for foreign citizens who came to Russia to perform labor activities.
Opening hours: from Monday to Friday from 09.00 to 18.00
!! Here you can also submit documents about the medical examination.

What documents are required:
To undergo dactyloscopy and photography, a foreign citizen must present the following documents:
• passport and a notarized translation of the passport;
• certificate of absence of disease caused by human immunodeficiency virus (HIV infection);
• documents confirming medical examination.

Period of validity:
Dactyloscopic registration and photographing are taken once; the documents are valid indefinitely. In case of loss of documents confirming the passing of fingerprinting and photographing, duplicates of these documents can be obtained.

Medical examinations

Time requirements for medical examinations:
• for foreign citizens arriving in Russia for labor purposes – within 30 calendar days from the date of entry into the Russian Federation. At the same time the foreign citizen is obliged to present these documents to migration authorities within thirty days from the date of entry;
• for other foreign citizens – within 90 calendar days from the date of entry into the Russian Federation.

What documents are required:
• passport and notarized translation of the passport;
• migration card;
• registration at the place of residence.

Where you can get it done (in Moscow):

1. CENTRAL DEPARTMENT FOR SPECIALIZED MEDICAL CARE
Address: Leninsky Prospekt, 17, room 56.
Phone: 8 499 558-58-28, 8 495-952-34-22.
Opening hours: from 09.30 to 13.00 on working days according to the order of the person in the line.
Range of necessary medical examinations: except fluorography.

2. Kutuzovsky clinic
Address: 41 Kutuzovsky Prospekt.
Phone: 8 499-249-25-55, 8 499 558 58 28.
Opening hours: working days from 09.00 to 15.00.
Range of necessary medical examinations: except fluorography.

3. Clinic named after V.G. Korolenko
Address: 3, Kosinskaya str.
Phone: 8 495-770 -09-83.
Opening hours: working days from 09.00 to 15.00.
Range of necessary medical examinations: There is no information about the possibility of fluorography.

4. Proletarsky clinic
Address: 22 Melnikova St.
Phone: 8 495-674-36-24, 8-499-558-58-28.
Opening hours: working days from 09.00 to 15.00.
Range of necessary medical examinations: except for phthisiatrician.

5. Ostankinsky clinic
Address: 103, Prospekt Mira St.
Phone: 8-495-682-30-91, 8-495-682-30-80.
Opening hours: working days from 09.00 to 15.00.
Range of necessary medical examinations: There is no information about the possibility of fluorography.

6. Sakharovo Multifunctional Migration Center – Branch “Multifunctional Medical Center of Labor Migration”
Address: Moscow, Troitskiy AO, Voronovskoe settlement, Varshavskoe highway, 64th km, bld. 1/47.
Opening hours: from Monday to Sunday from 08.00 to 20.00.
Full range of necessary medical examinations, including fluorography: yes.

7. State Budgetary Institution “Moscow City Scientific and Practical Center for Fighting Tuberculosis of the Department of Health of the City of Moscow”.
Address: 18, Dokukin St.
Phone: 8-499-187-78-72, 8-499-187-90-77.
Opening hours: 8.00-20.00, Saturday from 9.00-16.00.

Full range of necessary medical examinations, including fluorography: Yes.
Please note that the approximate time to take the tests takes 3 hours. Term of preparation of the medical report after examination and tests takes up to 7 working days.

Wh ere to submit the results of the medical examination
The results of the medical examination must be submitted in person to the migration authorities, considering the deadlines established by law.

You can submit the results of the medical examination:

1. At the Multifunctional Migration Center in Sakharovo on the day of the receipt of the work permit.
Address: Moscow, Troitskiy AO, Voronovskoe settlement, Varshavskoe highway, 64th km, bld. 1/47.
Opening hours: from Monday to Sunday from 08.00 to 20.00.

2. In the State Budgetary Institution “Migration Center” only for foreign citizens who came to Russia to perform labor activities.
Opening hours: from Monday to Friday from 09.00 to 18.00
!! Here you can also undergo dactyloscopy and photography.

First-hand comment from our foreign colleague.

