On 24 March 2022, the Russian Federal Tax Service issued Letter No. CD-4-2/[email protected]*, which (the “Letter”) establishes a virtual moratorium for on-site tax audits, including repeat audits, of accredited IT companies until 3 March 2025 inclusively.
The only exception is where an audit is scheduled with the consent of the head or deputy head of a higher tax authority or the Russian Federal Tax Service. The lower tax authority must submit a reasoned request in order to schedule an on-site audit.
At the same time, any on-site audits launched before the Letter was issued are subject to completion in the prescribed manner. No extension or suspension of these audits according to Article 89 of the Russian Tax Code should occur.
Furthermore, the audit suspension is temporary in order to reduce the administrative burden on IT companies in the period between 2022 and 2024, and does not mean that this period will not be audited in principle. In practice, by scheduling an audit in March 2025 after the moratorium expires, the tax authorities will have the right to audit the 2022-2024 period as well.
The Letter contains no additional criteria for the moratorium, apart from requiring an IT company to have a state accreditation certificate. In other words, the moratorium will also formally apply to accredited IT companies that are not eligible for corporate profits tax or insurance contribution incentives under Russian law.
The chosen legal form of the document introducing the moratorium is also noteworthy: the Letter is of an internal nature and addressed to lower tax authorities. To date, we are not aware of any further legislative initiatives in this area.
The Letter implements one more tax support measure for the IT industry announced in Russian President Decree No. 83 dated 2 March 2022, on which we previously reported. Also, in pursuance of that Decree, Law No. 67-FZ dated 26 March 2022 has set the corporate profits tax rate at 0% for the period between 2022 and 2024. The Ministry of Finance and the Ministry of Digital Development are currently negotiating the details of another measure announced in the Decree: extending the list of IT activities subject to preferential treatment where further developments can also be expected.
Our experts continue to closely monitor this issue and will keep you informed of any further changes.
* In Russian