Calculation of corporate property tax

2024 Author: Howard Calhoun | [email protected]. Last modified: 2023-12-17 10:16

Property tax refers to regional types of taxes. Collection is carried out directly. The subject of taxation are legal entities that have real estate and movable property on their balance sheet. The calculation procedure and tax structure have a number of features.

Calculation of corporate property tax

In Russia, two types of taxation are practiced: the first is federal taxes, the second is territorial fees. The federal ones are subject to the general rules established by the Government of the Russian Federation.

Territorial taxes can be changed in terms of payment, at rates or coefficients according to the decision of local authorities. From this point of view, the corporate property tax is a territorial tax. Accordingly, its rates and payment procedure are determined by local authorities. At the same time, there is an important requirement - local laws and regulations for any purpose should not contradict federal documents, in particular the Tax Code of the Russian Federation.

Features

Before starting a business, the main issue should be the study of the legislative aspects of each of its types. The priority in this process is the issue of taxation. For example, an entrepreneur should be interested in what law on corporate property tax is in force and what rules it dictates?

Articles 372-386 of the Tax Code of the Russian Federation are considered issues for the settlement of this tax. In addition, managers and accountants should keep track of changes in the field of taxation at two levels: at the federal and territorial levels.

Corporate property tax is a specific type of tax that recognizes as its subject movable or immovable property listed on the balance sheet of an enterprise as a fixed asset. But there are many subtleties and reservations.

Nuances

There are a number of nuances that managers and accountants of enterprises need to know in order to avoid errors in reporting. For example:

• All companies, regardless of the participation of the founders, are subject to a single accrual and payment procedure. That is, corporate property tax makes no difference for both domestic companies and foreign organizations.
• The next feature concerns enterprises that use UTII and STS in their work. Such legal entities use the cadastral value of immovable objects as a tax base.
• If the business owns residential premises, they will be taxed regardless of whether they are listed as fixed assets orno.
• If real estate or other types of material assets from the list of fixed assets are leased or transferred to trust management, then the payment of corporate property tax is not canceled. Such an object is exempt from tax if it is alienated in favor of another entity that is not listed as a payer of this tax.
• Also, for taxation, it does not matter whether the right to property is registered with state bodies or not, actual use is considered. Such circumstances do not cancel the need to pay it.

Who pays?

Each type of tax is intended only for certain categories of business entities. At the same time, the freedom of choice of the taxpayer is preserved. He has the right to independently choose the system of taxation and types of taxes.

As for the letters of the law on corporate property tax, you should refer to Article 374 of the Tax Code of the Russian Federation. According to it, the tax is charged on the following types of property:

• Real and movable property owned by legal entities.
• Including those types of property that are transferred for temporary use to other companies or individuals.
• Real and movable property of companies with foreign participation.
• Property transferred to the balance of the enterprise under a concession agreement.
• Property of companies operating in the Russian Federation and not having official representative offices.

What is nottaxable?

At the same time, the main criterion for the property tax of organizations in Moscow or in any other city remains one - reflection on the balance sheet as a fixed asset.

At the same time, a list of types of property that are not considered objects of taxation is defined at the legislative level:

• Objects of nature management.
• Land shares.
• Objects of water origin.
• Other natural resources.
• Civil defense facilities.
• Objects of military service.
• Property belonging to the structural units of law enforcement agencies.
• Property of services and structures that are equated to one of these services.
• Cultural objects.
• Nuclear installations.
• Icebreakers and ships.
• Space objects.

For more information about a particular type of object, please refer to local laws and regulations.

Exempt category

Under exemption, it is customary to understand two categories: fully exempt subjects and subjects with the right to benefits. However, there is a fundamental difference between them. Therefore, they should be clearly distinguished. Thus, the list of the exempt category includes the following organizations:

• Associations involved in organizing and holding football games for the championship this year (2018).
• Major football organization or FIFA.
• Entities directly related to FIFA, such as its subsidiaries.
• Companies established andparticipating in the 2014 Olympic Games.
• Organizations marketing these events.

Procedure for granting benefits

Corporate property tax benefits are also provided at two levels: federal and territorial. Federal benefits may include full exemption or exemption for certain types of property. Regional benefits, their procedure for determining and implementing are within the competence of local authorities.

If we are talking about exemptions by type of property, then such exemptions may be temporary or implemented indefinitely. Full information on this part is reflected in Article 381 of the Tax Code of the Russian Federation.

Specialized benefits are also applied in practice. The procedures for their implementation and other rules should be clarified with local authorities.

Preferential category

A number of companies are exempt from paying this type of tax.

• Prosthetic and orthotic companies.
• Pharmaceutical enterprises. In their activities, types of property involved in production processes are not taxed.
• Property of organizations dealing with issues of the disabled. An important condition is that the share of persons with disabilities in the company must be at least 80%. The exemption concerns the types of property used for the implementation of statutory activities.
• Real and movable property owned by lawyers, advocates andnotaries.
• Organizations conducting religious and spiritual and educational activities.
• Organizations that conduct scientific and research activities
• Residents of economic zones with special arrangements for the first 5 years.

