CONTENTS OF LAST ISSUE
What Has The Year of the Rat Prepared for Accountants?
For accountants, the year of the Rat under the Chinese calendar starts with studying new accounting rules. Let us consider the main changes that accountants can expect in 2020.
Changes in accounting statements
General changes
One of the main changes is that accounting statements, starting from the statements for 2019, will need to be submitted to a tax authority at the place of registration of the entity as an electronic document only. The same applies to audit report thereon if the accounting statements are subject to mandatory audit.
From January 01, 2020, tax authorities will maintain the State Information Resource of Accounting Statements (GIRBO). The Law No. 247-ФЗ dated 26.07.2019 establishes the procedure for submission of the accounting statements (including amended statements) to the GIRBO.
A copy of the accounting statements will need to be submitted as an electronic document through an operator of the electronic documents flow within not more than three months after the end of the reporting period. In submission of accounting statements subject to mandatory audit, an audit report thereon shall be submitted within the period established earlier.
It will be possible to obtain information from the GIRBO about other companies or individual entrepreneurs on a paid basis. The Government of the Russian Federation has established that from 2020 the annual subscription service for such requests from one workplace will cost 200,000 rubles. The Federal State Statistics Service will continue to provide accounting statements for 2018 and earlier periods for free.
Now all reporting forms should be filled in only in thousand rubles, the measurement unit ‘million rubles’ has been excluded from forms. The name of the line OKVED (Russian National Classifier of Economic Activities) has been replaced with OKVED (Russian National Classifier of Economic Activities) 2.
Changes in accounting balance
The header section of the accounting balance was supplemented with the line specifying whether the accounting statements are subject to mandatory audit or not after the ‘Location’ line. If they are, information about the auditing firm must be specified:
- Name of the auditing firm or full name of an individual auditor;
- INN (Taxpayer Identification Number);
- OGRN (Primary State Registration Number) or OGRNIP (Primary State Registration Number of the Individual Entrepreneur).
The abovementioned changes must be taken into account in submission of accounting statements for 2019.
Changes in statement of financial performance
Changes have also affected statements of financial performance. The reason for this was introduction of amendments to the Russian Accounting Standard (RAS) 18/02 Accounting of Calculations of Corporate Income Tax. The standard determines how certain indicators of the statement of financial performance must be filled in.
The main purpose of the changes is to bring the accounting rules for tax liabilities and related accounting items in line with IFRS.
These changes will become mandatory for use later – from the period of submission of accounting statements for 2020 but an entity may decide to use the changes before the specified period.
Lines related to income tax have been updated in the new form of statement of financial performance:
- Line 2410 has been renamed to Income Tax instead of Current Income Tax;
- Lines 2421 Permanent Tax Liabilities (Assets); 2430 Changes in Deferred Tax Liabilities; 2450 Changes in Deferred Tax Assets have been excluded.
New lines have been introduced:
Line 2500 Aggregate Financial Result is now determined as the sum of the following lines:
2400 Net Profit (Loss)
+
2510 Surplus on Revaluation of Non-Current Assets Not Included in the Net Profit (Loss) for the Period
+
2520 Surplus on other operating activities not included in the net profit (loss) for the period
+
2530 Income Tax on Transactions the Result of Which is Not Included into Net Profit (Loss) of the Period
In a simplified statement of financial performance, the line Income Taxes must include current income tax and deferred tax.
Changes affecting the accounting procedure
From 2020, the requirements of the chief accountant concerning correct preparation of primary accounting documents will become mandatory for all employees. The Law on accounting establishes the requirements for maintaining primary accounting documents of an entity. It has been supplemented with a provision that makes it incumbent upon employees of the entity to comply with the requirements of the chief accountant concerning compliance with the established procedure for documenting transactions and submission of documents required for accounting. Such requirements of the chief accountant must be made in writing. If the entity does not have a chief accountant, these provisions shall apply to requirements of another official entrusted with accounting.
