The government has expanded the conditions for exempting companies from paying windfall tax
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At a government meeting on July 13, a number of amendments were approved to clarify the list of companies that will not pay excess profit tax (also known as windfall tax), the Finance Ministry said in a statement. In addition to the already approved exceptions, three more categories will not pay the tax: developers that implement projects involving citizens’ funds through escrow accounts (provided that they do not pay dividends in 2021-2022), credit and non-credit financial institutions in respect of which measures are being taken for bankruptcy prevention, as well as companies that did not have sales revenue in 2018-2019.
The amendments also establish a special calculation procedure for companies that recorded a drop in profits in 2022 compared to 2021 by more than two times. The amount of tax for such companies should not exceed 10% of profit for 2022, provided that they did not pay dividends in the previous two years.
Previously, business complained about the unfairness of the excess profit criteria put forward by the Ministry of Finance. In May, Delovaya Rossiya asked the Ministry of Finance to work out in more detail the methodology for determining the tax base when calculating the tax, Vedomosti wrote. The business association drew attention to the fact that organizations that in 2018-2019. spending more intensively than in the period of 2021–2022 (including on the modernization of enterprises), the profit of the base period will be lower, and hence the amount of tax will be higher. In addition, companies that made capital investments in earlier periods, taking into account the length of the investment cycle, will increase their profit for 2021–2022. due to the increase in production parameters. In both cases, organizations will be forced to pay an additional tax on normal rather than excess profits, the sources conveyed the contents of the letter.
As Alexei Repik, chairman of Delovaya Rossiya, explained in an interview with Vedomosti, at first the tax was designed as a tax only on the 20 largest groups, and eventually spread to 1,000 much smaller companies. Companies whose profits have halved or tripled in 2022 turn out to be large payers of windfall tax, he noted. “But there are companies that, for example, in 2018-2019. built plants, they will now pay from their profits in 2021–2022, and not from the difference,” Repik said, adding that the business association is discussing with the Ministry of Finance the issue of withdrawing them from the taxation perimeter.
At the end of June, the State Duma adopted in the first reading a bill on a one-time fee from excess business profits. According to the Ministry of Finance, the mechanism can bring the budget 300 billion rubles. The tax base is calculated as the difference between the arithmetic average of profit for 2021–2022. and the same indicator for 2018–2019, follows from the text of the bill. The general rate is set at 10%, the fee must be transferred no later than January 28 of the following year. At the same time, if the fee is paid from October 1 to November 30, 2023, the business will receive a “discount”, and the rate will be reduced to 5%. In the document, for the first reading, it was proposed to exempt companies producing oil, gas and coal, oil refineries, liquefied natural gas producers with existing production and export, as well as all participants in the register SME.
According to the Ministry of Finance, among the 50 largest taxpayers, the burden will be distributed as follows: 20% will be paid by enterprises in the field of extraction of solid minerals, 19% by mineral fertilizer producers, 13% by metallurgists, 12% by wholesale and retail trade enterprises, 9% by banking organizations , 5% – petrochemical enterprises, power generation, construction companies, manufacturing and logistics industry.
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