I came to Russia at the beginning of January and, therefore, had to undergo a medical examination and fingerprinting.
I had a medical check-up in the medical center at 18 Dokukin St., because you can take all the analyses there and there is no need to go to other institutions. The line (without an appointment, the principle of a live line) was already quite long at 10 o’clock in the morning, so it is advisable to come early. The staff is friendly and helpful, but if you do not speak Russian, it is worth bringing an interpreter.
I ended up spending 4 hours in the clinic, including 3 hours in line, the tests themselves were done within an hour.
I received the results in 7 working days in the same building.
For fingerprinting I decided to go to the migration center in Sakharovo. I arrived by public transportation at 8 am and was directed to Gate 1 (for work permit holders). It took me 1.5 hours to get a voucher, then another 2 hours before I could get fingerprinted and photographed. It takes 4-6 business days to get confirmation that all the documents have been submitted.
Including the drive there and back, the whole procedure took me 10 hours. The staff is friendly and diligent, but the process on site is very unclear.

Summary of the procedure

Let’s summarize the order and steps of the above procedures:
1. Have your tests done at one (or several, in case one of the specialists/examination options is not available at the chosen center) of the medical centers listed above.
2. Receive test results from the appropriate medical center after 7 business days.
3. Get fingerprinted and photographed.
4. After all the procedures you will get a fingerprint card with. The information will be sent for registration to the information center of the Main Directorate of the Ministry of Internal Affairs in Moscow.

Please note that the information in the overview is relevant as of the date of this posting. The procedure is being clarified, and information may change. We recommend you to clarify the information before you visit a clinic or an authority.

We would like to remind you that from 01.01.2022, the application of the standards FAS 6 “Fixed Assets” and FAS 25 “Accounting of Leases/Rentals” is mandatory.
Much has been written and said about the new FAS. We, for our part, have been reviewing the standards in our newsletters and webinars.
However, even with the information available from open sources, accountants have many practical questions about how to apply the new standards in their company. There are a number of issues that need to be resolved individually for each company.

For example:

• What discount rate should be used when calculating lease payments?
• How should cash flows be determined and at what rate should they be dis-counted in an impairment test?
• For which assets will the residual value be non-zero and how should the re-sidual value be determined?
• How do I make adjustments to a lease agreement?
• What entries should be made when the asset is impaired, when the asset is revalued?
• Which points should be changed/added in the accounting policy?
• and many others

Drawing on our extensive experience with international accounting standards, as well as a large number of real-life cases from clients, we can offer “emergency assis-tance” to accountants in answering these relevant and important questions.
In case you have difficulties and/or questions regarding the application of the new lease or fixed asset standards, send us an email with the subject “Question on the new FAS”. We will answer quickly and to the point.

On 29 November 2021, with the adoption of Federal Law No. 382-FZ, changes to the tax treatment of leasing transactions were introduced.

Changes affecting the calculation of property tax – clause 49 of Law 382-FZ makes amendments to Article 378 of Chapter 30 of the Tax Code, meaning that the tax for rented property, including finance lease (leasing) agreements, is payable by the lessor.

Changes affecting the calculation of profit tax:

• Law 382-FZ (clause 21) excludes clause 10 of Article 258 of the Tax Code, which allows the lessee or lessor to depreciate the leased property depending on who records the leased asset on their balance sheet under the terms of the agreement. In other words, the lessee will no longer be able to depreciate the leased asset in tax accounting starting from 2022, as was the case previously if the lessee accounted for the leased asset on their balance sheet – with the introduction of the changes, the leased asset will only be considered depreciable property by the lessor in tax accounting;
• clause 23 of the adopted law also changes the procedure for calculating profit tax in terms of how expenses under leasing agreements are recognised (sub-clause 10, clause 1 of Article 264 of the Tax Code) – if the payments under the agreement include the purchase price of the leased asset, which passes into the lessee’s ownership after the agreement ends under a sales agreement, the leasing payments are recognised as expenses less the purchase price;

Accounting for the purpose of paying transport tax does not change with the entry into force of Law 382-FZ.

The Federal Law comes into force on 1 January 2022.

In our message No. 6/2021 dated 06/11/2021, we informed about the planned changes in the workflow regulations, which could have a significant impact on the work of companies that use ERP systems hosted on servers located outside the territory of the Russian Federation.

On December, 24th 2021 the Ministry of Finance of Russia issued information message No. IS-Uchet-35 on the adoption of Order No. 224n dated 23.12.2021, according to which the due date for the requirement to store accounting documents on the territory of the Russian Federation, according to the Federal Accounting Standard FAS 27/2021, is postponed from January, 1st 2021 to January, 1st 2024.

The amendments were adopted in order to provide conditions for the organizations for proper preparation to store accounting documents in the Russian Federation, by postponing the due date of paragraph 25 of FAS 27/2021 from January 1st , 2022 to January 1st, 2024.