Territorial authorities have the right to independently make adjustments, including additions to the preferential part. Innovations after approval should be introduced into the relevant laws.

A striking example of a territorial addition is the Moscow region. Here, the object of tax on the property of organizations is not subject to tax if it belongs to budgetary and municipal organizations of the city of Moscow.

Procedure of settlements

Calculations are made according to a simple formula. Much more important is the legal aspect. To find the final amount, you need to know the tax rate and the amount of the tax base. The tax rate is set at the federal level - 2.2%. Territorial adjustments cannot exceed this mark.

The corporate property tax base is calculated as the average value of the object of taxation for the year. The following formula applies:

The estimated price of the object of taxation on the 1st day of the month is added to the value of the property on the last day of the reporting period. The resulting amount is divided by 13. The total is used when calculating corporate property tax for legal entities as the sum of the tax base

Total tax amount will be equal to the tax rate multiplied by the tax base divided by 100%.

Importantremember, if a company uses someone else's property on the basis of a temporary use agreement, then the coefficient will be different - the number of months during which it is planned to operate the property.

Principles of forming the tax base

The tax base deserves special attention, since the final amount of the tax, the correctness or errors in the calculation methods depend on it. As already mentioned, this value represents the average value of the object for the tax period. But there are a number of objects for which calculations must be made in a separate order. These are:

• Fixed assets of enterprises engaged in the gas supply system of the population.
• Types of fixed assets previously subject to different rates depending on the tax system.
• Objects from the list of fixed assets, located separately from the enterprise and keeping a separate balance sheet.
• Fixed assets for which there is a legal obligation to maintain tax records at their actual location.

At the same time, it is allowed to reduce the tax base by the amount of investments, if we are talking about the procedure for calculating taxes of shipping or hydrotechnical enterprises.

Rates by type of property

As already mentioned, the rates are individual for each region. The established mark - 2, 2% - is the maximum figure. Rates in regions cannot be higher than this amount. Consider some features of the application of rates depending on the type of property.

Conditionalindicator - 0% applies to the following categories:

• Objects of main gas pipelines.
• Enterprises involved in the production and storage of helium.
• Companies engaged in the development and technical plans of mineral areas.
• Companies engaged in design documentation and construction work on behalf of enterprises in the field of production and storage of helium, laying of main gas pipelines.

The complete list of objects with 0% rates is approved by the Decree of the Government of the Russian Federation under the number 2188.

Rates of 1.6% are relevant for facilities that are part of the production activities of companies in the above industries.

Property of railway tracks for general use and other facilities from this industry apply a rate of 1%. The basis for such calculations is Government Decree No. 504. If such facilities were built and transferred for use after December 30, 2016, then they have the right to apply reduction factors in the calculations.

Real estates throughout the country, with the exception of Moscow, for which corporate property tax has been mandatory since the year, and the cadastral value is used as a base, are eligible to apply a 2% rate. In Moscow, such objects accept a rate of 1.4%.

A striking example of an individual territorial solution is the Yaroslavl region. Here, priority is given to investment projects implemented in the most important sectors for the region. For such companies and their property, a rate is provided forselection: 0 to 2%.

If the territorial authorities have not determined the rates for certain types of property, then the general rule applies to them - the maximum values are used.

Legal Framework

In the legal aspect, this tax is guided by a whole list of articles and provisions from the law. An accountant needs to know the following articles:

• The situation of business entities for which this tax is mandatory - Article 373 of the Tax Code of the Russian Federation. Here are the procedures and rules for both domestic and foreign companies.
• Information about which object and on what principles is taxed is indicated in article 374 of the Tax Code of the Russian Federation. This describes the procedure applicable to both immovable and movable property.
• The federal value of the corporate property tax rate, as well as the procedure for its formation in territorial divisions, is regulated by Article 380 of the Tax Code of the Russian Federation.
• Article 375 of the Tax Code of the Russian Federation informs about what the tax base is and on what principles it should be determined.
• There are also clarifications about the tax period. In practice, several options are used. The taxpayer can choose the most convenient for him using Article 379 of the Tax Code of the Russian Federation.

When to pay?

Terms for the payment of taxes of a territorial nature should be determined by local authorities. If the date is not specified, then the general rules specified in federal laws and other valid official documents apply. As for the term of the tax on property of organizations, during the tax period it is allowed to makeadvance payments. The amount of tax can be paid at the end of this period. The minimum amount of advance payments for this type of tax is at least 25% of the tax amount.

It is important to consider that local authorities have the right to determine the category of taxpayers who are exempt from the obligation to make advance payments during the tax period.

The payment procedure is also subject to a number of rules:

• Enterprises with foreign participation operating in the Russian Federation through the formation of an official representative office must pay tax to the tax office at the place of registration.
• Advance payments and taxes made using the cadastral value of objects of taxation must pay tax at the actual location of the object.
• Domestic enterprises make all corporate property tax payments to the local tax office.

At the end of each reporting period, reports are generated both on advance payments and on the accrual of taxes. Delivery to the relevant authorities should not be delayed later than 1 month after the end of the reporting period. Reports are generated quarterly. The number of quarters in a year gives one tax period. The tax period is summarized by the declaration.