Review of new benefits for the IT sector from Versus.Legal: who can apply and under what conditions

Alexey Vikharev, lawyer VERSUS.legal

It is not the first time that the government has paid close attention to the IT business: the “tax maneuvers” of 2020 and 2021 have helped many accredited companies to feel the “relief” of the tax burden.

The new reality has also brought new benefits for the IT industry. The main support measures were announced on March 02, 2022 by the President of the Russian Federation. As follows from the introductory part of the document, the main purpose of state support is the accelerated development of the information technology industry, so we can assume that this support package will not be the last.

Who can count on the new benefits?

The answer is given in the Decree itself – accredited organizations operating in the field of information technology. This definition of an IT company is not new. Most of the tax benefits, which were envisaged from 2021, could only be received by “accredited organizations”.

Who is considered an accredited organization?

The state has defined a list of activities that may relate to the IT field for the purpose of obtaining tax benefits. Such activity is determined on the basis of the OKVED of the organization. In other words, if the activities of a Russian company correspond to the selected OKVED groups, and they are reflected in an extract from the Unified State Register, then the Ministry of Finance will be able to enter the company into the appropriate register and recognize it as an accredited organization (you can submit the application yourself through Public Services – read more here).

Which OKVED codes are suitable for accreditation?

The Ministry of Finance points to the following groups:

• 62.01 – software development;
• 62.02 – advisory activities and work in the field of computer technology;
• 62.02.1 – computer system planning and design activities;
• 62.02.4 – activities to prepare computer systems for operation;
• 62.03.13 – computer system maintenance activities;
• 62.09 – activities related to the use of computer technology and information technology;
• 63.11.1. – activities for the creation and use of databases and information resources.

Important: the coincidence of the company’s activities and the allocated OKVED group, although it gives grounds for inclusion in the Register of accredited IT Companies, does not mean that the company automatically receives the allocated benefits.

The Tax Code of the Russian Federation (Articles 427, 284) provides for additional requirements that must be met in order to receive benefits. First, the number of employees for the estimated (reporting) period is at least seven people. Secondly, at least 90% of the company’s revenue is the implementation of the following programs and services:

• instances of developed software or databases;
• transfer of exclusive rights to developed software, databases;
• granting rights to use software, databases;
• development, adaptation and modification of software, databases;
• installation, testing and maintenance.
• distribution (placement) of advertising or provision of additional services using applications and online services of these organizations or implementation, installation, testing and maintenance of domestic solutions in the field of information technology.

What does the expansion of the spheres of activity of companies that can claim benefits mean?

The rules remain the same – at least 90% of the company’s income should be the provision of separately designated services (as well as the required number of employees). However, now such income can be from the provision of 3 new types of services:

1. for the implementation / placement of advertising – this should significantly expand the potential range of companies for accreditation, including companies engaged in fritupley services / games;
2. additional services using applications and online services – the Ministry of Finance explains that the exact list of such services will be coordinated with the Ministry of Finance, but in general they can be understood as providing access to educational, news and gaming content and services, hotel reservations and ticket sales;
3. on adaptation, installation, implementation, testing, support of Russian software not owned by the company (integrators) – the Ministry of Finance explains that the income from this activity can be at least 75%, but in order to receive benefits, the total share of all income must eventually be at least 90% of IT activities.

Important: although such changes are provided for in the issued Decree, however, at the time of preparation of the article, they were not introduced into the Tax Code of the Russian Federation (on March 26, 2022, Federal Law No. 67-FZ introduced only part of the new benefits provided for by the Decree). We recommend that you keep an eye on updates, perhaps new clarifications or additions may be adopted.

What are the new benefits for accredited companies?

1. Financial support for the IT industry

This is the first part of the Decree, the main idea of which is, obviously, additional financing of the industry. At the moment, the Russian Government has already issued an Order dated April 1, 2022, in which details have appeared.

A. Implementation of grant support for promising developments

This part of the support will be of interest to those who can offer projects for the development and implementation of Russian solutions in the IT industry. In short, the Government divided the amounts for grants as follows:

• RFRIT received subsidies in the amount of 10.8 billion rubles to support at least 20 projects in accordance with the Decree of the Government of the Russian Federation No. 550;
• Skolkovo Foundation: 1.2 billion rubles to support at least 4 projects in accordance with the Decree of the Government of the Russian Federation No. 555;
• Innovation Assistance Fund: 2 billion rubles to support at least 107 projects in accordance with the Decree of the Government of the Russian Federation No. 554.

