The expenses and costs specified in paragraph 8.1 are accounted

8.4. The expenses and costs specified in paragraph 8.1 are accounted for in books in Account 97 “Deferred expenses” and shown in accounting statements on the basis on the determined useful life.
Expenses and costs with a life exceeding 12 months are recognized as part of other noncurrent assets and, with a life of less than 12 months, as part of other current assets.
8.5. Expenses associated with insurance contracts should be accounted for in Account 97 (Subaccount “Deferred expenses of voluntary insurance of employees”) and charged to cost accounting accounts by means of their reasonable distribution among accounting periods in proportion to the number of calendar days of a contract’s validity in the accounting period. In this connection, the balance at the end of the accounting period in Account 97 (Subaccount “Deferred expenses of voluntary insurance of employees”) are added to the balance of Account 76 (Subaccount “Settlements related to property, personal, and voluntary insurance”) and are shown in accounting statements as part of receivables (payables).
9. Settlement Accounting
9.1. Trade accounts receivable shall be determined based on the prices established by agreements, inclusive of VAT.
Accounts receivable shall be recognized as short-term unless their maturity exceeds 12 months from the reporting date. The remaining accounts receivable shall be recognized as long-term. The above-mentioned period shall be calculated from the first day of the calendar month following the month in which the asset is recorded in the accounting books.
9.2. Accounts payable to suppliers and other creditors shall be recognized based on the amount of accepted invoices and accrued liabilities, inclusive of VAT.
9.3. The VAT balance for given and received advances recorded in Account 76 “Settlements with miscellaneous debtors and creditors” is reflected in the balance sheet item “Other current assets” as part of VAT on received advances and in the item “Other liabilities” as part of VAT on given advances broken down by long-term and short-term liabilities.
9.4. The accrual of payable expenses (interest, discount) on the borrower’s liabilities shall be recognized in the reporting periods to which these accruals relate under the existing agreements.
9.5. Calculated profit tax shall be accounted for in accordance with Regulations for Accounting 18/02, using 1C:Accounting 8.1 CORP; for this purpose, the Company operates a chart of tax accounts. Any business transactions recorded in business accounting are simultaneously recorded in tax accounting. Business and tax accounting ledgers are reconciled to maintain the equation of the following data:
BA = TA PD TD, where:
BA is business accounting,
TA is tax accounting,
PD is permanent differences,
TD is temporary differences.
The amount of current profit tax is calculated using the data generated in accounting records in accordance with paragraphs 20 and 21 of Regulations for Accounting 18/2002. In this connection, the amount of current profit tax shall correspond to the amount of assessed profit tax specified in a profit tax declaration.
9.6. The itemized amount of deferred tax assets and deferred tax liability shall be recorded in the accounting statements.
10. Accounting for Expenses Associated with Loans and Advances
10.1. Loans and advances accounting records shall be maintained in accordance with Regulations for Accounting 15/2008 approved by Order of the Ministry of Finance of the Russian Federation No. 107n of October 6, 2008.
10.2. Loan expenses shall be recorded in the accounting books separately from the principal amount of liability for the loan (advance) obtained.
10.3. Additional expenses directly associated with the obtainment of loans and advances and the placement of borrowed funds shall be included in costs in the reporting period in which they are incurred.
10.4. The Company does not use the present value method to calculate the value of debt securities and loans granted.
11. Changes in Assessed Values
11.1. Assessed reserves shall be established in accordance with Regulations for Accounting 21/2008 “Changes in Assessed Values” approved by Order of the Ministry of Finance of the Russian Federation No. 106n of October 6, 2008.
11.2. A bad debt reserves shall be established on an annual basis under a directive document after annual inventory taking before the preparation of the Company’s annual statements. The amount of any reserve shall be determined on a case-by-case basis relying on objective information about the debtor’s solvency.
11.3. The Company shall establish a reserve for impairment of financial investments, whose current market value is not measured if they substantially fall in value. To check financial investments in shares whose current market value is not measured for any signs of impairment, the Company employs the calculation of net asset value according to the issuer’s balance sheet, taking into account the Company’s stake in the issuer’s share capital. Financial investments in shares whose current market value is not measured shall be checked for impairment, and a reserve for impairment of financial investments whose current market value is not measured shall be established at the end of the accounting year.
12. Accounting for Income and Expense
12.1. Income from ordinary activities shall be as follows:
revenues from interests in other entities;
revenues from the provision of services in relation to organizing the operation of and to developing the electric grid facilities of Russia’s United Power System (UPS);
revenues from the fee-based provision of assets for temporary use (temporary possession and use) under lease agreements (lease payments);
revenues from technical supervision services;
other revenues.
