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Daily Monitoring of the Legislation

Monitoring of the Federal Legislation dated 9.06.2006

Decision of the Presidium of the Higher Arbitration Court No. 16058/05 of May 16, 2006

The essence of the dispute is whether the penalties may be collected for untimely payment of the income tax from natural persons at the expense of resources of the tax agent.

According to the Presidium of the Higher Arbitration Court of the Russian Federation, since the penalties is a way of ensuring execution of obligations to pay the taxes and fees, and pursuant to Article 226 of the Tax Code of the Russian Federation the duty to pay the income tax from natural persons to the budget rests with tax agents, then the penalties are a way to ensure execution of the duties of payment of this tax by the tax agent. Besides, the penalties are a law reinstatement measure of state enforcement of compensatory nature for the untimely payment of the tax to the budget. Therefore, they must be collected from the subject of tax relations assuming this duty. The duty to pay the incomes tax from natural persons according to the common rule emerges with the tax agent sooner than the similar duty with the taxpayer. Hence, collection of penalties from the taxpayer rather than the tax agent (if the tax is not collected from him by the tax agent) would not ensure in full amount reimbursement of the dam age to the state from untimely and incomplete payment of the tax.

In this connection, the Presidium did not agree with the lower instances that, citing Item 9 of Article 229 of the Tax Code of the Russian Federation, recognised that the payment of the tax at the expense of the tax agents is not permitted. Reference to the mentioned norm may not be recognised as reasonable, since it envisages impermissibility of payment of the tax by the tax agent at his own expense. And the controversial issue pertains to the forced collection of penalties rather than the payment of the tax by the tax agent. Thus, the penalties for the untimely payment of the income tax from natural persons that was not collected from the taxpayer may be collected from the tax agent at the expense of his monetary resources and other property.

Letter of the Ministry of Finance of the Russian Federation No. 02-14-10a/1354 of May 25, 2006

Explains the procedure of transfer of non-financial assets obtained by institutions on a gratuitous basis from legal entities and natural persons from non-budget activities to the budget ones where these assets are used. Decision to transfer non-financial assets from non-budget activities to the budget one is taken by the chief administrator of the budget resources enjoying the mentioned authority in compliance with the Decree of the President of the Russian Federation No. 314 of March 9, 2004 in the presence of endorsed volumes of financing necessary for the maintenance of the given assets. The Letter describes accounting work used to register operations of transfer of non-financial assets.

Letter of the Department of the Tax and Customs Tariff Policy of the Ministry of Finance of the Russian Federation No. 03-03-04/2/134 of May 6, 2006

Expenses to draw up and get the single, triple and annual visas for the cases when business trips did not occur may not be taken into account in expenses for the purpose of profit taxation. The cost of the visas intended for business trips abroad and covered by the organisation to employees is exempted from the income tax from natural persons and the uniform social tax. Abandoning the trips does not change the qualification of the given type of payments to natural persons exempted from the income tax from natural persons and the uniform social tax.

Letter of the Department of the Tax and Customs Tariff Policy of the Ministry of Finance of the Russian Federation No. 03-05-01-04/111 of May 4, 2006

On the issue of taxation of operations with interest-free bank bills with the income tax from natural persons, emphasises that if the bill is interest-free, there appears to be no income with the first natural person bill holder. And there appears no tax agent duties with the bank redeeming the own bill.

When the bank redeems an own bill from the natural person not being the first holder, there appears to be no tax agent duties either. With the natural person getting payment under the bill, there emerges the income equal to the whole bill amount, making the natural person obliged to submit the declaration independently to the tax body and accrue the tax.

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