Tax accounting and accounting: closer to each other

The result of numerous discussions about the need of convergence of accounting and tax accounting was the RF President signing on 20 April 2014 of the Federal Law 81-FZ "On Amendments to Part Two of the RF Tax Code".

The most significant are the amendments as to

• the procedure of writing off of the value of certain tangible assets;
• the recognition of loss on assignment of the right to claim;
• the accounting of the material assets obtained free of charge;
• the reflection of sale of real estate;

Let's review these amendments in details.

New procedure of writing off of the value of low-value assets

Currently the records of tools, appliances, inventory, devices, laboratory equipment, special clothing and other means of individual and collective protection (hereinafter special equipment and special clothing) with a useful life of more than 12 months, as a rule, are kept with the formation of differences between the accounting and tax accounting. Such situation arises from the fact that for tax purposes the value of special equipment and special clothing, if it is less than 40,000 rubles, and the useful life of such assets is more than 12 months, is written off a single time , and for accounting purposes - proportionally, taking into account their useful life.

From 1 January 2015, after the entry into force of the above amendments, taxpayers will be enabled to write off the value of such assets for profits tax purposes gradually over several reporting periods. In particular, the following wording was added to the text of the Tax Code: “In order to write off the value of assets referred to in this sub-point, for more than one reporting period, the taxpayer may independently determine the procedure for recognition of material costs in the form of value of such assets, taking into account the period of their use or other economically justified indicators”. That is the way to write-off and the period during which the gradual write-off of the value of special equipment and special clothing will be carried out, will be determined by the taxpayer independently based on the planned useful life. Thus, by choosing the uniform record keeping procedure for the purpose of tax accounting and accounting, the taxpayer will be able to avoid differences between accounting and tax accounting, which is a positive change for taxpayer.

Loss on assignment of rights to claim.

Under the current wording of this norm, upon assignment of taxpayer- seller of goods (works, services), calculating the income (costs) on accrual basis, the right to claim the debt against a third party after the maturity stipulated by the agreement of sale of goods (works, services) the difference between the income from sale of the right to claim the debt and the value of sold goods (work, services) is recognized as loss on the transaction of assignment of the right to claim, which is included in non-operating costs of the taxpayer as follows:

• 50 percent of the amount of the loss is to be included in non-operating costs as of the date of assignment of the right to claim;
• 50 percent of the amount of the loss is be included in non-operating costs after 45 calendar days from the date of assignment of the right to claim.

In this case, for the accounting purposes the costs are recognized in the reporting period in which they occurred, regardless of the time of actual payment of funds.

From 1 January 2015, after the entry into force of amendments, in the tax accounting recognition of loss on assignment of rights to claim will be recognized by the taxpayer a single time and in the full amount as of the date of assignment, as well as in accounting. Such a change is positive for the taxpayer, as it allows reducing the tax base for corporate income tax once only, simplifying the tax accounting and converging it to the accounting.

Assets obtained free of charge

Significant changes were undergone by the procedure of recognition of material costs for assets obtained free of charge. If currently the Tax Code does not provide for the recognition of material costs for assets obtained free of charge (except for surpluses identified in the inventory), then from 1 January 2015 the taxpayer may recognize as material cost the market value of the assets obtained free of charge at the time of their entry in accounting records. That is, in case of sale of such assets, the taxpayer will be able to reduce the taxable base for the corporate profits tax by the value of the assets sold under the general procedure.

However, the procedure for determining the material costs for property obtained free of charge is not so simple. According to the new wording of this norm, the value of inventories obtained free of charge is determined based on market prices. Pricing information shall be confirmed by the taxpayer-recipient of property (works, services) by documents or by an independent valuation.

Moment of formation of the tax base for the value added tax upon sale of real estate

At present the text of the Tax Code does not provide any clear understanding of the moment, when it is necessary to recognize the revenue from the sale of real estate for the purposes of calculation of the value added tax: at the time of transfer of property or at the moment of state registration of the property right. In practice, as a rule, the owner, to avoid disputes with tax authorities, recognizes the revenue and assesses the value added tax at the time of signing the certificate of acceptance, without waiting for the buyer’s state registration of the property rights.

It should be noted that in the Russian legislation moments of recognition of revenue upon sale of real estate for profits tax purposes and for accounting purposes do not match:

• for profits tax purposes the date of sale of real estate is the date of transfer of real estate to the buyer of such property under the certificate of acceptance or other document on transfer of real estate;
• for accounting purposes the date of sale is recognized “the date of transfer of ownership”, which, accordingly, passes to the buyer after state registration.

Now lawmakers gave a clear definition of the moment of sale of real estate for the purposes of calculation and payment of value added tax, thus eliminating the occurrence of disputes between taxpayers and tax authorities. According to the text of the new edition of the Tax Code, upon sale of real estate from 1 July 2014 the moment of determination of the tax base is the day of transfer of real estate to the buyer of the real estate concerned under the certificate of acceptance or other document on the transfer of real estate.

Other changes

Having considered the most significant changes, we do not want to ignore other changes introduced by the April amendments.

From 1 January 2015 VAT payers are exempted from the obligation to maintain the ledger of invoice received and issued. In fact, this step discharges taxpayers from preparation of unnecessary documentation, as in most cases the ledger of invoices issued and received duplicates ledgers of purchases and sales.

From 1 July 2014 the procedure of signing the invoice issued by individual entrepreneur registered with the general taxation system changed. If before the invoice could be signed only by the individual entrepreneur, after the entry into force of the amendments, the individual entrepreneur can charge to sign the document another person authorized by power of attorney on behalf of the individual entrepreneur.

The other changes introduced by the Federal Law 81-FZ relate to the corporate profits tax.



Not less important change aimed at simplifying the record keeping was the decision of the legislator to exclude from the text of the RF Tax Code of the concept “sum differences” that occurred on 1 July 2014. All references to sum differences have been replaced by “differences in the amount”. This was done in order to unify the record keeping procedure of sum differences with the exchange ones, but from 1 January 2015 year only. Thus, the sum differences arising on the settlement in conventional units, the payment under which it is provided in Russian rubles, from 1 January 2015 will be considered in the same manner as the exchange rate differences. In accordance with the transitional provisions all sum differences arising under the agreements concluded before 1 January 2015, are recorded under the same procedure. For agreements signed in 2015, the exchange differences will be converted according to the official exchange rate of the RF CB, or a rate agreed by the parties. The date of re-calculation will now be considered not only the date of transaction and the end of the reporting period, but also the end of each month.



The official cancellation of the application of method of writing off of material values LIFO (according to the value of the last received unit) for tax purposes became almost formally, since for accounting purposes, this method has not been used for several years and, therefore, has been hardly used for taxation purposes. However, now lawmakers have excluded the possibility of applying this method in the record keeping.

Thus, summarizing the changes introduced, we can note a positive trend towards the convergence of accounting and tax accounting.