12.2. Direct expenses directly associated with the performance of work and provision of services by the Company shall be recorded in Account 20 “Core operations.”
Analytical accounting records in Account 20 “Core operations” shall be maintained by type of activity.
Unless it is possible to charge expenses clearly to any given type of activity, they shall be recorded in Account 26 “General expenses” and, upon the expiration of the reporting period, written down to Account 20 “Core operations” in proportion to the amount of income from ordinary activities (exclusive of VAT).
Expenses shall be fully charged to the cost of products and services sold in the reporting period and recognized in Account 90 “Sales.”
12.3. The general expenses that are recorded in Account 26 and related to the branch’s activities shall be determined in accordance with the procedure set forth in the Technique for Calculating the Cost of Technical Supervision Services approved by the Company’s internal regulations and orders before being written down to Account 20. Upon the expiration of the reporting period, such expenses shall be charged to the branch’s balance sheet.
12.4. Income and expense shall be recognized in the accounting books based on the accrual principle assumption, suggesting the recognition in the accounting books of the Company’s business facts in the reporting period in which they occur irrespective of the actual time of receipt or payment of funds related to these facts.
12.5. Income and expense forming the financial performance and denominated in any foreign currency shall be recalculated into rubles at the exchange rate of the Central Bank of the Russian Federation as of the transaction date.
12.6. If denominated in any foreign currency, the value of cash at banks shall be recalculated on the transaction date and the date of preparation of accounting statements.
13. Accounting for R&D and Engineering Expenses
13.1. The accounting records of R&D and engineering expenses shall be maintained in accordance with Regulations for Accounting 17/02 approved by Order of the Ministry of Finance of the Russian Federation No. 115n of November 19, 2002.
13.2. Analytical accounting records shall be maintained for each inventory item: any completed item of R&D or engineering whose results are independently used for production purposes.
13.3. Expenses in connection with each completed item of R&D or engineering shall be written off using the straight-line method during the period established by the Company.
13.4. The depreciable life of expenses in connection with each completed item of R&D or engineering shall be determined by the commission established under the Company’s regulations and orders according to the expected useful life during which the Company shall gain economic benefits (income), but not in excess of five years.
14. Information About Participation in Joint Operations
The accounting records of business transactions in the event of joint operations, joint use of assets and joint activities shall be maintained in accordance with Regulations for Accounting 20/03 approved by Order of the Ministry of Finance of the Russian Federation No. 105n of November 24, 2003.
15. Segment Information
In accordance with Regulations for Accounting 12/2010, approved by Order of the Ministry of Finance of the Russian Federation No. 143n of November 8, 2010, the Company shall view its activities as a single operational and geographic segment.
16. Post Balance Sheet Events
16.1. In accordance with Regulations for Accounting 7/98 approved by Order of the Ministry of Finance of the Russian Federation No. 56n of November 25, 1998, the Company shall record in the accounting statements any post balance sheet events which have or may have an impact on the financial standing, cash flow or performance of the entity and take place between the balance sheet date and the date on which the statements are submitted to shareholders.
16.2. Post balance sheet events shall be reported in the accounting statements through the revision of data on the Company’s relevant assets, liabilities, capital, income and expense accompanied by the disclosure of the related information in notes.
16.3. For the monetary evaluation of the implications of a post balance sheet event the respective calculation shall be made and the confirmation of such calculation shall be ensured. The calculation shall be made by the Department (function) to which the event relates in accordance with the functions performed.
17. Estimated Liabilities, Contingent Liabilities, and Contingent Assets
17.1. In accordance with Regulations for Accounting 8/2010 approved by Order of the Ministry of Finance of the Russian Federation No. 167 of December 13, 2010, accounting records and statements shall show estimated liabilities, contingent liabilities, and contingent assets.
17.2. Estimated liabilities shall be reflected in the account of reserves for deferred expenses (Account 96). In recognizing an estimated liability, according to its nature, the amount of such estimated liability shall be charged to expenses from ordinary activities or to other expenses, or included in value of the asset.
17.3. Contingent liabilities and contingent assets are not reflected in accounting records but disclosed in accounting statements. Contingent liabilities and contingent assets shall be disclosed on the basis of the calculation prepared by the Company’s division to which such contingent liabilities and contingent assets relate according to its functions.
