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ing criteria characterizing efficiency of tax bodies' performance for the purpose of assessment of tax control.
3. Ratio of successful field tax inspections without trials:
D , = D r , / n x 100
rfiwt nfwt *-*0
In this formula: D, , - ratio of successful field tax in-
rfiwt
spections without trials; D, , - the number of successful
nfiwt
field tax inspections without trials; D0 - the total number of successful field tax inspections.
Introduction of the proposed criteria will provide an opportunity for better and more thorough assessment of efficiency and results of tax administration performed by tax bodies. Analysis of all the indicators of efficiency of tax bodies' performance will make it possible to create a system of tax relationships which will serve the purpose of
economy growth and will enable appropriate structural shifts.
1. Il’ina G.G. Taxpayers Assessed the Quality of Tax Bodies' Activities // Tax Policy and Practice. 2009. October. № 10 (82).
2. Kalashnikova I.N. Tax Audit Efficiency as an Indicator of Tax Administration Efficiency // Regional Economy: Theory and Practice. 2009. № 19.
3. Kalashnikova I.N. Impact of Control Technologies on the Degree of Tax Administration in Russia // Bulletin of Saratov State Socio-Economic University. 2010. № 4.
4. Tax Administration: textbook for students / Mironova O.A., Khanafeev F.F. M.: Publishing House “Omega-L”, 2008.
5. Nushtakina R.F. Ways of Improving the Indicators of Assessment of Efficiency of Tax Body Structural Divisions // Tax Planning and Administration // URL: http://www.konfi-nalog.jurati.ru.
удк 336.226.2 A.N. Khramova
COSTS OF REPAIRS AND RECONSTRUCTION OF RENTED PROPERTY FOR TAXATION PURPOSES
The paper examines the concept and problems of repair and reconstruction of rented property costs for taxation purposes regarding both tenant and landlord in the framework of current legislation. The author puts forward suggestions for taxation improvement regarding cost incurred for repair and reconstruction of rented property.
Key words: finance, taxation, rent, repairs, reconstruction, depreciation, costs.
A.H. Храмова
РАСХОДЫ НА РЕМОНТ И РЕКОНСТРУКЦИЮ АРЕНДОВАННОГО ИМУЩЕСТВА В НЕЛЯХ НАЛОГООБЛОЖЕНИЯ
В данной статье исследованы понятия и проблемы расходов на ремонт и реконструкцию арендованного (переданного в аренду) имущества в цепях налогообложения как у арендатора, так и у арендодателя с точки зрения действующего законодательства и предложены варианты совершенствования налогообложения в связи с осуществлением расходов на ремонт и реконструкцию арендованного имущества.
Ключевые слова: финансы, налогообложение, аренда, ремонт, реконструкция, амортизация, затраты.
In any organization fixed capital assets play an important role for providing its activities. They are usually with a long-term operation period, and taking into consideration their high cost modern Russian organizations transfer them into active assets by operating them under lease. To maintain and reprocess functional and qualitative characteristics of fixed capital assets they are periodically entitled to repairs. This is extremely important for fixed capital assets under long-term lease. The Civil Code of the Russian Federation states that repairs of fixed capital assets are divided into ordinary maintenance and repairs. In accordance with the Civil Code of the Russian Federation repairs of the leased fixed capital assets are made for the account of the lessor and ordinary maintenance is made for the account of the lessee except as otherwise provided by the lease contract.
In case the lease contract provides that repairs are made by the lessee, the lessee's expenses incurred are deduc-table from income tax base. It can be only if the lessor does not reimburse these expenses under the lease contract and conversely [1].
It is our understanding that for profit tax purposes the way repairs are made (own-account or contracting) is not of importance. Any expenses associated with repairs of the leased depreciable capital assets incurred by the lessee or the lessor in compliance with the obligations imposed on them by the lease contract can be registered immediately as part of expenses for profit tax purposes. In this regard the party which makes the repairs can declare input VAT for deduction, in our opinion [4]. Alternatively, in case expenses on repairs are for the account of either party (e.g., the lessor) under the contract lease and in practice are made for the account of the other party (e.g., the lessee), expenses are not reimbursed to that party We believe these expenses are not recognized for profit tax purposes of the party which actually made the repairs (the lessee). Input VAT cannot be declared for deduction as well [9].
When making really expensive and complex repairs the lessee or the lessor (depending on the fact which party is making the repairs) can make appropriation to the reserve fund for repairs of fixed capital assets.
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The lessees of fixed property have to make repairs of the leased premises rather often. These repairs are aimed at improvement of characteristics of the premises, e.g., to reconstruct the object, finish construction or modernize the building. These capital investments create fixtures. A fixture is a qualitative change of the object, i.e. a change that cannot be attributed to repairs or ordinary maintenance. Reconstruction, finishing construction and modernization are considered to be fixtures [10]. As a rule, these expenses are for the account of the lessee because it is the party which is interested in improvement of the fixed property to be used.
