Amendments to the Tax Code

31.03.2020 the Russian State Duma passed a law amending the Tax Code and legislation on payment of social insurance contributions.

We would like to inform you that on March 31, 2020 the Russian State Duma passed a law on the basis of the Draft Law No. 862653-7 amending the Tax Code and legislation on payment of social insurance contributions. Once approved by the Federation Council and signed by the President, it will come into force. Some changes will be applied from the moment of their publication; other will take effect next year.

1. Non-working days are equated to public holidays and weekends for calculating time PERIODS

After the President declared the period from March 30 to April 3, 2020 as non-working days, there was uncertainty: whether to submit annual reports during the non-working week or to wait for the first working day.

The draft law introduces changes that will allow avoiding this situation in the future: henceforth, if the Decree of the President establishes non-working days, the end date of a given time period is the nearest working day following non-working days and weekends.

This procedure will be applied to all cases where the Tax Code sets periods of time in days (i.e. working days, not calendar ones), and therefore will affect the reporting due dates, as well as the deadlines for submitting documents requested during a tax audit.

The changes will take effect as soon as the Law is officially published.

Before the Draft Law

Uncertainty over the Presidential Decree declaring non-working days from March 30 to April 3, 2020


The previous procedure for calculating time periods:

if the last day of the period falls on a weekend fixed by the Russian legislation or a public holiday, the end date of a given time period is the nearest working day following this non-working day. (part 7 of Article 6.1 of the Tax Code)

How to determine due dates: neither the Tax Code nor Labor Code contains "non-working days" – there are "public holidays" and "weekends". The Ministry of Finance of the Russian Federation (letter dated 27.03.2020 # 07-04-07/24096/VD-4-1/5303@), announced the postponement of the deadline for submission of annual financial statements on the first business day – April 6, 2020. No clarifications were issued on due dates for tax reporting.

The new procedure for calculating periods of time:

if the last day of the period falls on a weekend fixed by the Russian legislation / a Decree of the President or a public holiday, the end date of a given time period is the nearest working day following this non-working day (part 7 of Article 6.1 of the Tax Code).


2. The Russian Government haS been given expanded powers for 2020

The Russian Government is entitled to issue regulations providing for the period from 01.01.2020 to 31.12.2020:

  1. Suspension, cancellation, or postponement of tax control measures, including transfer pricing audits, suspension of the running of the expiry period, including the terms of appointment (conduct) of tax audits, for the period of suspension or postponement of these tax control measures.
  2. Extension of the deadlines for paying taxes (advance tax payments), including those stipulated by special tax regimes, of fees and social insurance contributions.
  3. Extension of the deadlines for advance payments on the transport tax, property tax for organizations and land tax imposed by Federal Subjects and municipalities.
  4. Extension of the deadlines for submitting tax returns (calculations), accounting (financial) and (or) other documents(s) to the tax authorities.
  5. Extension of the deadlines for sending and executing requests for the payment of taxes, fees, social insurance contributions, penalties, fines and interests, and for taking the decisions on its collection.
  6. Additional grounds for granting a deferral (installment) in 2020 for the payment of taxes, social insurance contributions, penalties, fines, interest, as well as changes in the procedure and conditions of its provision.
  7. Grounds and conditions for non-application or new ways of applying methods of enforcing the obligation to pay taxes, fees, and social insurance contributions.
  8. Grounds and conditions for absence of liability in case of failure (late submission) of tax declarations (calculations), accounting (financial) reporting and (or) other documents (information) to tax authorities.

Similar powers are granted to the Government regarding social insurance contributions against industrial accidents and occupational diseases.

The amendments will come into force since the date of the official publication of the Law. Government regulations can be applied to legal relations arising from January 1, 2020.

As the Government of Russia obtains extended powers, we draw your attention to the draft Government Resolution published on the Federal Portal of Draft Normative Legal Acts. In our opinion, the Government of Russia will adopt this resolution as soon as the law in question enters into force.

