The bill (N84984-8) was submitted to parliament by the government on March 10, adopted in the first reading on March 11, and then finalized in the State Duma Budget Committee.

Adopted in the second reading and as a whole, the law freezes the cadastral value of property tax for individuals and land tax at January 1, 2022 levels. A similar rule is envisaged for organizations when paying property tax: the tax base will be calculated based on the cadastral value of property as of January 1, 2022. "That is, in fact, cadastral values will essentially be frozen," Deputy Finance Minister Alexei Sazanov said.

The adopted law exempts income received in the form of material benefits in 2021-2023 from personal income tax. "We practically remove all restrictions on material benefit. In essence, all the assistance that we have, is provided by employers, what was considered as material benefit and was subject to personal income tax - including the payment of interest on a mortgage loan and so on, all these issues - it is proposed here to remove all taxation, any assistance," the head of the State Duma Committee on Budget Andrei Makarov said.

Interest received in 2021-2022 on deposits and balances in bank accounts is also exempt from personal income tax.

The authority of Russian constituent subjects to establish tax holidays in the form of a 0% tax rate for individuals registered as individual entrepreneurs for the first time, who within two years from the date of registration as individual entrepreneurs have switched to the simplified taxation system (STS) and the patent taxation system (PTS) is being extended. This norm will be valid through the end of 2024.

A proposal has been made to abandon the application in 2022 (from March 9) and 2023 in respect to organizations of the norm of increased penalties from the 31st day of delay in the amount of 1/150 of the refinancing rate, the rate will be lowered to 1/300. Currently, penalties for each calendar day of delay in payment of the tax is defined as a percentage of the unpaid amount of tax: for organizations in arrears up to 30 calendar days, the interest rate of the penalty is taken as equal to 1/300 of the refinancing rate of the Central Bank for each day, and starting from the 31st day of delay - at a rate of 1/150 of the rate. Previously, experts estimated that after CBR's rate hike from 9.5% to 20%, payment of taxes for businesses will be 48.66% per annum after the first month of delay.

Extended intervals of interest rate caps on debt obligations are fixed for 2022-2023.

Foreign organizations have been given the right to submit information on participants as of the end of 2021 to tax authorities not by March 28, but by December 31, 2022. "This is a very important proposal by business, because today it is very difficult to obtain information, non-submission leads to fines and other negative consequences," Makarov said earlier.

The threshold for recognition of controlled transactions between related parties has been doubled, from 60 million to 120 million rubles. Transactions between related parties where one of the parties applies an investment tax deduction for corporate income tax and where income is recognized from January 1, 2022 to December 31, 2024 will not be recognized as controlled transactions.

Restrictions are imposed on the application of liability for failure to submit to a tax authority documents confirming the amount of profit or loss of a controlled foreign company (CFC) for the years 2020-2021.

The adopted draft law establishes a zero VAT rate for five years with respect to services for the provision of temporary accommodation in hotels and other accommodation facilities, and a zero VAT rate is also established with respect to services for the lease, management or granting of other rights for tourist infrastructure facilities put into operation from 1 January 2022. The rate will be applied for a period of 5 years for the moment the facility is put into operation.

From 2022, a 0% corporate income tax rate will be set for accredited organizations in the IT industry. Currently it is 3%.

As for the transportation tax, starting in 2022 a multiplying coefficient will be applied only for vehicles worth over 10 million rubles, i.e., no increasing coefficients will be applied up to 10 million rubles.

An accelerated VAT refund will be introduced for all companies that are not in bankruptcy proceedings or in the process of reorganization or liquidation. They will make available the declarative procedure of tax refunds, which allows for returning or offsetting the amount of tax even before the completion of desk audit of the submitted declaration. According to the adopted amendments, companies under the declarative procedure will not have to provide a bank guarantee or surety if the amount to be refunded does not exceed the amount of taxes and insurance fees for the previous year. If the amount is higher, a bank guarantee or surety will be required.

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