In accordance with Article 623 of the Civil Code of the Russian Federation only fittings are recognized as the property of the lessee. After the expiry of the time-limit of the lease contract fixtures remain the property of the lessor in spite of the fact whether the lessor reimbursed the expenses associated with fixtures to the lessee or not.
For each party of the lease contract the order of disclosure of fixtures value of the leased property for tax purposes depends on the fact whether there is obtained agreement for carrying out this kind of improvements from the lessor and on the fact whether the lessor will reimburse the expenses incurred by the lessee [2].
Since January 1, 2006 amortizable assets are capital investments into the leased fixed capital assets in the form of fixtures made by the lessee with the agreement of the lessor (sub-paragraph 4 paragraph 1 Article 256 of the Civil Code of the Russian Federation). Thus, expenses on fixtures reimbursement cannot be registered immediately as part of expenses for profit tax purposes but are liable for depreciation.
In case the lessee has an agreement from the lessor on capital investment appreciation, the capital investment appreciation is recognized as amortizable assets. In case fixtures are created without the agreement from the lessor, they are not recognized as amortizable assets of the lessee [3].
Capital investments into the leased fixed capital assets stated in sub-paragraph 4 paragraph 1 Article 256 of the Civil Code of the Russian Federation are depreciated as follows:
Firstly, in case the cost of capital investment is reimbursed to the lessee by the lesser, depreciation for profit tax purposes is accrued by the lessor in the procedure provided by Chapter 25 of the Tax Code of the Russian Federation.
Secondly in case capital investment is made by the lessee with the agreement from the lessor and its cost is not reimbursed by the lessor, in profit taxation depreciation is accrued by the lessee during the term of the lease contract on the basis of depreciation amount computed with the account of useful life of the leased assets in the accordance of classification of the assets approved by the government of the Russian Federation [7].
Thirdly, in case capital investment is made without the agreement of the lessor and is not reimbursed by the lessor, these expenses cannot be depreciated or immediately deduced from the lessee for profit taxation purposes. These expenses are liable for compensation out of net profit of the lessee.
If creation of a fixture was not reimbursed by the lessor, in any case after the termination of the lease contract the fixture is transferred to the lessor together with the leased
premises as it is inseparable from them without causing damage to the premises. In accordance with sub-paragraph 32 paragraph 1 Article 251 of the tax Code of the Russian Federation beginning with January 1, 2006 the lessor is not obliged to include non-reimbursable expenses on the fixture in the income statement after the termination of the lease contract. This provision is applied irrespective of whether the lessor agrees to creation of fixtures or not. We believe that for VAT purposes compensation-free transfer of fixtures will be registered as donated assets in the lessor statement in accordance with sub-subparagraph 2 sub- paragraph 1 paragraph 1 Article 146 of he Tax Code of the Russian Federation. Thus, the lessor is obliged to accrue VAT for the donated fixture and transfer it to the budget.
It is our understanding that in case fixtures were created for the account of the lessee with the agreement of the lessor and without the subsequent reimbursement, it is important that for tax purposes the property for the fixture passes to the lessor The Civil Code of the Russian Federation does not provide the information on the moment the fixture passes to the lessor. Since the legislation sets the standard for property rights for the fixtures only at the time of the lease contract termination, it turns out that within the contract term the lessor has property rights to the fixtures. However, we consider that within the contract term and subject to the lease contract terms both the lessee and the lessor may have rights to the fixtures. There are two conceptual viewpoints on this subject [8].
The first viewpoint states that the lessee has property rights to the fixtures within the lease contract term. This is due to the fact Article 218 of the Civil Code of the Russian Federation provides that the owner of the newly created or manufactured item of property is the body that bought it into acquisition for own use. After termination of the lease contract the property right for the fixture is transferred to the lessor. Following this theory, a fixture should be recognized by the lessee as a fixed asset, appear on the balance sheet, be depreciated, and be imposed with corporate property tax.
The second viewpoint implies that the lessor always has property rights to the fixtures as the fixtures are inseparable from the leased premises. That is the reason the lessee is not obliged to include the fixture as part of the fixed assets in the balance sheet, to depreciate or to impose corporate property tax.
We believe the first viewpoint is more logical and motivated. Difficulties arise in case the lessor reimburses the fixtures to the lessee, though.
If the creation of fixtures is reimbursed to the lessee directly upon actual basis or to the fullest extent, the lessor acquires title for it; hence, the fixtures can appear on the lessor's balance sheet and start to be depreciated.
The lessor may also reimburse the lessee the expenses on the fixture creation after the termination of the lease contract. It is our opinion that in this case depreciation of the fixtures should be accrued to the lessee. After the termination of the contract lease the sum of money which the lessee gets from the lessor as reimbursement of the expenses is subject to consideration as the taxable revenue of the lessee and depreciated cost of the fixtures is subject to consideration as expenses reducing this revenue.