17.4. Reserves for estimated liabilities shall include the following deferred expenses:
- reserve for deferred expenses associated with vacation pay;
- reserve for deferred expenses associated with year performance bonuses;
- other reserves for deferred expenses.
17.5. The reserve for deferred expenses associated with vacation pay shall be established for each employee in accordance with the procedure set forth in the Technique for Calculating the Reserve for Future Vacation Pay (Annex 6 hereto).
17.6. The reserve for deferred expenses associated with year performance bonuses shall be established for each employee as the amount of remuneration that an employee has the right to receive for the accounting period. The amount of the reserve shall include all insurance contributions and contributions to social security against accidents calculated on the basis of deductions to the reserve. The reserve shall be established as of the date when there arises certainty that remuneration will be paid based on the labor compensation system provided for in the Company’s internal regulatory documents.
18. Information About Related Parties
18.1. In accordance with Regulations for Accounting 11/2008 approved by Order of the Ministry of Finance of the Russian Federation No. 48n of April 29, 2008, the Company shall include information concerning related parties in a separate section of notes.
19. Cash Equivalents
19.1. In accordance with Regulations for Accounting 23/2011 approved by Order of the Ministry of Finance of the Russian Federation No. 11n of February 2, 2011, the Company shall select the approaches to separating cash equivalents from other financial investments.
Cash equivalents are highly liquid financial investments that can be easily converted into an amount of cash known beforehand and that are exposed to an insignificant risk of change in their value. These include promissory notes and bills of exchange payable within three months or less, short-dated government securities, and bank deposits with a maturity of three months or less as at the reporting date.
20. Tax Accounting
20.1. Organization of tax accounting.
20.1.1. The Company shall calculate and pay taxes and levies in accordance with the laws of the Russian Federation on taxes and levies and the laws of the constituent entities of the Russian Federation on taxes and levies.
20.1.2. Tax report preparation procedure, tax ledger forms and maintenance procedure, tax base formation procedure, the calculation and payment of taxes and levies shall be governed by these Regulations as well the internal documents of the Company on the procedure for the calculation and payment of individual taxes and levies. Tax ledgers shall be maintained as special forms as specified in Annex 7 hereto in hard copy and electronic form.
20.1.3. Tax arrears shall be reconciled with tax authorities on a quarterly basis.
20.1.4. To ensure correct and complete formation of tax bases for all taxes and levies, the Company’s divisions shall provide any necessary information within the period specified in the workflow schedule.
20.1.5. Responsibility for the correct calculation of taxes and levies shall lie with the Director of the Accounting and Reporting Department (Chief Accountant) of the Company.
20.2. Budgetary payments.
The accounting records of settlements for taxes and levies shall be maintained in accounts on an accrual basis for each particular tax and due by budget level (federal, budget of the constituent entity of the Russian Federation, local budget) and type of debt (principal amounts of taxes or levies in arrears, penalties, fines).
20.3. Profit tax accounting.
20.3.1. The Company shall apply a unified organization system, methods and forms of tax accounting for profit tax purposes under Chapter 25 of the Tax Code of the Russian Federation (hereinafter, the “Tax Code”) and these Regulations.
The Company shall calculate its tax base for each reporting (tax) period based on tax reporting data.
The Company shall permit the revision and expansion of principles, procedure and forms of tax accounting set forth in this accounting policy for tax purposes during the tax period through the inclusion of additional analytical data, registers and principles of generalization of information, which is expected to contribute to more correct disclosure of the tax base formation.
20.3.2. Fixed assets and intangible assets.
20.3.2.1. Depreciable property shall be any property whose useful life is more than 12 months and original value exceeds 100,000 rubles.
Depreciable assets shall also include capital investments in leased fixed assets in the form of nonremovable improvements made by the lessee with the consent of the lessor and capital investments in fixed assets granted under a free use agreement in the form of nonremovable improvements made by the borrowing entity with the consent of the lending entity. Depreciation related to capital investments in leased fixed assets in the form of nonremovable improvements that are made with the consent of the lessor and whose value is not reimbursable by the lessor shall take into account the useful life of capital investments in such fixed assets in accordance with the classification of fixed assets approved by the Government of the Russian Federation. If any lease (free use) agreement terminates before the depreciation date of nonremovable improvements, the underdepreciated value of nonremovable improvements shall be expensed as costs not taken into account for profit tax purposes.
20.3.2.2. The useful life of any previously used fixed assets acquired shall be reduced by the number of years (months) of operation of this property by its previous owners. If the actual useful life of acquired fixed assets when operated by their previous owners equals or exceeds its useful life determined by the Resolution, the useful life shall be determined on a separate basis subject to safety requirements and with due consideration to other factors.
