Corporate income tax, tax rate: types and size

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

Income tax is mandatory for all legal entities that are on the general taxation system. It is calculated by summing up the profit from all activities of the company and multiplying by the current rate.

Legal basis

The procedure for calculating and paying corporate income tax, the tax rate for enterprises of all forms of ownership are indicated in Ch. 25 of the Tax Code of the Russian Federation. Regional acts regulate the process of applying tax benefits. Lawyers and accountants in their work also use the explanations of the Ministry of Finance and the Federal Tax Service in relation to certain paragraphs of regulations.

Subjects and objects

The tax payers are:

• Russian organizations involved in the gambling business, as well as those that do not use the simplified tax system, UTII, ESHN.
• Foreign organizations that receive income on the territory of the Russian Federation.
• Members of the consolidated group.

Exempted from taxation are enterprises that pay UTII, STS, ESHN. If the volume of their annual salesexceeds the statutory limits, then enterprises must pay corporate income tax, the rate of which exceeds the statutory limits. Also excluded in 2017 are organizations involved in the preparation and holding of FIFA 2018 in the Russian Federation.

The basis for the calculation is the profit of the organization. In Art. 247 of the Tax Code of the Russian Federation says that profit:

• for domestic organizations and representative offices of foreign companies - this is the amount of income received by the enterprise (its representative office), reduced by the costs incurred;
• the amount of total profit calculated for this participant;
• for other foreign organizations - this is the amount of funds recognized as income under Art. 309 NK.

Income and expenses

Income is the economic benefit from the activities of the organization, expressed in kind or in cash. This is the sum of all receipts of the organization, excluding expenses and taxes that are presented to buyers (for example, VAT). They are determined by the data of primary documents. Receipts are divided into sales income and non-operating income.

When the corporate income tax is calculated, the tax rate does not take into account receipts:

• from donated property;
• as collateral;
• contributions to capital;
• assets received under loan agreements;
• property received through targeted funding.

Costs are reasonable and justifieddocumented costs incurred by the taxpayer, provided that they were used to generate income. When the corporate income tax is calculated, the tax rate, the expenses do not include the amount of fines, sanctions, pen alties, dividends, payments for excess emissions of substances, expenses for voluntary insurance, material assistance, pension supplements, etc. A complete list of amounts that excluded from expenses, presented in art. 270 of the Tax Code of the Russian Federation. Normalized expenses can be written off not completely, but partially. Since 2017, the amounts spent on assessing the level of qualifications of employees can also be attributed to expenses. However, there is one important condition: the employee must confirm his consent to the assessment of the level of qualification in writing.

Reporting periods

The corporate income tax rate is set at a fixed rate. Reports on the accrual of the amount of the fee must be submitted for 6, 9 and 12 months. Advance payments should be transferred to the budget on a monthly basis. Since 2016, the average quarterly amount of income from sales has been increased to 15 million rubles.

Tax base

How is corporate income tax calculated? The tax rate is multiplied by the difference between receipts and expenditures. If the amount of receipts is less than the amount of expenses, then the base is equal to zero. Profit is determined on an accrual basis from the beginning of the calendar year. Since the legislation prescribes certain types of corporate income tax rates, then revenues must be considered separately for eachactivity.

The Tax Code specifies the features of determining income and expenses for different categories of payers: banks (Art. 290-292), insurance companies (Art. 293), non-state PF (Art. 295), microfinance organizations (Art. 297), professional participants of the RZB (Article 299), operations with the Central Bank (Article 280), urgent financial transactions (Article 305), clearing organizations (Article 299). Gambling business organizations keep separate records of income and expenses. Only economically justified expenses that are documented are taken into account.

What is the corporate income tax rate?

The amount of the paid fee is transferred to the federal and local budgets. Since 2017, there have been changes in the distribution of interest. The basic corporate income tax rate has not changed and is 20%. Previously, 2% of the amount paid went to the federal budget, and 18% remained in the local. A new scheme has been introduced from 2017 to 2020. The amount of tax calculated at the rate of 3% will be transferred to the federal budget, and 17% to the budget of the constituent entities of the Russian Federation. Regional authorities may reduce the fee rate for certain categories of payers. In 2017-2020, it cannot be less than 12.5%.

Exceptions

For certain types of income, the corporate income tax rate is:

• Income of foreign companies from the use, leasing of containers, mobile vehicles, international transportation - 10%.
• The rate of income tax of a foreign organization throughrepresentation not related to activities in the Russian Federation is 20%.
• Dividends of Russian organizations - 13%. The full amount of taxes remains in the local budget. Dividends received by foreign companies are taxed at a rate of 15%. This also includes interest income on state securities.
• Receipts from Russian Central Banks, which are taken into account on depo accounts - 30%.
• Bank of Russia profit - 0%.
• Profit of agricultural producers - 0%.
• Profit of organizations engaged in medical, educational activities - 0%.
• Income from the operation associated with the sale of a share of the authorized capital - 0%.
• Receipts from works carried out in the innovative economic zone, tourist and recreational zone, subject to separate accounting of revenues and costs - 0%.
• Revenues of a regional investment project, provided that they do not exceed 90% of all receipts - 0%.

Reporting

At the end of each tax period, the organization must submit a declaration to the Federal Tax Service. The form of the report and the rules for its preparation are approved by the Order of the Federal Tax Service N MMV-7-3 / 600. The declaration is submitted to the inspection at the location of the enterprise or its division. The report is submitted on paper. The largest taxpayers, as well as organizations in which the average number of employees for the previous year was more than 100 people, can submit an electronic declaration.

2017 tax changes

The amount of allowance for doubtful debts must be less than 10% of revenue for the previous or reporting period. A doubtful debt is a debt that exceeds the amount of a counter liability. If an organization has receivables and payables to one counterparty, then only the amount exceeding the accounts payable can be written off for doubtful debts.

Loss carry forward is limited. From 2017-01-01 to 2020-31-12, losses from previous periods cannot be reduced by more than 50%. This change does not affect the base to which tax credits apply. The changes relate to losses incurred after 2007-01-01.

From 2017, the restriction on the transfer of amounts of losses incurred after 2007-01-01 has been lifted. The transfer can now be carried out for all subsequent years. Changes relating to the adjustment of the amounts of taxes transferred to the state and local budgets should be reflected in the declaration and payments. These documents must clearly reflect which amounts are paid at a rate of 3%, and which - at a rate of 17%.

There are more reasons for recognizing debt as consolidated. For example, there are two interdependent foreign organizations (one of the organizations is the founder of the second). Before one of them, the Russian enterprise had a debt obligation. In this case, the debt is recognized as consolidated. And it doesn't matter what share of the capital the foreign creditor company owns. Now consolidated debtdetermined by the size of all taxpayer obligations.

If the capitalization ratio has changed during the reporting period, then the question of adjusting the tax base may arise. From 2017, controlled debt expenses do not need to be recalculated. As mentioned earlier, the amount of expenses can include the costs incurred to assess the level of qualifications of employees. To encourage such reviews, provisions will be developed to account for the cost of valuations. The company will be able to take into account the costs if the assessment was carried out on the basis of a service agreement, and an employment contract was concluded with the subject.

Changed the procedure for calculating pen alties on tax, and the amount of pen alties increased. The changes apply to delays that occur after 2017-01-10. If you delay the tax payment deadline by more than 30 days, then the amount of interest will have to be calculated according to the following algorithm:

• 1/300 of the Central Bank rate, valid from 1 to 30 days of delay;
• 1/150 of the Central Bank rate effective from 31 days past due.

In case of repayment of all arrears before 2017-01-10, the number of days of delay does not matter.