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Year 2015

Case 6

On April 7, 2015, a law regulating that a company is obliged to have a seal was abolished. The company that asked for advice on this issue was established on April 7, 2015 and originally it had a seal.

Question:

  1. Is the company obliged to make seal impressions on source accounting documents now that the law was abolished if it still has a seal?

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FinExpertiza consultants

Indeed, since April 7, 2015, limited liability companies and joint-stock companies are entitled to have no seal 1. Exceptions are as follows:

  • The company is to have a seal in accordance with its Charter;
  • The company is to have a seal in accordance with a federal law.

In this case, the company was established on April 7, 2015 and it still has a seal.

In this respect, let us consider the issue on seal impressions in source accounting and tax accounting documents.

Article 9 of the Law on accounting 2 does not classify a seal impression as an obligatory particular of a source accounting document. Neither does Article 252 of the Tax Code of the Russian Federation regarding the requirements for source accounting documents showing expenditures for taxation purposes.

At the same time, source accounting forms are determined by a company on its own 3. Thus, a seal impression may be an element of a source accounting form approved by a company. This may be evidenced, for example, by a particular space in a document indicated as "seal" or otherwise.

A similar case arises when a company decides to use unified source documents approved by the Russian Federal State Statistics Service (Rosstat); many of these documents also have seal impressions.

Examples of such templates include "Service Acceptance Certificate" (form No КС-2) 4, "Shipment delivery note" (form No 1-Т) 5, "Cash receipt note" (fоrm No КО-1) 6 and some others.

Therefore, if the company maintains a seal (in other words, seal is stipulated by its Charter) after April 7, 2015, we recommend making seal impressions in the documents that provide for such a particular. We believe that absence of a seal impression in other source documents will not be a defect of form.

Footnotes:

1 Paragraph 5 of Article 2 of Federal Law No 14-FZ "On limited liability companies" as of February 8, 1998, Paragraph 7 of Article 2 of Federal Law No 208-FZ "On joint-stock companies" as of December 26, 1995.

2 Federal Law No 402-FZ "On accounting" as of December 6, 2011.

3 In accordance with Part 4 of Article 9 of the Federal Law "On accounting" templates of source accounting documents are determined by the director of the economic entity as advised by an officer authorized to maintain accounting records.

4 Approved by Resolution No 100 of the Russian Federal State Statistics Service as of November 11, 1999.

5 Approved by Resolution No 78 of the Russian Federal State Statistics Service as of November 28.

6 Approved by Resolution No 88 of the Russian Federal State Statistics Service as of August 18, 1998.

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Case 5

The company faces the problem that the new Law "On accounting", unlike the previous Law, has no requirement for the director to decide upon the list of persons authorized to sign source accounting documents.

Questions:

  1. What is the procedure to determine the list of persons entitled to sign source accounting documents?
  2. May the former procedure be used, when the list of persons entitled to sign documents was agreed upon with the Chief Accountant and approved by the order of the entity?

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FinExpertiza consultants:

Indeed, the former Law "On accounting" stipulated that the list of persons entitled to sign source accounting documents was approved by the company's director in consultation with the Chief Accountant 1.

The new Law 2 does not have this regulation.

Therefore, the procedure to determine the list of persons entitled to sign source accounting documents is not regulated by law at present.

At the same time, the Law stipulates the necessity to determine the list of persons responsible for signing source documents.

In accordance with Article 9, Part 2, paragraphs 6 and 7 of Federal Law No 402-FZ as of December 6, 2011, the required details of a source accounting document include:

  1. The position of a person (persons) who entered into the transaction and are responsible for its registration, or the position of a person (persons) responsible for registration of the event;
  2. Signatures of the specified persons indicating their surnames and initials, or other details necessary for identification of these persons.

Besides, the Law has preserved the regulation that bookkeeping and preservation of accounting documents is managed by the director of an economic entity 3.

Therefore, according to the spirit of the new Law, the entity's director, being a person responsible for the management of accounting, has to decide upon persons responsible for registration of transactions and events, i.e. items of business operations 4.

In our opinion, the list of such persons may be determined via issue of an executive order. In this case, unlike the former procedure, there is no need to agree with the Chief Accountant upon this list.

