LETTER OF THE FEDERAL TAX SERVICE OF THE RUSSIAN FEDERATION

of June 30, 2014 No. State Duma-4-3/12324 @

About accounting treatment for the purpose of the taxation of profit of subsidies

The Federal Tax Service for data and use in work directs approved with the Ministry of Finance of the Russian Federation (the letter of 16.05.2014 No. 03-03-10/23121) line item concerning accounting treatment for the purpose of the taxation of profit of the subsidies received by the commercial organization and the amounts of remaining balance unspent the organization of subsidies in case of their return.

According to Item 1 of Article 78 of the Budget code of the Russian Federation subsidies to legal entities (except for subsidies to the public (municipal) institutions), to individual entrepreneurs, physical persons - producers of goods, works, services are provided on non-paid and irretrievable basis for the purpose of cost recovery or the half-received income in connection with production (realization) of goods, performance of works, rendering services.

At the same time, the expenses made due to target receipts are included in the expenses in case of determination of taxable basis on the income tax of the organizations in generally established procedure.

In case of return to the relevant budget of the amount of remaining balance unspent the organization of subsidies the specified transaction should be considered as the new circumstance influencing the size of the valid tax liabilities on the income tax of the organizations. In this case the amount of the remaining balance of unused subsidies listed in budget receipt shall be considered as a part of non-operating expenses of the accounting (tax) period in which the specified transfer is made.

Bring this letter to subordinate tax authorities and taxpayers.

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