Finance, Tax & Accounting
2016 has been a year of hard work and effort on behalf of Russia, beset by sanctions from the EU and US, and globally mired in bad press and media coverage. No matter what it does – from fighting Isis and terrorism in Syria to being accused of influencing the American election results, Russia is often described in far from flattering terms. All this noise has detracted Russia’s real achievements and clouded observation of the true directions the Russian economy is taking.
In fact, Russia has recovered from sanctions rather well, 2017 will see it move into positive GDP growth of 1.5% over the year, the same ironically as the EU. What has changed is that while the EU has damaged its trade relations with Russia – losing an estimated USD60 billion in export vales to Russia over the past two years – the efforts to supply the Russian market with product have moved instead to, and been taken up by Asia. President Obama and German Chancellor Angela Merkel, the two main protagonists of the sanctions, appear not to have understood that when championing a global market economy, the imposition of regional sanctions will not work.
The Comprehensive Double Taxation Agreement (CDTA) between Hong Kong and Russia entered into force on 1st January this year in Russia, with Hong Kong following on 1st April this year.
Signed at the beginning of 2016, the CDTA aims to provide greater certainty on taxing rights between Hong Kong and Russia, incentivizes foreign investment with reduced income tax and withholding tax rates, and helps investors to better assess their potential tax liabilities on business transactions.
Before the CDTA came into effect, companies operating in Hong Kong but listed in Russia were subject to income tax in both jurisdictions. In some cases, the taxation of repatriated profits of a Hong Kong company based in Russia would be determined by the tax bureau individually, depending on the source of the income.
Numerous amendments to the Russian Tax Code came into force on 1st January, mostly related to the issuance of Russian Federal Law 401.FZ dated 30th November last year, which introduced some new concepts and clarified the existing taxation rules. The most important changes that may have impact on foreign investors are outlined as follows:
Third Party Tax Payment Permitted
The revised Tax Code now allows third parties to pay taxes of a taxpayer. This will solve several problems faced by corporate taxpayers. It will be useful for example in cases when a taxpayer’s account is frozen in connection with the revocation of its bank’s licence or if the account is blocked by the tax authorities. Similar problems also occur with payments of taxes when an organisation, which is liquidated, closes its accounts, and unpaid taxes are discovered in the course of preparation of its liquidation balance sheet. It should, however, be noted that third parties who have paid taxes of another person will not be entitled to a refund of the amounts paid from the public funds.
By Marina Romanova
Tallinn, Riga and Almaty had drown ahead Moscow to emerge as current Eastern Europe and Central Asia top financial centers, according to the latest Global Financial Centres Index (GFCI) rankings released this Monday by London-based consultancy firm Z/Yen and Long Finance.
The former capital city of the Republic of Kazakhstan scored 605 points, for the first time leaping over Moscow, which ranked 84 globally with 568 points. Russia’s second largest city, St Petersburg ranked 85 with 567 points, although losing only 3 points since March 2016.
By Marina Romanova
Russia’s share in a world’s national debt is the smallest in Europe, but its foreign-currency debt is the second high among emerging economies.
The Visual Capitalist, infographic data web site, has counted that the combine global national debt or world public government debt is amounted in 2015 to as much as US59,7 trillion. Using the IMF data of debt-to-GDP ratio by country, www.visualcapitalist.com experts found out that Russia’s share in a world debt is lowest in Europe and equal only to 0,49 percent of the world debt, while the European continent, excluding Russia, holds over 26 percent of total world debt.
India ‘s share in a world debt in 2015 was 2,06 percent, South Korea’s – 0,76 percent, Germany accounted for 4,81 percent, UK – 3,92 percent. Continue reading…
By Marina Romanova
Russia’s central bank accredited Bank for Investment and Development of Vietnam (BIDV) to be country’s first financial representative on the Russian market, Vietnamese and Russian media reports.
“It is important not only for the bank itself but for the future cooperation between Russia and Vietnam,” TASS quote Dmitry Skobelkin, a central bank deputy governor, as saying.
Earlier in April 2016, the central bank issued the operating license for BIDV’s representative office in Russia. The joint bank is taking part with Russia’s state-run VTB bank in a pilot project aimed at arranging payments between two countries in their national currencies. In the long term it is possible for BIDV to open a branch in Russia, bank press release said.
BIDV’s press office describe Russia as one of its key markets and VTB as its main financial partner in Russia for the last 17 years. The VRB, with 50 percent from BIDV and 50 percent from VTB, of chartered capital respectively, started to operate on November 2006. It has 5 branches in Vietnam, namely in Hanoi, Ho Chi Minh, Vung Tau, Da Nang, and Nha Trang city. Continue reading…
By Yuriy Zarya, IT Project Manager and Thomas Titsch, Director ERP
VAT and Profit tax return in SAP
Russian legislation obligates companies to provide the VAT return in a specific format. As it undergoes
frequent changes, it adds a lot of complexity to statutory filing in Russia. SAP provides its clients with preconfigured solutions for clear VAT reporting that fully comply to Russian tax and legal requirements.
As of April 2015, the VAT return should include information on all incoming and outgoing VAT
invoices. In addition, the authorities will accept only VAT returns provided in the mandatory electronic
format. In early 2015, SAP provided a new necessary update of its ERP system (these updates are called
“notes”) that covers these latest changes to the VAT declaration form and ensures the capability to
deliver the VAT return in the XML format as requiredby the Russian Federal Tax Service (FNS). Continue reading…
By Thomas Titsch, Director ERP
Western companies should be aware of Russian accounting aspects when implementing ERP. In the last, the Russian understanding of enterprise planning was accountant driven and to some extent this remains. In order to understand Russian aspects in ERP implementations, you need to look at the aspects of the accounting approach.
Where do the different approaches come from? At this point, it makes sense to look back in history for a moment. In the pre-computer era, the Russians invented the concept of account correspondence. That means that the accounting entries were made into chessboard arrangements like in the picture below.
By Oleg Galiulin, Senior SAP Expert and Yuriy Zarya, IT Project Manager
Choosing an ERP System
Currently, all international companies have to prepare their financial statements according to both International Financial Reporting Standards (IFRS) or Generally Accepted Accounting Principles (GAAP), and local reporting standards of the countries they work in.
In addition, the more their businesses grow, the more complex informational systems are needed. At present there are plenty of IT companies that are ready to provide self-engineered ERP solutions. The changing complexity of a company’s IT needs makes it difficult for a company to choose the ideal ERP system.
By Albina Safina, Senior SAP Expert
SAP software solutions help companies to improve the efficiency of enterprises in Russia and to respond operatively to changes in the requirements of legislation in Russia. SAP rapidly develops procedures and documents required under the new regulations. The country version of SAP for Russia provides standard statutory print documents required for different business processes: sales, receipt and return, transportation and movements, and inventory.
Revised and Corrected VAT-invoices
In accordance with the government Decree №1137 from November 26, 2011, SAP has rapidly developed print documents for revised and corrected VAT invoices, and procedures for their registration in the system. Newly created VAT invoices are automatically reflected in the purchase/sale ledgers and in the journals of received and issued VAT invoices. Continue reading…