The current version of the draft Resolution provides a number of preferences for taxpayers, including:

  • extension of some tax payment deadlines for organizations and individual entrepreneurs included in the unified register of SMEs as of 01.03.2020 and operating in sectors of the economy identified by the Russian Government as the most affected, and for microenterprises – of the deadlines for paying social insurance contributions as well;
  • temporary suspension of initiation and conduct of the first and the second rounds of field tax audits, Transfer Pricing audits, checks on currency control legislation compliance (with some exceptions) for all taxpayers (tax agents, social contributions payers);
  • extension of the deadlines for submitting tax returns (except for VAT returns), advance payments, accounting (financial) statements, documents, explanations and other information provided upon request;
  • temporary non-application of sanctions under Article 126 of the Russian Tax Code (failure to submit documents and information to the tax authority) and some other.

We plan to prepare a separate alert with our detailed comments after the resolution is adopted by the Government.


The supreme executive authorities of the constituent entities have the right in 2020 to issue normative acts providing for the period from January 1, 2020 to December 31, 2020:

  1. extension of tax payment due dates stipulated by the following special tax regimes: Unified Agricultural Tax, Simplified Taxation System (STS), Unified Tax on Imputed Income (UTII), and Patent System of Taxation;
  2. extension of due dates established by federal constituent entities and municipalities for payment of regional and local taxes (advance payments of tax) and trading fee, if these due dates are not extended by the Government of Russia, or if the Government has established earlier due dates for their payment.

The modifications will come into force on the date of publication of the Law. Normative acts of the supreme executive authorities of the constituent entities may provide for their application to legal relations that have arisen since 1 January 2020.

! We recommend you monitor the advent of relevant acts of the constituent entity of the Russian Federation where you conduct business.

4. Changes in taxation of interest income of individuals

Pursuant to the Instructions reflected in the President’s address with respect to the spread of coronavirus infection, Draft Law №862653-7 proposes the following changes to the personal income tax legislation.

Before the Draft Law

Changes under the Draft Law

Effective from

The difference between the amount of interest accrued in accordance with the terms of the contract and the amount of interest calculated based on the Central Bank refinancing rate increased by 5 percentage points is subject to taxation. The personal income tax rate in this case is 35%.

The subject for taxation of interest income on deposits is the interests received by taxpayer during tax period on all deposits (account balances) in Russian banks, over the amount of interest, calculated as 1 mln RUB multiplied by key rate of Central Bank of Russia, effective on the first day of the tax period. The personal income tax rate – 13%.


Income in the form of interest received on deposits (account balances) in rubles in Russian banks, the interest rate on which during the entire tax period does not exceed 1% per annum, as well as on escrow accounts, is not taken into account for calculation of the tax base of individual.


January 1, 2021

Benefits for bond income. In particular, coupons of corporate bonds issued after January 1, 2017 are subject to personal income tax at the rate of 35% applicable to the amount of income exceeding the interest calculated at the key rate increased by 5% per annum. Incomes in the form of a discount received upon redemption of traded bonds of Russian companies denominated in rubles and issued after January 1, 2017 are not taxable.

Cancellation of all benefits, and taxation of income on corporate bonds regardless the date of issue, as well as on state and municipal bonds at the 13% tax rate.

January 1, 2021


Banks are obliged not later than February 1 of the year, following the reporting tax period, to submit to the Tax Authorities (at their registration) information on the amount of interest paid. Based on the information provided, the Tax Authorities calculate the amount of tax based on the results of the tax period.

This taxation procedure applies to income received by taxpayers starting from January 1, 2021. Therefore, aсcording to the new regulations, the tax on interest income must be paid by individuals (based on a tax notice sent by the Tax Authorities) for the first time by 1 December 2022.

5. Reduced social INSURANCE contribution rates for small and medium-sized enterprises

Draft Law №862653-7 proposes starting from 2021 the implementation of the following reduced social insurance contribution rates with respect to payments, exceeding the minimum wage, for payers regarded as small and medium-sized enterprises:

  • on obligatory pension insurance - 10%,
  • on obligatory social insurance in case of temporary disability and with respect to maternity - 0%,
  • on obligatory medical insurance - 5%.

It is proposed to apply the same rates for small and medium-sized enterprises for the period from April 1, 2020 to December 31, 2020.


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