B. Provision of preferential loans to support the current activities of accredited organizations and the implementation of new projects

The Government of the Russian Federation also instructed to provide subsidies in the amount of 6 billion rubles to authorized banks and Russian credit organizations to provide preferential lending to digital transformation projects and to compensate for lost income on loans issued to system-forming organizations in the field of information technology.

Such measures make it possible to provide preferential loans at a rate not exceeding 3%. The government expects that such benefits will be directed to the implementation of at least 75 digital transformation projects implemented on the basis of Russian IT solutions.

The Presidential Decree fixed the provision of benefits for the maintenance of the current activities of accredited organizations and for new projects. At the disposal of the Government, one can notice some concretization: new projects should be aimed at digital transformation, and benefits for ensuring current activities — only in relation to systemically accredited organizations.

Not every IT company is such an organization. The Ministry of Economic Development provided criteria for determining who can be included in the list of system-forming organizations. For companies that operate in the field of information technology (software development, consulting and related services), it is necessary to have revenue of at least 1.5 billion rubles at the end of the reporting year.

Nevertheless, this Decree of the Government is not the last one to date. Perhaps in the near future additional clarifications or new orders will be provided in this part of the benefits.

2. IT business support

Another part of the measures proposed by the President of the Russian Federation is aimed at supporting the business of accredited organizations.

A. Establishment of a 0% corporate income tax rate

Previously, the “tax maneuver” allowed to reduce the income tax from 20% to 3%. Now the rate has temporarily decreased to 0. To use the new tax rate, you must meet the criteria of accredited organizations (see above). This measure has already been introduced into the Tax Code of the Russian Federation and is valid until December 31, 2024 (for tax (reporting) periods 2022-2024).

B. Exemption from currency control, other types of state control (supervision) and municipal control

This measure also allows accredited companies to feel more relaxed during the current period of “turbulence”. Exemption from state control is expected for a period of up to three years.

The Federal Tax Service of Russia and the Ministry of Finance additionally clarified that the conduct of on-site tax audits in respect of accredited organizations is suspended until March 3, 2025 inclusive. Nevertheless, the authority has the right to conduct such an audit if it was appointed with the consent of the head (deputy head) of a higher tax authority, the head (deputy head) of the Federal Tax Service of Russia. Such an exception to the rule was initially indicated in a Letter from the Ministry of Finance to the Federal Tax Service of Russia.

To implement this measure, amendments were also made to Federal Law No. 294-FZ of December 26, 2008 On the Protection of the Rights of Legal Entities and Sole Proprietors in the Exercise of State Control (Supervision), according to which scheduled inspections are not carried out until December 31, 2024.

Decree of the Government of the Russian Federation No. 448 of March 24, 2022 answers some “everyday” questions that may arise in connection with the cancellation of inspections of organizations. In particular:

• if the start date of the audit occurs after March 25, 2022 (the entry into force of this Resolution), then a decision is made to cancel such an audit;
• if the inspection was not completed on the date of March 25, 2022, then it is subject to completion within 5 working days from the date of entry into force of the Resolution, while the issuance of prescriptions is not allowed for such inspections.

B. Simplification of employment procedures for foreign citizens

The Presidential Decree also provides for simplification of procedures for the employment of foreign citizens attracted to work in accredited organizations and obtaining a residence permit.

As is known to those who have at least once encountered the employment of a foreign employee in a Russian company, this process is not the easiest and fastest. Now, in some cases, the bureaucracy will take less time (for example, in relation to the employment of citizens from Belarus), a little more time (when employing citizens from countries with a visa-free regime, or when employing highly qualified specialists) and significantly more time (if there is a visa regime).

At the moment, the Government of the Russian Federation has not yet submitted a document according to which this support measure will be applied. In turn, the Ministry of Finance gives its comment and offers to provide an accredited organization to attract foreign citizens to work on the basis of an employment contract without obtaining the appropriate permission.

At the same time, the Ministry of Finance there also proposes to establish the period of stay of a foreign citizen (and his family members) for the duration of the employment contract, but not more than three years. If an employee needs to obtain a visa, the Ministry of Foreign Affairs of the Russian Federation, at the request of the Ministry of Finance, provides a work visa for the same period. In addition, the existence of an employment contract may allow a foreign employee and his family members to obtain a residence permit without obtaining a temporary residence permit (but it will still be necessary to apply to the Ministry of Internal Affairs, undergo a medical examination).

In general, the idea of simplifying the procedure for the employment of foreign specialists, of course, can always be welcomed. However, it should be borne in mind that such decisions require detailed and high-quality study in order to avoid deadlocks, and also require awareness of the current context in the country and in the world. Obviously, this takes a significant amount of time, so now the Government of the Russian Federation has not yet provided specific changes to the legislation.