Amendments to RAS 13/2000 Government Assistance Accounting have also been introduced. The rules of government assistance accounting have been brought in line with IFRS. Based on RAS 13/2000, information about government assistance provided from the budget system of Russia is
generated. Now the provisions of this standard apply to government assistance provided from state non-budgetary funds. At the same time, the list of cases when RAS 13/2000 is not applied has been expanded.
According to the amendments, public sector organizations must not use RAS. In addition, RAS does not need to be applied, if the economic benefit is related to:
- Public ownership (ownership of municipal entities) of authorized funds of state and municipal unitary enterprises;
- Reimbursement of lost income or financial support (reimbursement) of costs for manufacturing of goods, performance of works, provision of services on a contractual basis.
In general, there are quite a few changes, in addition to staple changes, that we face every year (an increase of the minimum monthly wage in 2020, increase of the maximum base for calculation of insurance premiums in 2020) important changes that transform the work procedure of accountants have also been introduced. Changes in accounting legislation are mainly related to coordination of accounting rules in Russia with IFRS.
Tax changes
Personal income tax
An important amendment regarding personal income tax is that the deadline for submission of reports in the 2-NDFL (personal income tax) form and in the 6-NDFL (personal income tax) form for the year has been moved from April 1 to March 1. Calculation in the 6-NDFL form for 2019 must be submitted on or before March 2, 2020 since March 1 is a day off (Letter of the Federal Tax Service of Russia No. БС-4-11/23242@ dated 15.11.2019).
Employers with 10 or more employees are required to submit reports in the 2-NDFL (personal income tax) and the 6-NDFL (personal income tax) forms in an electronic form only. If the number of employees is less than 10, the reports may be submitted in hard copy.
It will be possible to submit accounting statements on personal income tax on separate subdivisions under new rules: by choosing one Inspectorate of the Federal Tax Service in a municipal entity.
From 2020, entities that have several separate subdivisions in the territory of one municipal entity will be able to submit tax statements on personal income tax and transfer the deducted amount of personal income tax to the budget at the place of registration of the entity itself or one of its separate subdivisions. But for that end, the company will have to submit a notice to the Inspectorate of the Federal Tax Service and specify which subdivision will report. The deadline for submission of the notice is January 1; it will be impossible to change the subdivision during the year,
Transport and land tax
One of the positive changes for entities was that it is no longer required to submit several tax returns. Tax returns on transport and land tax shall not be submitted to tax authorities for 2020 and subsequent tax periods.
As part of the 2019 financial statements, this is the last time the companies submit tax returns on land and income tax. Tax inspectors will calculate the tax independently based on the available information and send the relevant notices to taxpayers.
Such practice has been applied to individuals for many years, and now it will be applied to legal entities as well.
Property tax
From 2020, it will no longer be required to submit calculations concerning advance payments on corporate property tax. Only the obligation to submit annual tax returns where a section dedicated to information on advance payments will appear.
In accounting statements for the tax period of 2019, a new form of the entity’s property tax has been introduced.
In addition, if a company is registered with several Inspectorates of the Federal Tax Service at the place of registration of its immovable property items and determines the tax base thereon as their average annual value, it can submit one tax return on all its items to any Inspectorate of the Federal Tax Service where it is registered at its choice. To report for 2020 centrally, the company needs to file a notice on or before March 2. It is not allowed to change the procedure for submission of the tax return chosen by the taxpayer during the tax period. To report centrally for subsequent years, such notices will need to be submitted annually.
The changes affecting property tax are positive for companies; they will simplify the work of accountants in the upcoming year, especially the work in companies registered with several Inspectorates of the Federal Tax Service.
Not all important changes affecting the work procedure of accountants in 2020 have been considered. It is essential to recall that lawmakers plan to bring the accounting procedures of Russian companies in line with IFRS, and from 2021 the use of certain Federal Accounting Standards will be mandatory.
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