It is noted that the due date of the beginning of whole FAS 27/2021 standard remain in force, with the exception of paragraph 25 of FAS 27/2021 on the storage of accounting documents, data contained in such documents, and the placement of databases on the territory of the Russian Federation, which is subject to mandatory application from January 1st, 2024.

Information message No. 6/2021 with a detailed review of FAS 27/2021 can be found found at the following link.

We will be glad to answer your questions!

Оn January 1, 2022, the Resolution of the Government of the Russian Federation №1951 dd. 16.11.2021 comes into force. It concerns increasing the rate limit for insurance payments in cases of temporary disability and maternity, and also mandatory pension insurance:

• The rate limit for social insurance, in cases of temporary disability and maternity, for each individual does not exceed 1,032,000 rubles on a cumulative basis starting fr om the 1 January 2022;
• The rate limit for mandatory pension insurance does not exceed 1,565,000 rubles on a cumulative basis starting from the 1 January 2022 for each individual.

The payments for health care insurance and social payments in case of injuries will have to be made on the basis of all the taxable incomes irrespective of their amount. There will be no lim it for them, as before.

We would like to draw your attention to the fact that starting fr om January 1, 2022 a new standard for accounting for fixed assets (hereinafter referred to as FA) is mandatory for usage – FAS 6/2020.

The corresponding changes were made by the Order of the Ministry of Finance N204n dated September 17, 2020. Before transition to the new standard, we recommend that you do the following:

• Establish a limit on the cost of fixed assets to allocate the cost of an asset to the FA or the low-value FA category;
• Conduct an inventory of fixed assets and other assets that, in accordance with FAS 6/2020, could be classified as fixed assets based on the new cost limit;
• Make appropriate changes to the accounting policy of the Company;
• Determine the useful life period of the FA and the terms of the annual testing of it for relevance;
• Sel ect the method of subsequent accounting of the FA (after initial recognition), at initial or revalued cost;
• Determine the liquidation value (hereinafter referred to as LV) of fixed assets on the balance sheet of the enterprise. and the timing of the annual LV assessment;
• For the method of assessing fixed assets at a revalued cost, establish the frequency of revaluation of fixed assets for each group of revalued fixed assets;
• Reflect changes in the organization’s balance sheet as of 01.01.2022 using incoming adjustments;
• Disclose relevant information in the accounting (financial) statements of the company.

What does this mean in practice?

According to the new standard, an organization has the right to independently set a cost limit for classifying an object as a fixed asset, in the contrast to the previously existing limit of 40,000 rubles.

With an increase in the limit (if, for example, an organization decides to set it at the level of 100,000 rubles in order to make it equal to the FA limit in tax accounting), some fixed assets may no longer meet the accounting FA lim it criteria and will need to be reclassified as low-value FA, writing off the net book value of the period as an expense (clause 5 of FAS 6 / 2020), while it will be still necessary to keep inventory and off-balance sheet records of such objects.

The standard introduces the concept of residual value – the amount that an entity would receive if an item were disposed of (including tangible assets remaining after disposal), less the estimated disposal costs at the time of disposal. A LV of the particular can be equal to zero if at the end of the UL no more benefits are expected fr om the disposal of the object, if receipts are expected, but they are not material, or if it is impossible to determine how much will be received upon disposal of an asset (paragraph 31 of FAS 6/2020). 

The liquidation value of fixed assets should be systematically (at least, at the end of each year) analyzed for changes and, if necessary, adjusted (clause 37 of FAS 6/2020).

Also, the innovation of the standard – the accrual of depreciation on fixed assets is not suspended (including in cases of downtime or temporary break in the use of fixed assets), except for the case when the residual value of an item of fixed assets becomes equal to or exceeds its book value (hereinafter BV). If subsequently the residual value of such an item of fixed assets becomes less than its book value, depreciation is resumed on it (paragraph 30 of FAS 6/2020).

What should be done?

According to paragraphs 48-49 of FAS 6/2020, the consequences of a change in accounting policy associated with the beginning of the application of the new standard should be reflected retrospectively – as if the specified standard had always been applied.

It is necessary to recalculate and adjust the balance sheet statement in the part of fixed assets as of 01.01.2022, in case there was no early application of the standard, and also determine the BV – the initial asset cost less accumulated depreciation. The initial cost should be calculated according to the previously existing rules, and the accumulated depreciation – according to the norms of the new standard (clause 49).

Prospective application of the standard, without incoming adjustments at the beginning of the year, is possible only for organizations that are entitled to use simplified accounting methods, including simplified accounting (financial) statements (paragraph 51 of FAS 6/2020).

We will be happy to answer your questions!