D. Other support measures

In addition to what is listed in the Presidential Decree, there is also a benefit for consolidation and promotion of purchases of critical domestic IT developments. This support measure is aimed at simplifying the procurement of Russian IT solutions carried out to meet state and municipal needs, and therefore it may not affect a private IT company.

Without appropriate explanations, it is difficult to guess which developments are critically important. However, in this context, it is impossible not to mention the Presidential Decree of March 30, 2022 on measures to ensure the technological security of critical information infrastructure. In accordance with the document, for significant objects of critical information infrastructure (objects of social, economic, political and other significance for the state, a special register is maintained), the purchase of foreign software is prohibited from March 31, 2022.

Another measure of support, which has already been provided for in Government Decree No. 337, is the provision of credit holidays to small and medium-sized businesses. This benefit applies to small and medium–sized businesses (here you can read about the conditions for classifying a company to such entities, and here you can check whether it is in the register of entities). The Government decree extended this benefit, including to all small and medium–sized businesses that are engaged in information technology (in a broad sense, activities under the code 62 and 63 OKVED fall under this category).

In this case, credit holidays allow you to get deferred payments under loan and loan agreements concluded before March 1, 2022. The deferral itself, however, is granted for a period of no more than 6 months. To do this, you need to contact a credit institution in the period from March 1 to September 30, 2022.

3. Support for IT employees

This part of the support measures aroused particular interest. At the moment, there are two such measures so far: the provision of a preferential mortgage and the provision of a deferral from the army.

A. Improvement of housing conditions and increase of wages of employees of accredited organizations

At a meeting of the Government of the Russian Federation, such a measure was called the provision of preferential mortgages. The order, in turn, already contains more specific data – 1.5 billion rubles have been allocated for the purpose of reimbursing credit and other organizations for lost income on housing (mortgage) loans. Additionally, it is indicated that such a measure should improve housing conditions in 2022 for at least 10 thousand employees of accredited organizations.

Unfortunately, so far the Government of the Russian Federation has not clarified all the criteria for obtaining a preferential mortgage. Interestingly, the explanations of the Government of the Russian Federation to the publication of the Order indicate that the interest rate on a preferential mortgage will be reduced to 5% per annum, but the text of the document itself does not mention the specific amount of the interest rate.

The Ministry of Finance is currently considering the following option: IT specialists aged 22 to 45 years with an income of 150 thousand rubles per month for cities with millions of people and from 100 thousand rubles for regions can use the benefit.

It is worth considering, of course, that we are talking about the size of the “official” salary. With the adoption of such a support measure, the state can potentially expect that employers will start transferring employees from a “gray” salary.

We talked about a preferential mortgage above in Section 2 and we can once again draw attention to the fact that there are no specific criteria for obtaining it yet, except for individual proposals from the Ministry of Finance.

B. Postponement from the army

Here, the Government has already managed to issue a Resolution and define the rules for obtaining a postponement.

The criteria for employees and responsibilities for the company are established.

For an employee:

• the presence of an employment contract with an IT company – civil law contracts and the absence of a contract will not allow you to get a postponement;
• work on the terms of “normal working hours” – this concept is in the Labor Code of the Russian Federation: such duration “may not exceed 40 hours per week.” The issue of non-full-time work is not settled here, and therefore there may be difficulties for such a category of employees;
• work experience of at least 11 months during the year preceding the start date of the next draft OR the conclusion of an employment contract no later than one year from the date of graduation – if more than a year has passed after graduation from the university, then you must have at least 11 months of work experience in an accredited organization to postpone;
• availability of higher education in certain specialties – the Resolution lists 75 different specialties that may relate to the field of IT, from nuclear physics and mechanical engineering to information security and business informatics.

For the company:

• to form a list of employees who meet the criteria above: it is necessary to specify the full name, year and place of birth, SNILS, name and date of graduation of the educational organization, diploma number, place of residence and military commissariat, as well as the place of work and TIN of the company;
• to send such a list in electronic form through the Public Services portal, no later than 50 calendar days before the start of the next draft – in relation to the April-July 2022 draft, it is necessary to send such a list by May 01, 2022. However, at the time of writing, Public Services do not yet provide a technical option for downloading such a list. We believe that this is a technical moment, and it is necessary to monitor the State Services website in order not to miss the opportunity to submit such lists;
• in case of dismissal of an employee who has received such a postponement, it is necessary to notify the relevant military commissariat within two weeks after dismissal.

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Many of the described measures to support the IT industry are still in the process of development or actual implementation. Of course, there is an increase in applications for accreditation from companies and any relaxation can help in unstable times.

The IT industry remains to a certain extent interesting for the state, so we can expect the emergence of new support measures.