The Ministry of Finance of the Russian Federation has a similar point of view. According to it, pursuant to Part 1 of Article 9 of Federal Law No 402-FZ, the director of an economic entity determines the source accounting documents to be used for registration of business transactions of an economic entity, and decides upon the list of persons entitled to sign source accounting documents 5.

It should be noted that in accordance with the spirit of Federal Law No 402-FZ as of December 6, 2011, source accounting documents may be signed by not only an entity's employees, but also by other persons acting on its behalf (for example, by persons employed under civil law contracts).

According to its legal nature, the order is an internal (local) legal act and cannot impose obligations on persons not employed by the entity. In case of a necessity to authorize such persons to sign source accounting documents, these persons may be granted power of attorney in accordance with the civil legislation 6.

Footnotes:

1 Paragraph 3 of Article 9 of Federal Law No 129-FZ "On accounting" as of November 21, 1996.

2 Federal Law No 402-FZ "On accounting" as of December 6, 2011.

3 Part 1 of Article 7 of Federal Law No 402-FZ as of December 6, 2011.

4 Paragraph 8 of Article 3 of Federal Law No 402-FZ as of December 6, 2011.

5 Information No PB-10/2012 "On the Federal Law of 6 December 2011 No 402-FZ "On Accounting" of the Ministry of Finance of the Russian Federation.

6 Articles 185-189 of the Civil Code of the Russian Federation.

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Case 4

The entity outsourced a transport company for transportation services in 2013.

Question:

  1. Does the organization need to receive (have, register and so on) an invoice to confirm the validity of the costs for recognitions of expenses for tax purposes on the basis of the contract for provision of transport and forwarding services in case of signing certificate of completion?

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FinExpertiza consultants:

  1. Need to register the invoice as it is set out in Annex 4 to Carriage rules only applies to legal relations of the parties under the contract of carriage, according to which "Transport Company", OOO is the shipper. In our opinion, which is supported by, inter alia, the position of the Ministry of Finance of the Russian Federation in 2013, the filling of the invoice is a sine qua non for recognition of the cost of shipping for income tax calculation.
  2. As for registration of the invoice in terms of the parties relations under the freight agreement the following should be noted: in accordance with the legislation, the freight forwarder is obliged to issue only forwarding documents, which the invoice is not part of. This is also true for the situation when the forwarder enters into a contract of carriage with the carrier on its own behalf, and to the situation when the freight forwarder ships the goods with the help of his own transport. However this document is necessary, if the parties to a freight forwarding agreement provide for issuance of the invoice.

JUSTIFICATION. In accordance with item 1 art. 252 of the Tax Code reasonable and documented costs incurred (incurred) by the taxpayer are recognized as expenses.

By documented expenses are meant, in particular, costs, documented and issued in accordance with the legislation of the Russian Federation (paragraph. 4 item. 1 art. 252 of the Tax Code).

Please note that the relationship of the parties confirmed by the documents under the contracts depends on the type (legal nature) of this contract. Contracts, provided by the client for example, lead to the conclusion that the client's operation includes conclusion of contracts of carriage and freight forwarding contracts: in particular, we qualify1 Freight agreement number 1/CSA/PT of 03.05.2011 as contract of carriage, while the freight forwarding contract No. 525 of 25.04.2008, for example, is a contract of freight forwarding (as well as contract No. 4 of 28.04.08). These contracts have a different legal nature and, accordingly, different consequences of documenting the relationships of the legal parties.

To solve the issue of registration of the invoice under contracts of carriage and freight forwarding, we used the following documents:

  • Civil Code (Chapter 40, 41);
  • Federal Law of 08.11.2007 No 259-FZ "Charter of road transport and urban surface electric transport" (hereinafter - the "UAT");
  • Government Decree of 15.04.2011 No 272 "On approval of motor freight transportation" (hereinafter - the "traffic rules");
  • Federal Law of 30.06.2003 No 87-FZ "On the forwarding activity" (hereinafter - the "Law on TED");
  • Government Decree of 08.09.2006 No 554 "On approval of the Rules of forwarding activities" (hereinafter - the "TED Rules");
  • Order of the Ministry of Transport of the Russian Federation of 11.02.2008 No 23 "On approval of the design and form of forwarding documents."