20.3.2.3. The Company shall include in the reporting (tax) period expenses capital investment expenses of 10 percent (30 percent for fixed assets belonging to the third to seventh depreciation groups) of the original value of fixed assets (with the exception of donated fixed assets) and 10 percent (30 percent for fixed assets belonging to the third to seventh depreciation groups) of expenses incurred in the event of completion, retrofit, rehabilitation, upgrading, re-equipment, partial liquidation of fixed assets whose amounts are determined in accordance with Article 257 of the Tax Code.
Fixed assets, upon their commissioning, shall be included in depreciation groups (subgroups) at their original value minus 10 percent (30 percent for fixed assets belonging to the third to seventh depreciation groups) of the original value included in the reporting (tax) period expenses and the amounts by which the original value of assets changes in the event of completion, retrofit, rehabilitation, upgrading, re-equipment, partial liquidation of assets shall be recorded in the aggregate balance of depreciation groups (subgroups) (change the original value of assets depreciated using straight-line method in accordance with Article 259 of the Tax Code) minus 10 percent (30 percent for fixed assets belonging to the third to seventh depreciation groups) of such amounts.
20.3.2.4. If, at the time of the disposal of a fixed asset, the asset’s actual useful life exceeds its depreciable life, the loss on disposal of such fixed assets shall be included in other expenses on a non-recurrent basis immediately after disposal of such asset.
20.3.2.5. The straight-line method of depreciation shall apply to all fixed assets based on the norms calculated relying on useful lives in accordance with Article 259.1 of the Tax Code and the Resolution.
20.3.2.6. The straight-line method of depreciation shall apply to all intangible assets.
20.3.2.7. Expenses associated with the acquisition of tools, gear, implements, devices, laboratory equipment, special clothing, and other personal and collective protective equipment provided for in the laws of the Russian Federation and with the acquisition of other assets shall be included in material costs as they are brought into operation in accordance with the following procedure:
- in the total amount if the operating life is 12 month or less,
- in equal parts if the operating life is more than 12 months.
20.3.3. Tax accounting for expenses associated with research and development (hereinafter, “R&D”).
20.3.3.1. R&D expenses shall be recognized for tax purposes as part of other expenses in the accounting (tax) period of completing such R&D (separate stages thereof) unless otherwise provided for in Article 262 of the Tax Code, provided that tax accounting for R&D expenses is in accordance with their classification and the applicable procedure.
20.3.3.2. If any expenses incurred in connection with R&D result in the Company’s receiving exclusive rights to the intellectual activity results specified in paragraph 3 of Article 257 of the Tax Code, such rights shall be recognized as intangible assets depreciable in accordance with the general procedure.
20.3.4. Tax accounting for income from sale.
20.3.4.1. Income from the sale of goods (work, services) shall be recognized by type of activity.
Income from sale shall be recognized in the accounting (tax) period during which such income takes place, irrespective of whether or not any money, other property (work, services), and/or property rights have actually been received (accrual method of accounting).
20.3.4.2. For tax purposes, income from the sale of fixed assets and other property (except for securities) shall be recognized based on financial accounting data net of the amounts of tax imposed on buyers and sum differences.
20.3.4.3. Income received from the fee-based provision of assets for temporary use (temporary possession and use) under lease agreements (lease payments) and recognized in the accounting records and accounting statements as revenues in line 010 of the Income Statement shall be recognized as income from sale for tax accounting purposes. Expense related to the lease of the relevant property shall be recognized as production- and sale-related expenses for tax accounting purposes.
20.3.4.4. In conducting transactions involving securities that are not traded in the organized securities market, the actual transaction price shall be applied.
20.3.5. Tax accounting for production- and sale-related expenses.
20.3.5.1. Production-related expenses are divided into direct and indirect.
Direct expenses shall include:
- financial expenses provided for by paragraphs 1 and 4 of Article 254 of the Tax Code and recorded in accordance with the working chart of accounts of the Company in Account 20 “Core operations”;
- expenses in connection with the compensation of the personnel involved in the process of production of goods, performance of work, provision of services and the amounts insurance contributions to the Pension Fund of the Russian Federation, the Social Insurance Fund of the Russian Federation, the Federal Compulsory Medical Insurance Fund, and territorial compulsory medical insurance funds, and a mandatory industrial accident and occupational illness insurance contribution charged to the above-mentioned amounts of compensation expenses and recorded in accordance with the working chart of accounts of the Company in Account 20 “Core operations” recorded in accordance with the working chart of accounts of the Company in Account 20 “Core operations”;
- depreciation of fixed assets used in the production of goods (work, services) and recorded in accordance with the working chart of accounts of the Company in Account 20 “Core operations.”
