Lengthy discussions that have taken place in recent years on how the state should support the development of the domestic IT industry have led to the implementation of the so-called. "Tax maneuver". Its goal, according to high-ranking officials, was to strengthen import substitution in the IT market, to facilitate the return of domestic developers to Russian jurisdiction and to stimulate the export of Russian software. The corresponding changes to the Tax Code of the Russian Federation were introduced by the Federal Law of July 31, 20. No. 265-FZ (hereinafter referred to as Federal Law No. 265-FZ) and will come into effect on January 1, 2021. Most commentators on these changes focused on the most obvious points: reducing tax rates, removing time limits for certain benefits, etc. ... But,a detailed analysis of the amendments to tax legislation shows that not all IT organizations will benefit from them.
The term “tax maneuver” is commonly understood to mean such changes in tax legislation that lead to a redistribution of the tax burden within a certain industry between different categories of taxpayers. That is, as a rule, the result of a tax maneuver is an increase in the tax burden for some companies while reducing it for others. The tax maneuver carried out in 2020 for the IT industry fully reflected this: some market players received serious preferences, while the situation of others significantly deteriorated. At the same time, the "watershed" partly runs along the line of nationality of taxpayers or the place of creation of goods, works, services, and partly - along individual segments of the IT industry.
Decrease in the size of insurance premiums The
first and, probably, the main component of the tax maneuver was the indefinite reduction in the size of insurance premiums to 7.6% for companies that meet certain criteria. Recall that previously there was a temporary (until 2023) preferential rate on insurance premiums for IT companies in the amount of 14%. This benefit is one of the most important for an industry in which salaries have an extremely high share in the overall cost structure. The criteria for obtaining the right to the reduced rate have not changed. The organization still needs to:
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However, from January 1, 2021, an additional restriction appears: the share of income from operations on the development, implementation and licensing of computer programs and databases accounted for for the purpose of obtaining benefits does not include income from the granting of rights, if such rights consist in obtaining the opportunity to distribute advertising information on the Internet information and telecommunications network or gain access to such information, post offers for the purchase (sale) of goods (works, services), property rights in the Internet information and telecommunications network, search for information about potential buyers (sellers) or conclude transactions. As you can see, IT companies that develop advertising content, develop and maintain programs for all kinds of aggregator sites will lose the right to the benefit.e-commerce sites, etc. Considering that this is a very significant segment in the modern IT industry, as well as the fact that small companies, as a rule, specialize in the development and promotion of certain content for a certain segment of the industry, it is obvious that for individual taxpayers the situation will not improve, but will worsen, since they will lose the right to the benefit.
At the same time, taking into account the rather vague wording of the above norm, it is possible to predict in the future a large number of disputes about the right to apply this benefit. The unfortunate construction of the text of the norm should also be noted. Surely the courts still have to deal with what the legislator had in mind in the wording “the rights consist in the ability to do this or to get access to that”. Indeed, often a program can have many functional purposes, one of which (albeit not the main one) may be to search and collect information about potential consumers of the relevant goods or services. In general, it can be predicted that soon there will be a lot of clarifications from government agencies on the procedure for applying this benefit, which are unlikely to suit all taxpayers. And they are already starting to appear. For instance,in the letter of the Ministry of Finance of Russia dated October 14, 2020 No. 03-15-06 / 89541 it is said that if the transferred rights consist in providing the opportunity to participate in competitive procedures (filing applications) held on the electronic trading platform, on the basis of clause 5 of Art. 427 of the Tax Code of the Russian Federation, income from the transfer of such rights should not be included in the share of income from activities in the field of information technology in order to apply reduced rates of insurance premiums.income from the transfer of such rights is not subject to inclusion in the share of income from activities in the field of information technology for the purpose of applying reduced rates of insurance premiums.income from the transfer of such rights shall not be included in the share of income from activities in the field of information technology for the purpose of applying reduced rates of insurance premiums.
Reduced tax rate
The second significant change was the reduction in the tax rate on corporate income tax from 20 to 3%, and in addition to organizations engaged in the development of "software" and the provision of IT services, companies that conduct design and development of products will also be able to apply such a reduced rate. electronic component base and electronic or radio-electronic products.
For the first category of taxpayers, the conditions for applying the benefits are similar to those established for insurance premiums: state accreditation, the average number of employees is at least seven people, and the share of income from IT operations at the end of the reporting or tax period is at least 90% of the total income. For the second (developers of the electronic component base), the rules are generally also similar: the same average headcount, inclusion of the organization in the corresponding register and the same share of income from the sale of services for the design and development of electronic component base products and electronic (radio-electronic) products.