Below, we are presenting some basic terms and definitions that are relevant to the issues at hand:

  • Contract of carriage (art. 785 of the Civil Code of the Russian Federation): under the contract of carriage the carrier undertakes to deliver the goods entrusted to him by the sender to a destination and give them to the person authorized to receive them (the recipient), and the sender undertakes to pay for shipping a specified fee.
  • Freight forwarding agreement (art. 801 of the Civil Code of the Russian Federation): under freight forwarding agreement one party (freight forwarder) undertakes to perform for the fee and at the expense of the other party (the client-shipper or the consignee) or arrange the performance of certain services associated with shipping and specified by the freight forwarding agreement.
    Freight forwarding contract may provide for duties of the forwarder to arrange shipping and transport by the route selected by the forwarder or the client, the forwarder is obliged to conclude on behalf of the client or on behalf of himself a contract (s) of carriage in order to ensure the sending and receiving of cargo, as well as other duties related to the carriage.
    As an additional service contract of freight forwarding can provide for implementation of such operations necessary for cargo shipment, as obtaining documents required for export or import, meeting customs requirements and other formalities, checking the quantity and condition of the cargo, its loading and unloading, payment of fees, taxes and other costs imposed on the client, storage of goods, its receiving in destination point, as well as performing other operations and services envisaged by the contract.
    Freight forwarding agreement (item 4 of the Rules of TED) – a civil transaction, under which one party (freight forwarder) assumes the provision of freight forwarding services for the fee or at the expense of the other party (the client).
  • Freight forwarding services (item 4 of the Rules of TED) – the services associated with cargo transportation, conclusion of contracts of carriage, provision of dispatch and receipt of the goods, as well as other services related to shipping.
  • Forwarder (item 4 of the Rules of TED) – the person performing or arranging the performance of certain freight forwarding contract of freight forwarding services.
  • Client (item 4 of the Rules of TED) – the person/entity who has entered into freight forwarding agreement with the freight forwarder and obliged to pay for the freight forwarding services provided by the forwarder.
  • An invoice is a document confirming the fact of the contract of carriage (item 2 of art. 785 of the Civil Code, art. 6 Carriage Rules, art. 2, item 1 art. 8 of UAT). The form of an invoice approved by the Carriage rules is currently mandatory for use in case of conclusion of the contract of carriage.
  • Consignor (art. 2 of UAT) – an individual or an entity that under a contract of carriage acts on its own behalf or on behalf of the owner of goods and is specified in the invoice.
    Consignor (art. 4 of the Rules of TED) - the person or the entity that presents goods for transportation.
  • Consignee - a natural or legal person entitled to receive the goods (art. 2 of UAT).
    Consignee (art. 4 of the Rules of TED) - a person authorized to receive the goods from the freight forwarder at the end of the carriage.
  • Carrier (art. 2 of UAT) – a legal entity or an individual entrepreneur that assumed an obligation under the passenger carrier contract or contract of carriage to carry the passenger and deliver the baggage and deliver the cargo entrusted to him by the consignor to the destination and give the baggage and the cargo to the person authorized to receive them.
    Carrier (item 4 of the Rules of TED) – the person performing the shipping under the contract of carriage.

Filling in the invoice for the contract of carriage

In accordance with item 2 art. 785 of the Civil Code of the Russian Federation the conclusion of the contract of carriage is confirmed by the preparation and issuance of an invoice to the shipper of goods (bill of lading or other document for the goods, provided according with the relevant transport charter or code).

The Transport Regulations entered into force on 25.07.2011. They instruct a new form of an invoice (Appendix No 4 to the Transport Regulations). Item 6 of the Transport Regulations states that the conclusion of the contract of carriage is confirmed by the invoice, prepared by the consignor (if otherwise is not dictated by the contract of carriage) in the specific form provided in Annex No 42.