The valuation method based on the value of inventory unit shall apply to the determination of financial expenses associated with the write-off of all types of inventory used in the production of goods, performance of work, provision of services. The date of payment of the above-mentioned expenses shall be the date of their launch into production.
Compensation expenses shall be considered for tax purposes, with the exception of contributions under mandatory and voluntary insurance contracts entered into in favor of employees based on financial accounting data. The amount of the above-mentioned contributions accepted for tax purposes shall be calculated in tax ledgers. If any vacation falls on several months, then payroll expenses with respect to compensation retained for employees for the period of vacation shall be accounted for as expenses for tax purposes evenly, in proportion to the vacation days falling on each month. In this connection, expenses in connection with payments for insurance contributions accrued to the vacation pay amount shall be accounted for as expenses for tax purposes on a one-shot basis within the period when they are formed and charged.
The reserve for deferred expenses associated with vacation pay, annual long-service awards, and year performance bonuses shall not be established.
Expenses in connection with the repair of fixed assets shall be recognized for tax purposes in the actual costs for the reporting (tax) period in which they are paid.
Direct expenses shall be fully charged in the current month to services rendered.
20.3.5.2. In the event of the sale or any other disposal of securities, the expensed value of securities sold shall be determined for:
- issue-grade securities (shares, bonds, etc.) on a first-in, first-out (FIFO) basis;
- non-issue-grade securities (notes, deeds of pledge, checks, etc.) per unit.
20.3.5.3. When income is received during several accounting (tax) periods and connection between income and expense may not be determined with certainty or is determined indirectly, expense allocation shall be adjusted for the principle of even recognition of income and expense. Expenses related several reporting periods (expenses in connection with the acquisition of rights to use computer software and databases, expenses in connection with annual technical support for software, and other similar expenses) shall be allocated evenly between the accounting period and subsequent periods.
20.3.6. Tax accounting for non-operating income and expense.
20.3.6.1. For tax purposes, a reserve for doubtful debts shall be established at the end of the reporting (tax) period in accordance with paragraph 4 of Article 266 of the Tax Code.
20.3.6.2. In the case of debt obligations of any kind, interest accrued at an actual rate shall be recognized as income (expense).
20.3.6.3. The value of losses arising out of receivables assigned to a third party before the payment date specified in a sale contract for goods (work, services) shall be calculated at the maximum interest rate for debt obligations as prescribed for the relevant type of currency in paragraph 1.2 of Article 269 of the Tax Code, equal to income from the assignment of receivables, for the period from the assignment date to the payment date specified in a sale contract for goods (work, services).
The provisions of this paragraph shall also apply to the assignment of receivables before the payment date for debt obligations.
20.3.6.4. The rules for determining the price of securities for tax purposes in accordance with Article 280 of the Tax Code shall apply to determining the financial result of transactions (not deemed to be controlled) involving traded securities.
20.3.7. Profit tax calculation procedure.
The Company shall calculate and make monthly advance payments of corporate profit tax in the amount of one-third of the tax payable for the quarter preceding the quarter in which advance payments are made in accordance with the procedure set forth in Articles 286 and 287 of the Tax Code.
Advance payments and taxes payable as budget revenues of constituent entities of the Russian Federation and municipalities shall be made and paid at the location of the Company and at the location of one of the Company’s separate divisions located in one constituent entity of the Russian Federation based on the proportion of profit resulting from the total of indicators of separate divisions located in the constituent entity of the Russian Federation and calculated as the arithmetic mean of the relative weight of the average number of employees and the relative weight of the depreciated value of depreciable assets of such separate division for the reporting (tax) period, respectively, in the average number of employees and the depreciated value of depreciable assets determined in accordance with paragraph 1 of Article 257 of the Tax Code for the entire Company.
Profit tax shall be assessed and paid by the Accounting and Reporting Department of PJSC ROSSETI according to data provided by the Company’s separate divisions.
Profit distribution shall not apply to the separate divisions located in the same constituent entity of the Russian Federation. The tax amount payable to the budget of such constituent entity of the Russian Federation shall be calculated on the basis of the profit share assessed on the basis of the total value of indicators of all separate divisions located in such constituent entity of the Russian Federation.