At the same time, it must be remembered that corporate income tax is paid for a calendar year, only advance payments are paid quarterly. This means that if an organization in the IT industry at some point in the calendar year ceases to meet the above conditions for granting benefits (for example, it loses its state accreditation or its average headcount decreases), then the tax will have to be paid for the whole year at the generally established rate of 20%. There is a special indication of this in the Federal Law No. 365-FZ. However, the issue with the acquisition of state accreditation in 2021 by an organization intending to apply this benefit remains controversial. The law does not say anything about this situation. With a high degree of probability, it can be predicted that the tax authorities may deny the right to apply this exemption to thosewho will receive accreditation in 2021 - on the basis that during part of the tax period one of the criteria for applying the exemption was not met. Therefore, everyone who intends to take advantage of the privilege, but does not yet have state accreditation, should hurry up to obtain it.
You should also pay attention to the procedure for calculating the 90% share of income from IT operations established by the Tax Code of the Russian Federation. The calculation of such a share cannot include income in the form of exchange rate differences, which formed due to the deviation of the foreign currency exchange rate from the exchange rate of the Central Bank of the Russian Federation, arose during the revaluation of property and claims, as well as income from the assignment of debt claims.
It should be noted that this benefit on corporate income tax is provided entirely at the expense of the regional budgets. Of the total tax rate of 20%, 3% is now credited to the federal budget, and 17% - to the budget of the constituent entity of the Russian Federation in which the relevant taxpayer is located. According to Federal Law No. 365-FZ, IT industry organizations using this exemption transfer tax at a rate of 3% to the federal budget.
A clear deterioration for IT companies can be considered the fact that Federal Law No. 265-FZ from Art. 259 of the Tax Code of the Russian Federation, clause 6 was excluded, according to which organizations operating in the field of information technology could not apply the general depreciation procedure to the computers they acquired, but write off the costs of acquiring it at a time as costs. Now computer equipment will have to be amortized in a general manner.
Changes in the procedure for paying VAT
The tax exemption for transactions involving the implementation of computer programs and databases, including licensing, which has been in effect for a long time (clause 26. Clause 2 of article 149 of the Tax Code of the Russian Federation), has undergone significant changes.
First, the number of released operations included updating programs and databases, as well as providing additional functionality. Also, the exemption now applies to situations of providing remote access to programs and databases via the Internet. This innovation makes life much easier for IT companies that have implemented their solutions on the SaaS (software as a service) model. Previously, the tax authorities often required the taxation of sales under this model of VAT on the grounds that in this case, not property rights, but a service are provided. This collision has now been resolved.
Secondly, by analogy with the exemption on insurance premiums, the VAT exemption will not apply to the exercise of rights to programs and databases if the transferred rights consist in the ability to distribute advertising information on the Internet or to access such information, place offers on the purchase (sale) of goods (works, services), property rights on the Internet, search for information about potential buyers (sellers) or conclude transactions. Thus, the tax burden on developers of programs and databases for all kinds of electronic trading and advertising platforms, offer aggregators, etc. will increase significantly.
Finally, thirdly, the VAT exemption will now apply only to programs and databases included in the unified register of Russian computer programs and databases maintained by the Ministry of Telecom and Mass Communications. And this, at first glance, a positive requirement for Russian developers, can create significant problems, since to get into this register you need to meet a large number of requirements. Here are just some of the most significant ones:
- exclusive rights to the software belong to a Russian entity without predominant foreign participation (in particular, for a legal entity, this means that the share of Russian entities in its participants should be more than 50%);
- the use of the software entered in the register does not require the obligatory use of software from abroad, as well as obligatory foreign updating or management;
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In addition, a number of additional requirements are imposed on programs that include functions for protecting confidential information.
In August of this year, the Ministry of Telecom and Mass Communications decided to additionally introduce professional expertise in respect of programs claiming to be included in the register.
In general, the procedure for entering the program into the register takes several months, and those Russian organizations that did not bother to resolve this issue in advance, most likely, will have to pay VAT on transactions for the implementation of rights to computer programs and databases in early 2021.
Summing up, it should be noted that if this tax maneuver can be assessed positively for the Russian IT industry as a whole, then some players will clearly be the loser. At the same time, in our opinion, there are two main factors that will hinder the achievement of the goals of the maneuver: linking the possibility of not paying VAT with the registration of software in the national registry (the IT industry is such a mobile and rapidly developing industry that often a business simply does not have time for several months wait until officials check all the papers and make an entry in the register) and the exclusion of advertising and intermediary content developers from the list of beneficiaries (today this is a huge and very rapidly developing segment of the industry). The biggest winners will be those companies that are in Russia and sell their developments abroad.
Valery Narezhny
Advisor, Gorodissky & Partners Law Firm LLC