The new Federal Law of 06.12.2011 No 402-FZ "On Accounting" came into force in 2013. One of the innovations was the abolition of the mandatory use of standardized forms of source documentation. According to item 4 art. 9 of the Law the manager of the business entity can independently develop and approve forms of the source documentation, given the fact that the documents contain all the required details listed in item 2 art. 9 of the Law.

In Information No PB-10/2012 "On the Federal Law of 6 December 2011 No 402-FZ ‘On Accounting' coming into force from 1 January 2013" the Ministry of Finance says the following:

  • On the basis of part 4 of article 9 of the Federal Law No 402-FZ primary accounting documents shall be in forms approved by the manager of the business entity. In addition, each primary accounting document must contain all the mandatory details specified in part 2 of article 9 of the Federal Law No 402-FZ.
  • From 1 January 2013 forms of primary accounting documents contained albums of unified pro-formas for source accounting documentation are not obligatory for use. However, the form of documents used as the primary accounting documents approved by the authorized authorities and valid under other federal laws (e.g. cash documents) are still mandatory for use.

According to the Ministry of Finance, the organization does not have the right to adopt its form of an invoice. The Ministry of Finance believes that from 01.01.2013 a form of an invoice approved by the RF Government Decree of 15.04.2011 No 272 is still valid. If the entity that requires transportation (i.e. the shipper) received an invoice in the form different from the form approved by the Government of the Russian Federation, the tax authorities may exclude the transportation cost from the profit tax base. In its letters the Ministry of Finance of the Russian Federation concludes that the invoice form approved by the RF Government Decree is mandatory and cannot be adopted independently3, and we agree with this.

Thus, entities must execute an invoice in accordance with the form stated in Appendix 4 to Transportation Rules for rendering transportation services. Therefore an invoice is required for income tax purposes as a document that supports the expense on transportation.

Russian Ministry of Finance in the letter dated 23.04.2013 No 03-03-06/1/14014, dated 28.01.2013 No 03-03-06/1/36 indicated that the cost of shipping goods and materials by road in order to calculate the income tax in 2013 must be confirmed by the bill of lading, which is issued to confirm the conclusion of the contract of carriage. Earlier, the Ministry of Finance clarified that taxpayers can confirm the cost of shipping goods under a contract with the organization with a bill of lading as well as with invoice form 1-T4.

Filling in the invoice for freight forwarding agreement

As for TED documentation the TED rules provide for a special set of forwarding documents to be drawn up depending on the situation and in accordance with the kind of provisioned forwarding services (the organization that has taken up shipping with acceptance of goods for carriage or not, and/or additional services).

Freight forwarding documents5 commonly are (item 5 of TED rules):

  • Forwarders Certificate of Transport (determines the list and conditions of freight forwarding services provision under the contract of freight forwarding);
  • Forwarders Certificate of Receipt (the freight forwarder's confirmation of receipt of cargo from the client or from the shipper specified by him);
  • Warehouse receipt (confirms that freight forwarder has accepted the client's cargo for warehousing when such warehousing occurs).

Item 6 of the TED rules determines that depending on the nature of freight forwarding services, including transportation of cargo in international traffic, parties to the freight forwarding agreement can determine the possibility of use of forwarding documents, not specified in item 5 of the Rules.

Thus, if the freight forwarder has given customer proper forwarding documents in accordance with the nature of the services provided, he fully complied with the requirements to documentation for the service provided under freight forwarding agreement. The aforementioned is true for the situation when the freight forwarder enters into a contract of carriage with the carrier on his own behalf, as well as to the situation when the freight forwarder arranges the shipment with his own transport, as Transportation rules governing filling of invoice, only apply to the contract of carriage, which is not concluded with the client in this case.

In the situation when the freight forwarder arranges shipment with his own transport, the concluded TED agreement shall not be construed as a contract of carriage, that is, its civil nature is not changes, it still remains the TED contract. So the law does not require preparation of the invoice (the new form). Any other (optional) document can only be set by the contract. But if the parties agreed on a mandatory exchange of invoices, surely such document should be included in a set of documents under the contract.