20.3.8. Procedure for determining the average number of employees.
The average number of employees shall be determined in accordance with the procedure prescribed by the Federal Service for State Statistics of the Russian Federation for completing unified forms of federal state statistical monitoring approved by Order of the Federal Service for State Statistics of the Russian Federation No. 428 of October 28, 2013.
20.3.9. Procedure for determining the depreciated value of depreciable assets.
The depreciated value of depreciable assets for the reporting (tax) period for the purposes of distributing profit tax among the Company’s separate divisions that pay tax shall be calculated in accordance with the procedure proposed by the Ministry of Finance of the Russian Federation in Letter No. 03-03-02/16 of July 6, 2005.
20.4. Value added tax.
20.4.1. Procedure for organizing separate accounting.
20.4.1.1. The Company shall ensure the maintenance of separate accounting records of both VAT-taxable and VAT-exempt income and expense from the production and/or sale of goods (work, services), as well as the amounts of VAT on purchased goods (work, services) used for the production and/or sale of both VAT-taxable and VAT-exempt goods (work, services), in accordance with the Regulations for Separate Accounting Records for Income and Expense and the Amounts of VAT on Purchased Goods (Work, Services) Including Fixed and Assets and Property Rights of PJSC ROSSETI approved by Order of the Company No. 398 of July 16, 2013.
20.4.1.2. Maintenance of separate accounting for production and/or sales costs.
The Company shall ensure separate maintenance of costs in connection with the production and/or sale of:
- taxable and non-taxable (tax-exempt) goods (work, services);
- goods (work, services) to which various tax rates are applicable by operation of law.
20.4.1.3. Maintenance of separate accounting for the amounts of input VAT.
The amounts of VAT declared by the sellers of goods (work, services) used both for the production and/or sale of VAT-taxable goods (work, services) and VAT-exempt goods (work, services) shall be accepted for deduction or recognized as cost in proportion to the (VAT-exclusive) cost of taxable and non-taxable goods (work, services) sold respectively as a percentage of the (VAT-exclusive) total cost of goods (work, services) sold according to data for the current tax period.
The following subaccounts of Account 19 “Input VAT” shall be introduced for separate accounting for VAT amounts:
VAT on purchased assets used for both VAT-taxable and VAT-exempt activities;
VAT on purchased assets used for VAT-taxable activities;
VAT on purchased assets used for VAT-exempt activities.
If, in the current tax period, aggregate expenses in connection with the acquisition, production, and/or sale of any goods (work, services) and property rights the sale of which is exempt from tax account for not more than 5 percent of total value of aggregate expenses in connection with the acquisition, production, and/or sale of such goods (work, services) and property rights, then all tax amounts declared by the sellers of goods (work, services) and property rights in the above-mentioned tax period shall be refundable in accordance with the procedure specified in Article 172 of the Tax Code.
20.4.2. Procedure for preparing and issuing tax invoices, purchase ledgers, and sales ledgers.
20.4.2.1. Tax invoices issued to buyers and received from suppliers, purchase ledgers, and sales ledgers shall be stored at the Company’s place of business.
20.4.2.2. The Company’s tax invoices shall be assigned numbers with due consideration to the functionality of 1C:Accounting 8.1 CORP, namely in ascending order for each transaction type, including composite numbers using prefixes according to the transaction type.
The numbers of tax invoices issued to buyers and accepted for accounting are a combination of digits or a prefix (“A” for advance payments received, “NA” for tax agents, and “BR” for fee-free disposal) and digits (as many as 14 characters).
20.5. Corporate property tax.
20.5.1. Corporate property tax shall be calculated and paid based on the standards of Chapter 30 “Corporate Property Tax” of the Tax Code and the provisions of laws of the constituent entities of the Russian Federation.
In the calculation and payment of corporate property tax, the Company shall apply the provisions of laws of the constituent entities of the Russian Federation which specify tax rates (within the limits established by Chapter 30 of the Tax Code), the procedure and time limits for tax payment, tax credits, and grounds for using them.
20.5.2. The Company shall determine the property tax base, submit the calculations of advance tax payments and file corporate property tax declarations at the location of the entity and each real property item located outside the entity based on data concerning the movable and immovable property recorded on the balance sheet as fixed assets.
20.5.3. For the purposes of correct application of tax credits, the separate accounting records of property for which credits are allowed shall be maintained in accordance with the applicable property tax laws.
20.6. The Company shall calculate and pay insurance contributions to the Pension Fund of the Russian Federation, the Social Insurance Fund of the Russian Federation, and the Federal Compulsory Medical Insurance Fund and contributions for compulsory social occupational accident and sickness insurance and shall submit to extrabudgetary funds its reports (calculations) with respect to insurance contributions.