The lease contract can include the term on expenses reimbursement of fixtures creation. In this case the moment of actual reimbursement does not matter because
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the lessee does not have the right to depreciate fixtures even reimbursement is done after the termination of the lease contract or not to the fullest extent of the expenditure incurred.
Eventually, the matter of including capital expenditures in the expenses by the lessee in case the lessee gets reimbursement after the termination of the lease contract, resolves itself into determination of period of their acknowledgment:
- gradually during the term of the lease contract and in net asset value in realization/transfer of the fixture to the lessor;
- at the moment of termination of the lease contract in estimation of financial result of such a transfer.
The question is solved depending on the tax tactics chosen by the lessee and after the analysis of each situation is carried out [6].
According to the provisions of the Tax Code of the Russian Federation accrual of depreciation on capital expenditures for tax purposes is not directly dependent on the fact how the lessee recognizes capital works. It should be admitted that accounting and tax legislation approaches are identical, though.
In practice it can be that procedure for the reimbursement of the expenses is not agreed by the parties. For example, if the contract provides that procedure for the reimbursement of the expenses is agreed on additionally. In relation to this we consider that until proved otherwise (reimbursement of the expenses will be done) this situation can be considered as not supposed for reimbursement. This is explained by the fact the lessee may not exercise the right to reimbursement of expenses as the responsibility of the lessor to reimburse expenses for fixtures is provided not mandatory in the Civil Code of the Russian Federation.
Taking all the aforesaid into consideration, it should be noted that there is a number of ambiguities in the current version of Chapter 25 of the Tax Code of the Russian Federation. Thus, in our opinion the moment the lessor agrees to creation of a fixture without reimbursement should not serve as a basis for possibility of expenses incurrence of the expenditures on the fixture creation from the lessee for profit tax purposes. It is because the fact whether the lessor agrees or does not agree to these activities is of commercial nature (is a commercial provision of the contract) and should not have an impact on tax liabilities of the lessee. Due to this several amendments should be made by law in Article 256 of the Tax Code of the Russian Federation, namely sub-sub-paragraph 4 paragraph 1 is replaced
by the following: “recognized as depreciated property shall be the capital investments into the leased fixed assets in the form of fixtures created by the lessee irrespective of the agreement of the lessor as well as the capital investments into the leased fixed assets in the form of fixtures created by the organization-borrower irrespective of the agreement of the organization-lender”.
Besides, we believe that legislative framework should also reflect the aspects of transfer of title for the created by the lessee fixtures as they directly influence on tax liabilities of the lessee concerning both income and property taxes. Provision of these bases in the lease contract should be facultative (“except as otherwise provided in the contract”), and failing this they should be treated under norms of the law
1. Official Letter of Federal Tax Agency Department in Moscow dated June 6, 2008 № 20-12/053638 “On Accounting Treatment of Income Tax Expenses on Ordinary Maintenance for Tax Purpos-es”// Moscow Tax Courier. 2008. № 15 - 16.; Official Letter of. Federal Tax Agency Department in Moscow dated February 18, 2008 № 20-12/015152.2 “On Accounting Treatment of Lease Payments for the Leased Property and Its Repairs in Profit Tax Purpos-es”// Moscow Tax Courier. 2008. № 7 - 8.
2. Official Letter of Federal Tax Agency Department in Moscow dated March 18, 2008 № 20-12/025122.1 “On Records of Depreciation Expenditures on Fixtures within the Lease Contract Terms for Profit Taxation Purposes” // Moscow Tax Courier. 2008. № 9 - 10.
3. Vasiliev Yu.A. Fixtures in the Lessee or the Lessor Statements: What Party Benefits? // Topical Issues of Accounting and Taxation. 2006. № 19.
4. Zahariin V.R. Repairs of Capital Fixed Assets as Seen by an Accountant // Economic and Legislative Bulletin. 2008. № 9.
5. Zernova I. Expenditures on the Repairs of the Leased Premises // Budgetary Organizations: Accounting and Taxation. 2008. № 3.
6. Kalashnikova I.N. “Impact on Control Technologies on Tax Administration Quality in Russia”// Bulletin of Saratov State SocioEconomic University. 2010. № 4 (33).
7. Kiryushina I.M. Improvement of the Leased Property // New Accounting. 2008. № 1.
8. Kozlova N. Who Depreciates Fixtures? // Practical Accounting. 2008. № 2.
9. Kuzmin D.V. Peculiarities of VAT Estimation in Consolidated Accounts // Finance and Credit. 2009. № 14 (350).
10. Resnyanskaya N.S. Reconstruction and the Subject of the Lease Contract. Making a Contract // Finance and Accounting Consultations. 2008. № 3.
УДК 336.717 d.G. Chernyshkin
REGULATION ON MARGIN TRANSACTION SETTLEMENT IN RUSSIA
Criticism of the present legal environment of margin transactions settlement at the Russian securities market is presented. Suggestions on development of efficient system of regulation of securities market segment are made.
Key words: margin transactions, securities market, regulation.