The absence of invoices within the set of source documents in case, when the obligation to fill and provide them is secured by the contract, entails for "Transport Company", OOO tax risks associated with not recognizing these expenses in the tax base. In this case, the probability of decision of the matter in favor of the "Transport Company", OOO at the pre-trial stage of tax dispute settlement is low. In court, the probability of a positive outcome of the case is quite high, given that arbitration practice deems standard forwarding documents sufficient to confirm the cost of TED, as well as typical instruments for provision of services. References to court decisions:

  • Resolution of the Federal Volga Region of 28.03.2011 N A55-13299/2010
  • Resolution of the Federal Volga Region of 28.03.2011 in case N A55-13299 / 2010
  • Resolution of the Federal Far Eastern District of 06.10.2010 N F03-6475/2010 in case N A59-6885/2009
  • Resolution of the Federal Northwest District from 24.07.2009 N A56-52305/2008
  • Resolution of the Federal Volga Region of 07.04.2009 N A12-14314/2008
  • Resolution of the Federal Northwest District from 24.07.2009 N A56-52305/2008
  • Resolution of the Federal Volga Region of 03.06.2009 in case N A12-17030/2008
  • Resolution of the Federal Volga Region of 07.04.2009 N A12-14314/2008 LLC "European chemical company"
  • Resolution of the Federal Volga Region of 03.06.2009 N A12-17030/2008, JSC "Alliance printing companies "Yugpoligrafizdat"
  • Resolution of the Federal Volga Region of 29.04.2008 N A12-11207/07-C65 GUP "Volgofarm"
  • Resolution of the Federal Central District of 25.03.2008 N A62-1289/2007 about "Gagarinskoe milk"

Footnotes:

1 In accordance with art. 431 of the Civil Code in interpreting the terms of the agreement the court shall take into consideration the literal meaning it contains words and phrases. The literal meaning of the terms of the contract in case of ambiguity is established by comparison with the other terms of the contract and its meaning of the whole.

2 See, for example, Resolution of the Federal UO from 19.02.2013 N F09-13653/12. In this judgment, the Court stated that "the conclusion of the contract of carriage of goods is confirmed by the preparation and issuance of the shipper of goods bill of lading, waybill does not confirm this action."

3 See, for example, Letter of the Russian Ministry of Finance 28.01.2013 N 03-03-06/1/36: "In accordance with item 2 art. 785 of the Civil Code drafting and issuance of the bill of lading support the conclusion of the contract of carriage. Item 6 of the Rules of transportation of goods by road, approved by Decree N 272, says that filling of the bill of lading, that confirms the conclusion of the contract of carriage is made as in the form set out in Annex N 4 to the Rules."

4 See Ministry of Finance Letter of 22.12.2011 No 03-03-10/123.

5 Forwarding documents are an integral part of the freight forwarding agreement.

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Case 3

The company has purchased boars with high PIC genetics from third party suppliers. Before being put into operation as fixed assets, they are kept in quarantine for 2-3 months. This is done in order to eliminate the risk of animal disease. During this period, the animals are not used in the core business, do not bring economic benefits, can be sold (some of them) to other sites of the segment, i. e. they are not defined as fixed assets. When animals are quarantined, medicine is used and they are fed.

Question:

  1. Can the company charge the cost of their maintenance (feeding and medicine) to 08 account?

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FinExpertiza consultants:

In our opinion the costs of the boars before they are ready for their intended use should be capitalized into the price of the animal.

JUSTIFICATION. As it became clear from the question, originally the entity has acquired breeding animals (breeding boars) not for resale, but for use for reproduction. In this case one should not be afraid of possible subsequent sale of some individual animals, as overall intentions of the entity are important with respect to the animals batch. We proceed from this assumption answering the question.

A quarantine process described in the request is required by the standard veterinary, sanitary and epidemiological rules of preparing animals for use. During the quarantine vaccination, deworming and other mandatory veterinary procedures are performed with individual animals, without those it is impossible to use the animal for its intended purpose because of the significant risk of mortality of the whole herd. So it is true that the main criteria for recognition of fixed assets during the animal quarantine period are not eligible, as specified in the request. But it is only so because the item is not yet ready for use, not because it temporarily serves as the purpose of earning income.

