How to determine whether a company can extend the deadlines for tax payment and report submission due to coronavirus
The Government has resolved that the deadlines for tax payments could be extended for some organizations by 4-6 months so that they could carry over their tax burden from the first part of the year to the second. The Government will make further decisions depending on the changes in the economic situation.
Not all companies will be eligible for deadline extension. Only those that:
- operate in the most affected industries;
- were included in the register of small and medium enterprises as of March 01, 2020;
will be able to benefit from extended deadlines.
Moreover, no deferment is provided for the following taxes:
- Personal income tax;
- Professional income tax;
- Profit tax withheld from revenues paid to foreign organizations by sources in Russia.
The diagram below shows which companies may or may not benefit from the special deferments introduced due to the current situation. We have described in more detail below the deferment periods for various tax and social insurance contribution payments.
1. Deferment of tax payment if a company does not operate in the most affected industries
No special tax deferments have been set out for companies that do not operate in the most affected industries specified in presidential decrees. However, any organization may under the general procedure postpone tax payment:
- due to the non-working period from March 30 to April 30;
- due to the damage caused as a result of circumstances of force majeure.
Postponement of tax payments on non-working days established by presidential decrees
Presidential decrees declared the period from March 30 to April 30, 2020 as non-working days in Russia for all organizations except those included in the lists of exceptions. There are 3 categories of companies:
- Organizations operating throughout the period March 30-April 30;
- Organizations operating throughout the period April 4-April 30;
- Organizations not operating throughout the period March 30-April 30.
The deadlines for payment of taxes is postponed for the organizations not operating throughout the period March 30-April 30 to the first working days following those non-working days.
|Operating from March 30 to April 30||Operating from April 4 to April 30||Not operating from March 30 to April 30|
|Tax payment for March 1-March 27||Deadline not postponed||Deadline not postponed||Deadline not postponed|
|Tax payment for March 28-March 31||Deadline not postponed||Deadline postponed to April 4||Deadline postponed to May 6|
|Tax payment for April||Deadline not postponed||Deadline not postponed||Deadline postponed to May 6|
Individual postponement due to damage caused by coronavirus
When an organization applies for individual tax payment deferment or installment plan due to coronavirus, it needs to prove that the pandemic caused damage to the organization.
To do so, an application must be sent to tax authorities with a debt repayment schedule. If an organization applies for a deferment of more than 6 months, then a bank guarantee or property pledge will be required.
No penalties for late tax payments will be accrued from the application submission date until tax authorities issue a decision.
Possible deferment with no loss in profit tax return:
- Decrease in revenue by 10%-20% – 3 months;
- Decrease in revenue by >20%-30% – 6 months;
- Decrease in revenue by >30%-50% – 9 months;
- Decrease in revenue by >50% – 1 year.
Possible deferment with loss in profit tax return:
- Decrease in revenue up to 10% – 3 months;
- Decrease in revenue by >10-20% – 6 months;
- Decrease in revenue by >20-30% – 9 months;
- Decrease in revenue by >30% – 1 year.
2. Companies operating in the most affected industries
The Government has approved a list of sectors of the economy that are the most affected by COVID-19 (Decree No. 434 dated April 03, 2020). This list will be revised depending on how the situation develops. The list provided below is current as of April 3, 2020.
- Air transportation, airport activities, road haulage:
- OKVED code 2: 49.3 – Other land passenger transport activity;
- 49.4 – Road freight transport and transportation services;
- 51.1 – Passenger air transport activities;
- 51.21 – Cargo air transport activities;
- 52.21.21 – Bus station and coach terminal activities;
- 52.23.1 – Support activities related to air transport.
- Culture, leisure and entertainment:
- 90 – Artistic activities, art and entertainment activities.
- Fitness activities and sports:
- 93 – Sports, leisure and entertainment activities;
- 96.04 – Fitness activities;
- 86.90.4 – Health resort and treatment center activities.
- Travel agencies and other organizations providing tourism services:
- 79 – Activities performed by travel agencies and other organizations providing tourism services.
- Hotel business:
- 55 – Provision of temporary residence.
- 56 – Provision of food and beverages.
- Further or additional education, private education activities:
- 85.41 – Additional education to children and adults;
- 88.91 – Children day care.
- Organization of conferences and exhibitions:
- 82.3 – Organization of conferences and exhibitions.
- Provision of consumer services (repair, laundry, dry cleaning, hairdressing and beauty salons):
- 95 – Repair of computers, personal and household items;
- 96.01 – Laundry and dry cleaning of textile and fur items;
- 96.02 – Hairdressing and beauty salons.
If a company engages in any of the activities in the above list, then it will be necessary to determine whether the company is included in the register of small and medium enterprises.
The companies not affected by the current situation, i.e. engaged in activities not listed above will be able to apply only for the deferment outlined in section 1 above.
2.1. Companies in the register of small and medium enterprises
The deadlines for payment of the following taxes will be postponed for companies operating in the most affected industries provided that they are included in the register of small and medium enterprises as of March 01, 2020:
- Profit tax, single agricultural tax, and tax under the simplified taxation system for 2019 – postponement of 6 months
- Other taxes (except VAT and taxes payable as tax agent) and advance tax payments
- For March and Q1 2020 - postponement of 6 months
- For April-June - postponement of 4 months
- If regional and local authorities have provided for the payment of advances for transport tax, corporate property tax and land tax, then these payments may be postponed as follows:
- For Q1 2020 – no later than October 30, 2020;
- For Q2 2020 – no later than December 30, 2020.
No special tax postponements are provided for companies that are not SMEs. The only possible postponements are those outlined in section 1 above.
Microenterprises meeting the above requirements are entitled to postpone the deadline for payment of social insurance contributions.
Companies are recognized as microenterprises if they are included in the SME register and their:
- Average number of employees was not more than 15 in 2019;
- Total taxable income for all types of activities and tax regimes was less than RUB 120 in 2019.
Such companies are entitled to deadline extension for payment of social insurance contributions:
- From payments to individuals for March-May 2020 – postponement of 6 months;
- For June-July 2020 – postponement of 4 months.
3. Extension of deadlines for tax return filing
All organizations are entitled to a 3-month extension of the deadline for filing reporting which must be submitted in March-May 2020. This reporting consists of the following:
- Tax returns (except VAT returns);
- Tax calculations of the amounts of income paid to foreign organizations and withheld taxes;
- Calculations of the amounts of personal income tax calculated and withheld by tax agents;
- Calculations of advance payments.
Important note: The above deadline extensions do not entail an extension of the payment deadlines, especially when the payment deadline is set no later than the date of tax return (calculation) submission.
If you are wondering whether your company needs to pay this or that tax or whether it should submit reporting, please do not hesitate to contact us. Simply use the form below or contact us by phone or email, and we will help you figure it all out.