20.7. Other taxes
Individual income tax, transport tax, and other taxes and levies shall be calculated, paid, and deducted in accordance with the laws on taxes and levies governing the procedure for the calculation and payment of the relevant taxes and levies.
21. Particularities of Accounting for Operations Connected with Controlled Transactions
21.1. In accordance with Federal Law No. 227-FZ of July 18, 2011, “On Amendments to Specific Legislative Acts of the Russian Federation in Connection with the Improvement of the Principles of Pricing for Tax Purposes,” the Company shall account for operations in connection with controlled transactions between interdependent persons.
For tax purposes, pricing in relation to the Company’s controlled transactions shall be in accordance with Section V.1 of the Tax Code.
21.2. With respect to debt obligations of any kind arising out of transactions deemed to be controlled transactions, income (expense) shall be deemed to be interest calculated at the actual rate subject to the provisions of Section V.1 of the Tax Code unless otherwise specified in Article 269 of the Tax Code.
21.3. For the purposes of deeming transactions to be controlled transactions, the amount of income from such transactions for a calendar year shall be determined by adding together the amounts of income from such transactions with one person (interdependent persons) for a calendar year subject to the procedure for recognizing income as provided for in Chapter 25 of the Tax Code, i.e. according to the Company’s tax accounting records.
21.4. For the purposes of assessing the taxes specified in paragraph 4 of Article 105.3 of the Tax Code in a correct and complete manner, the Company shall comply with the provisions of Section V.1 of the Tax Code and Chapters 21, 23, and 25 of the Tax Code. Tax assessment for taxable periods within a calendar year shall be based on the actual transaction prices. After the end of a year, the Company shall independently identify any controlled transactions.
21.5. The Company may, at its discretion, make adjustments to the tax base and tax amounts if any prices applied are different from market prices in the event that such difference results in lower tax amounts. The clarification of tax liabilities shall be in accordance with paragraph 6 of Article 105.3 of the Tax Code.
21.6. The Company may make symmetrical adjustments. For the purposes of symmetrical adjustments, no adjustments shall be made to any primary documents or tax ledgers.
21.7. In order to determine a market price for tax purposes, the Company shall apply the method that, subject to the actual circumstances and conditions of a controlled transaction, makes it possible to come to the conclusion in the most reasonable manner that the price used in the transaction is consistent or inconsistent with the market price.
21.8. For tax purposes, the comparison of the conditions of controlled transactions with the conditions of transactions between independent persons shall use only publicly available information concerning current market prices and/or financial quotations, pricing information from price news agencies, and information on the Company’s own transactions.
21.9. If pricing methods do not make it possible to determine whether any prices of goods (work, services) in one-off transactions are consistent with market prices, then determining whether the prices of such transactions are consistent with market prices may be based on such market value of the transaction item as measured by an independent appraisal in accordance with Russian or foreign valuation laws.
21.10. In conducting controlled transactions involving securities that are not traded in the organized securities market, the price shall be deemed to be the actual transaction price if this price is within the range of the minimum and maximum prices based on the estimated price of a security with the maximum deviation of prices of 20 percent upward or downward from the calculated price of a security.
The estimated price of securities that are not traded in the organized securities market shall be determined in accordance with the procedure set forth in Order of the Federal Financial Markets Service of the Russian Federation No. 10-66/pz-n of November 9, 2010 (hereinafter, the “FFMS Order”).
The estimated price of nontraded securities may be determined:
- as a price based on the prices of such securities existing in the securities market in accordance with paragraph 4 of the FFMS Order;
- as a price calculated in accordance with the rules specified in subparagraphs A, B, and C of this paragraph;
- as the estimated value measured by an appraiser.
A) The estimated price of nontraded bonds shall be determined in accordance with paragraph 5.1 of the FFMS Order as follows:
C
n t M
P = SUM ------------------- ------------------- ,
t=1 v t-1 v n-1
(1 r) (1 r) (1 r) (1 r)
where:
P is the estimated price of a bond;
M is the outstanding principal of a bond repaid upon maturity;
C is the amount of the tth payment for a bond (including the principal and interest);
n is the number of periods until the full redemption of a bond;
r is the interest rate corresponding to the coupon period. The interest rate shall be consistent with bond investment risks. Bond investment risks and interest rates shall be determined by a taxpayer on the basis of the assessment of market conditions as of the date of determining the estimated price in accordance with the procedure set forth in the accounting policy for tax purposes;
v is the value determined as:
v = I/B, where:
I is the number of days from the transaction date to the coupon payment date;
B is the number of days between coupon payments.