Breeding and productive animals intended for breeding, eventually compose the main herd of the company and, under the provisions of RAS 1.6 "Accounting of fixed assets" are recorded as fixed assets1. It is assumed that you meet the criteria for recognition of the fixed assets item, which are given in item. 4 RAS 6/012:

  • 4. The asset is accepted for accounting as fixed asset if the following criteria are met simultaneously:
    • a) the item is intended for use in manufacture of products, performance of work or provision of services, for the management needs of the organization or for provision by the organization for temporary possession and use or for temporary use;
    • b) the item is intended to be used for a long time, i.e. a period of more than 12 months or the normal operating cycle, if it exceeds 12 months;
    • c) the organization does not intend to resale the item later;
    • d) the item is capable of bringing economic benefits (income) in the future.

But until the acquired adult animals are fully ready for operation are debited to 08 account "Investments in non-current assets" at the actual self-cost of their acquisition, including shipping costs. And only the costs associated with the completed transactions on main herd composition are moved from account 08 "Investments in non-current assets" to debit of account 01 "Fixed assets" (Instructions for use of accounts of financial and economic activities of organizations).

The completed transactions on main herd composition are the transactions completed after the end of the quarantine period, which is a common and normal stage of preparation of the fixed assets ensuring the full readiness of the items for use. Thus, the cost of maintaining the animals and performing proper quarantine measures, which the company carries out until transfer of boars to the main herd, are aimed at bringing the animal to a condition suitable for use.

Under par. 83 RAS 6/1 such costs compromise initial cost of the item equally along with fixed assets of acquisition costs.

Thus, the cost of animal feed and veterinary preparations in the quarantine period in our view, should increase the initial cost of the animals, by analogy with the same costs, arising, for example, in the process of shipping of animals to the organization (see. item 48 of ‘Guidelines on accounting of investments carried out in the form of capital investment in the agricultural organizations', approved by the Ministry of Agriculture of the Russian Federation on 22.10.2008, item 148 Guidelines on accounting of fixed assets of agricultural organizations, approved by the decree of the Ministry of Agriculture of the Russian Federation on 19.06.2002 No. 559):

  • 48. Apart from the procedures associated with the main herd composition by growing own young stock the actual costs of acquisition of productive adult and workstock for main herd composition are taken into account.
    Cost of animals purchase and shipment costs are included into the actual cost for building up the main herd through the purchase of adult and productive workstock.
    The cost of adult animals purchased from breeding plants and from other organizations is recognized in the debit of account 08 "Investments in non-current assets", subaccount 7 "Acquisition of adult animals" and the credit of account 60 "Settlements with suppliers and contractors" in the amount of the actual purchase costs, including shipping costs. VAT amount is recognized individually by moving it from account 19 to the debit of account 68.
    Completed transactions associated with the main herd composition by purchase of adult animals are moved from the credit of account 08 "Investments in non-current assets" to the debit of account 01 "Fixed Assets" in the full amount of the cost without value added tax. The amount of VAT is usually debited from account 19 to account 68.
    Costs of adult animals shipment to the agricultural organization are debited to account 08 "Investments in non-current assets", subaccount 7 "Acquisition of adult animals" and credited to accounts, depending on the shipping method: 23 "Additional manufacturing" – for shipping by your own transport, 60 "Settlements with suppliers and contractors" or 76 "Settlements with various debtors and creditors" – in case transport services of other organizations are used, 70 "Settlements with staff associated with labor costs", 69 "Settlements with staff associated with social insurance and welfare" – salaries with deductions in case of cattle drive, 10 "Materials" – at the cost of feed, veterinary products, and others.
  • 148. Cost of adult animals shipment to the agricultural organization are charged to account 08 "Investments in non-current assets" from the credit of account 70 "Settlements with staff associated with labor costs", 69 "Settlements with staff associated with social insurance and welfare", 23 "Additional manufacturing" in case of shipping the stock by automobile transport, 10 "Materials" at the cost of feed, and others.

