28 Apr 2023 16:29

There will be no targeted exceptions for companies from general regime of windfall tax - Siluanov

ST. PETERSBURG. April 28 (Interfax) - There will be no targeted exceptions from the general windfall tax regime for individual companies, Russian Finance Minister Anton Siluanov told reporters.

"No. We have already agreed," Siluanov said when asked about the prospects for targeted seizures at the request of specific companies.

Amendments to the Tax Code of the Russian Federation, which introduce a one-time fee to the budget from the excess profits of Russian businesses for 2021-2022, will formally come into force only as of January 1, 2024, in the bill [a version as from mid-April that Interfax reviewed], as prepared by the Finance Ministry, prescribed a serious incentive for early payment of the windfall tax. In this case, the tax rate will be 5% of the excess profit for 2021-2022 over the same indicator for 2018-2019. When rendering payment in 2024, the fee is double at 10%. Formally, 10% will be the tax rate, and the "discount" is prescribed as a tax deduction in funds transferred uncompensated to the federal budget from October 1 to November 30, 2023, multiplied by two.

"The collection is structured in such a way that we comply with tax laws that it is impossible to introduce measures worsening for taxpayers during the year if they go beyond the tax period, and is structured in such a way that the collection itself is 10% payable in 2024, 5% in this. So those who want to save money can pay in this," Siluanov said when confirming the essence of the Finance Ministry's proposed design.

"We are sending the bill today to the departments for approval, as well as to the Russian Union of Industrialists and Entrepreneurs (RSPP)," Siluanov said, an it will be submitted to the government in the near future.

As reported, the Finance Ministry estimates potential revenues from the windfall tax at about 300 billion rubles.

The bill on the one-time fee renders exceptions for oil, oil refineries, coal companies, LNG producers, small- and medium-sized businesses. The tax will also not be levied on companies established after January 1, 2021, including foreign companies that began operating in the Russian Federation after this date, with the exception of those created through reorganization, as well as companies within the consolidated taxpayers group, which also includes coal, oil or oil refineries. Overall, taxpayers include Russian companies, as well as foreign companies that operate in the Russian Federation through a representative office, while foreign organizations recognized as tax residents of the Russian Federation are equated to Russian ones. Companies that were responsible members of a consolidated group of taxpayers in 2022 (that is, they calculated and paid income tax) will also pay a one-time tax for group members.

The tax base for the windfall tax will be the excess of the arithmetic average of profits for 2021 and 2022 over profits for 2018 and 2019. Profit will be calculated as the sum of tax bases for corporate income tax, taking into account the carry forward of losses from previous periods and excluding income from dividends. In addition, the tax base from the implementation of activities related to the implementation of an investment project under this agreement will not be taken into account for companies participating in agreements on the protection and promotion of investments, when determining profits,.

The tax base is assumed to be zero if profit for 2021 and profit for 2022 was less than or equal to the amount of profit for 2018 and profit for 2019, and if it was equal to or less than 1 billion rubles. The provision will not apply to participants of a consolidated taxpayers group.

The rate is set at 10%, though it is possible to reduce the tax by the amount of a deduction, as determined as the amount of funds donated to the federal budget multiplied by a factor of two for the period from October 1 to November 30, 2023. The amount of the deduction cannot exceed the amount of tax calculated at a 10% rate.