B) The estimated price of a nontraded discounted note shall be determined in accordance with paragraph 13 of the FFMS Order as follows:
d х t
1
P = N (1 - ------), where
t
0
P is the estimated price of a discounted note;
N is the principal of a note;
d is the discount rate as a percentage of the principal adjusted for note investment risks;
t1 is the maturity of a note in calendar days. If the maturity date has already come, t is taken as zero;
t0 is the calculation base of 365 (366) days.
C) The estimated price of a nontraded interest-bearing note shall be determined in accordance with paragraph 14 of the FFMS Order as follows:
N [1 C (t / t )]
1 0
P = -------------------, where
1 r (t / t )
2 0
P is the estimated price of an interest-bearing note;
N is the principal of a note;
C is the interest rate of a note;
r is the discount rate consistent with note investment risks;
t0 is the period calculation base of 365 (366) days;
t1 is the period from the start date of note interest accrual to its maturity date in calendar days;
t2 is the period from the note assessment date to its maturity date in calendar days.
If the maturity date has already come, t1 and t2 are taken as zero.
The interest rate (d, r) consistent with investment risks associated with nontraded securities (bonds and notes) shall be determined upon transaction completion in accordance with an appraiser’s report or a document containing a decision of the person/body authorized by a company to approve such transaction decision.
The estimated price of nontraded shares in joint-stock companies shall be determined in accordance with paragraph 9 of the FFMS Order by dividing (i) a company’s net asset value measured in accordance with the Procedure for Valuating Net Assets of Joint-Stock Companies approved by Order of the Ministry of Finance of the Russian Federation No. 10n of January 29, 2003, and Order of the Federal Commission for the Securities Market of the Russian Federation No. 03-6/pz of January 29, 2003, less the share of net assets that corresponds to a company’s outstanding preference shares, by (ii) the total number of a company’s outstanding ordinary shares.
The estimated price of nontraded preference shares in joint-stock companies shall be determined in accordance with paragraph 11 of the FFMS Order by dividing (i) a company’s net asset (equity) value that corresponds to a company’s outstanding preference shares by (ii) the total number of such shares.
A company’s net asset (equity) value that corresponds to its outstanding preference shares shall be measured on the basis of such liquidation value of preference shares and such amount of dividends on preference shares as specified in the articles of association of a company.
This value of shares may also be determined in accordance with paragraph 19 of the FFMS Order as the appraised value of such security in accordance with an appraiser’s report if the period from the appraisal report date to the transaction completion date is not in excess of six months.
21.11. Controlled transactions involving securities traded in the organized securities market shall be subject to the security price calculation rules specified in Article 280 of the Tax Code.
21.12. In giving the Notice of Controlled Transactions, the Company shall comply with the Regulations for the Procedure for Giving the Notice of Controlled Transactions approved by Order of the Company No. 640 of November 8, 2013.
21.13. For the purposes of transfer pricing (hereinafter, “TP”), tax ledgers shall be maintained as special forms as specified in Annex 7 hereto in hard copy and electronic form.
21.14. The workflow rules of the Company shall be governed by the workflow schedule for the purposes of identifying and classifying controlled transactions in a timely and correct manner and preparing TP reports in accordance with Annex 3 hereto.
21.15. Interaction among the Company’s divisions in entering into agreements with interdependent persons and preparing documents regarding controlled transactions shall be governed by the Company’s regulations and orders.
21.16. Interaction between the Company and the Company’s subsidiaries and dependent companies in preparing the list of controlled transactions shall be governed by the Company’s regulations and orders.
21.17. In order to ensure the safety of documents related to controlled transactions, business and tax accounting records and other documents necessary for tax assessment and payment, including documents supporting received incomes, incurred expenses, and paid (withheld) taxes, shall be kept in safety for a period of four (4) years.
22. Amendments to the Accounting Policy
22.1. The accounting policy of the Company may be amended and supplemented where provided for in paragraph 6 of Article 8 of Federal Law 402-FZ and Article 313 of the Tax Code.
22.2. Any amendment to the accounting policy of the Company shall be reasonable and shall require approval under the relevant regulations and orders of the Company.
Appendix to the Quarterly Report. Auditor’s Report on the Annual Accounting (Financial) Statements of the Issuer
Appendix to the Quarterly Report. Appendix to the Annual Balance Sheet
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