The fact that during the period of quarantine boars are not actually used does not mean that they "do not provide economic benefits" and therefore the cost of their maintenance are groundless. This is so because in this case the quarantine time is an integral part of the process of preparing animals for use. In our opinion one should not be afraid of unjustified increase in the initial cost of boar in tax accounting, as tax accounting of profit holds the same view for calculation of the initial cost of fixed assets in which the cost of making the item suitable for use is capitalized (item. 1 art. 2574, item 5 art. 270 of the Tax Code).

Footnotes:

1 Fixed assets include buildings, structures, operating and power machines and equipment, measuring and control devices and equipment, computers, vehicles, tools, production and household equipment and supplies, working, productive and breeding stock, perennials, internal roads and other related facilities.

2 With respect to the criterion of "c" of the item, we have already said that the sale of the animals beyond of the original plans for sale is possible and can lead to reshaping of the type of an asset (from the non-current in the current), if you between the change of plans and actual sale the entity prepares financial statements – in this the case for a fair presentation of information in the financial statements one will need to change the type of asset (subject to materiality assessment intended to sell the animals to indicate the financial position of the organization).

3 The amount of actual expenses of the organization for purchase, construction and manufacturing, with the exception of VAT and other recoverable taxes (except in cases stipulated by the legislation of the Russian Federation) is recognized as the initial cost of the fixed assets. Actual costs of purchase, construction and manufacture of fixed assets are amounts paid in accordance with the contract to the supplier (seller), as well as the amounts paid for the delivery of the item and bringing it into a state fit for use.

4 Article 257. Procedure for determining the cost of depreciable property
The initial cost of the asset is defined as the sum of the cost of its acquisition (and in case the primary means obtained taxpayer free, or identified as a result of inventory - as the amount at which such property is assessed in accordance with paragraphs 8 and 20 of Article 250 of this Code), construction, manufacturing, and bringing to a state in which it is suitable for use with the exception of the value added tax and excise duties, except as provided in this Code.
Article 270. Expenses not deductible for taxation purposes
The following costs not taken into account of the tax base:
5) in the form of the costs of purchase and (or) the establishment of depreciable property, as well as expenses incurred in the event of completion, equipping, reconstruction, modernization, technical re-equipment of the fixed assets, with the exception of the expenses referred to in item 9 of article 258 of this Code.

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Case 2

The company was established in April 2014 in Moscow, and in 2014 the Company changed its location and moved to Sevastopol, therefore in May 2014 USRLE was amended and the Company was registered in Sevastopol.

Questions:

  1. What tax legislation should the Company be guided by starting from May 2014? Do the provisions on transitional period apply to the Company?

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FinExpertiza consultants:

Sevastopol, which is a federal city, has become part of the Russian Federation since March 18, 2014. Thus information on the location of the Company in the territory of Sevastopol is included in the USRLE after inclusion of Sevastopol in the Russian Federation.

On the basis of item 2 art. 15 of the Federal Constitutional Law of 21.03.2014 № 6-FCL Accepting the Republic of Crimea to the Russian Federation and Formation of New Constituent Territories of the Russian Federation – the Republic of Crimea and Sevastopol, a City of Federal Importance" until January 1, 2015 in the Republic of Crimea and the city of federal importance Sevastopol procedures of calculating taxes, imposing taxes and collection of taxes and fees, including determining tax incentives, as well as the relations arising in the implementation of tax control, appeal to tax authorities, actions (inaction) of their officials and bringing them to justice for committing tax offense shall be governed by normative legal acts of the Autonomous Republic of Crimea and Sevastopol, Republic of Crimea and the cities with special status of Sevastopol, Crimea Republic, and the federal city of Sevastopol.

In accordance with art. 18 of the Law of Sevastopol from 18.04.2014 № 2-AP "On the use of legislation on taxes and duties on the territory of the federal city of Sevastopol in the transition period", the legislation of the Russian Federation on taxes and fees, except for the provisions governing procedures of calculating taxes, imposing and collection of land taxes and public due is used on the territory of the federal city of Sevastopol in relation to legal entities, located in the territory of the federal city of Sevastopol, and the details of which are included respectively in the Unified State Register of legal entities from the date of entry in USRLE.

Thus, during the transitional period, the Company uses the Russian legislation in the field of taxation (except for the provisions governing procedures of calculating taxes, imposing and collection of land taxes and public due).

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