Contracts concluded before 30 April 1997 under which technological equipment was to be imported VAT-exempt prior to 31 December 1997 were required to be registered with the Customs authorities before 18 June 1997 (see also our Tax News Reporter of 20 May 1997). We have now received information from an official form the Legal Department of the State Customs Committee who acknowledged that the deadline of 18 June is not the actual deadline for the registration of import contracts for technological equipment which were concluded before 30 April 1997. This deadline appears to be an internal deadline for the State Customs Service to report to the Government on how many import contracts have been registered. Following further contacts with the State Customs Committee, it is our understanding that the import contracts may continue to be registered . The official stated that a cut-off date would be established later this year, but this must be done by a Russian Government decree.
Instruction No 37 "On profits tax" amended
Amendments have been issued to reflect the changes introduced by the Law No 13-FZ of 10 January 1997. They clarify the method of making inflation adjustments to asset values for profits tax purposes. This adjustment may be used for fixed assets, raw materials, fuel and low-value assets. Other assets such as securities, foreign currency, intangibles and other types of property are not subject to the adjustment.
The timing of the recording of non-realisational incomes and expenses for tax purposes should be based on the accounting regulations, i.e. on an accruals basis - this follows from the form disclosing the adjustments to accounting profits enclosed to the Instruction.
It is stated that no adjustment of accounting profit should be performed for tax purposes for the amounts of positive and negative exchange rate differences from 21 January 1997. This conflicts with the previous view that negative exchange rate differences may be deducted only from the date when Regulation No 552 was amended, is 27 March 1997. We are seeking confirmation of this position with regard to this deduction with the tax authorities. A number of other minor amendments were also introduced.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
For further information contact Alla Shaulina on tel: +7 503 232 5511 fax: +7 503 232 5522 or e-mail directly: Alla_Shaulina@ru.coopers.com or enter a text search 'Coopers & Lybrand' and 'Business Monitor'.
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15 July 1997