Taxpayers have until 15 March 1996 to apply for a deferment of arrears and penalties which have accrued up to 1 January 1996. The finance bodies have to determine the application within two weeks. If granted, 5% of the deferred amount must be paid in each of the next ten quarters, with a penalty of 30% per annum, although the basis on which this penalty is calculated remains unclear. If all payments in the period are made in accordance with the deferment regime and all current tax and pension fund contributions are paid on a timely basis, the 50% still outstanding can be paid over the following 5 years (2.5% per quarter) without any penalties accruing.
(Presidential Decree No. 65 of 19 January 1996)
Representative offices / Withholding of Personal Income Tax
A letter from the Moscow State Tax Inspectorate implies that foreign legal entities making hard currency payments to the Russian bank accounts of Russian employees of representative offices in Moscow should withhold income tax from these payments. According to the Instruction of the State Tax Service on personal income tax, this would only apply in those cases where an employee does not produce to his employer proof of registration with the local tax inspectorate where the employee lives. In that case, the obligation to file for and pay income tax on a hard currency salary rests with the employee. This will be addressed in more detail in the next Tax Alert.
(Letter of the Moscow State Tax Inspectorate of 26 October 1995, No. 11-13/16863)
Representative Offices / 1995 Tax Declaration
The State Tax Service has issued a letter on the filing of tax declarations and activity reports of representative offices for 1995 (deadline 15 April 1996) and the filing of other taxes. As we have mentioned before, an auditor's opinion of the tax declaration is no longer required. The letter introduces the obligation to report on accounting policies and on how salaries of staff are paid. A new tax declaration form and other amended forms under Instruction 34 of the State Tax Service have been released and must be used in 1996.
(Letter of the Moscow State Tax Inspectorate of 19 January 1996, No. 16-10/984)
Legal Developments are reported in Tax News Reporter on official publication. This may be long after the law is issued.
This publication is intended for general guidance only and should not form the basis of specific decisions.
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