New conditions for obtaining benefits by IT companies

LEGAL DIGEST, NEWS \ 17.08.2022

The President of the Russian Federation has signed the Law, which changes the conditions for obtaining tax benefits by companies operating in the field of information technology.

From January 1^st, 2021, amendments to the Tax Code of the Russian Federation came into force. These include a change in the terms of VAT taxation, the provision of tax incentives at a reduced income tax rate (0% until January 1^st, 2024 instead of 3%) and reduced insurance premium rates (7.6% instead of 30%).

In order to receive tax benefits, companies must meet a number of conditions. However, the approved law changed some of their provisions, and starting July 14^th of this year, companies that meet the new requirements can use the right to receive tax preferences:

The table shows that the share of income from IT activities has decreased, and the requirement for the number of employees has been canceled and does not affect the procedure for obtaining tax preferences. Please note that the organization may lose the right to benefits if, at the end of the tax period, the condition on the share of income is not met or the company was deprived of state accreditation. In this case, the right is lost from the beginning of such tax period.

Tax benefits can be applied by Russian companies that operate in the field of information technology:

• develop and implement the computer programs developed by them, databases on a material carrier or in the form of an electronic document via communication channels (regardless of the type of contract);
• provide services (perform work) on the development, adaptation, modification of computer programs, databases (software and information products of computer technology);
• install, test and maintain computer programs, databases.

According to the new rules, companies that meet following conditions also can receive tax benefits:

• develop, implement, maintain and sell Russian software and hardware systems;
• provide services for the development, implementation and support of any Russian software;
• place online advertisements on their platforms;
• implement its own software and hardware, included in the unified register of Russian computer programs and databases;
• provide educational services using online platforms;
• provide paid access to content, including by subscription, etc.

Please note that from 2023, the following companies will not be able to receive tax benefits:

• platforms for participation in public procurement;
• intermediaries in real estate transactions;
• companies providing financial, banking and securities market services;
• companies providing labeling services;
• communication service companies;
• food delivery services;
• taxi services.

Also, tax benefits cannot be applied by companies:

• founded as a result of reorganization or in the form of accession to them by another legal entity or separation from its composition of one or more legal entities;
• in which the share of Russian Federation participation is less than 50%.

The taboo does not apply to organizations that received state accreditation before July 1st, 2022 and have already applied tax benefits.

Please note that starting next year, all companies will be able to apply a factor no higher than 3 to the basic rate of aromatization in relation to:

• Invisible assets in the form of exclusive rights to computer programs and databases from the unified register of Russian programs and databases. At the same time, this rule does not apply when depreciating invisible assets, the useful life of which the organization determines itself;
• Fixed assets that are included in the unified register of Russian radio electronic products as of the date of their commissioning.

It is important to consider the following features when using tax incentives:

• If according to the results of the first quarter and half a year, an IT company has not fulfilled the condition on Lion income, then it will be able to apply reduced rates of insured contributions in the second half of the year, but taking into account the fulfillment of the necessary indicators based on the results of grinding from July 1^st to September 30^th and from July 1^st to December 31^st of the current year;
• If the company received state accreditation before July 1^st of the current year and receives a tax benefit, it will continue to apply for it if the condition of a 70% share of income from IT activities is met.

In the matter of the application of tax laws and the use of tax benefits, please contact Acsour specialists.