Development of accounting policy
Accounting policy for the purposes of accounting record keeping is regulated by the Provision on Accounting «Organizations’ Accounting Policy» AR 1/2008 which is applied to organizations irrespective of their forms of incorporation, and with regard to disclosure of accounting policy, to organizations publishing their accounting statements in whole or in part in accordance with the Russian laws, their constituent documents or upon their own discretion.
Regarding accounting policy for the purposes of taxation, the Russian Tax Code does not specify entities which must have the tax accounting policy. However, the provisions on accounting policy for the purposes of taxation are contained in Chapters 21, 25, 26 and 26.4 of the Russian Tax Code. Therefore, all entities which pay VAT and income tax must have such policy.
Involvement of independent experts in development of accounting policy for the purposes of accounting record keeping and taxation where all the special aspects of company’s business to be considered is very efficient.
Accounting policy for the purposes of accounting record keeping includes:
Working chart of accounts for bookkeeping containing control and subsidiary accounts required for accounting record keeping in accordance with requirements to promptness and completeness of accounting and reporting.
Forms of primary accounting documents, accounting registers and documents for internal reporting.
Procedure of organization’s asset and liability recognition.
Methods of asset and liability valuation.
Document circulation procedures and methods of processing the accounting information.
List of persons authorized to sign documents.
Business operation monitoring procedure.
List of persons authorized to take money on account.
Other solutions required for accounting.
After foundation or reorganization, a company must adopt accounting policy no later than 90 days from the date of state registration and the policy will be deemed to be in effect from the date of state registration. Accounting policy adopted by organization shall be applied consistently from year to year.
Accounting policy for the purposes of taxation:
Accounting policy for the purposes of taxation shall contain tax accounting procedure approved by organization. The Russian Tax Code does not provide for the uniform procedure of making the accounting policy.
In our opinion, accounting policy for the purposes of taxation shall consist of three sections:
The first section shall describe organizational and technical aspects, such as organization of tax accounting (by accounting staff, through creation of a separate specialized subdivision or outsourcing), tax ledger system and document flow system for filling of tax ledgers.
The second section shall contain the tax accounting methods selected by organization when the Russian Tax Code grants such right to a taxpayer (for example, determination of the list of direct and indirect expenses). This is the main part of accounting policy. Here it is recommended to make a distinction between different kinds of taxes.
The third section shall give explanations with regard to calculation of the taxes if the tax law does not contain corresponding provisions or procedures. This is also a very important part that allows an organization to perform tax planning. For example, the Russian Tax Code does not contain a separate record keeping procedure; therefore, an organization shall develop and document such procedure in its accounting policy based on the specific features of its business. Attachments to tax accounting policy may include the forms of tax accounting ledgers developed and approved by organization itself.
For the purpose of VAT calculation, the tax accounting policy adopted by organization shall be applied to all the organization’s standalone divisions. The policy shall be adopted no later than at the end of the first fiscal period of organization functioning. However, if a taxpayer launched new business operations he shall determine and reflect in his accounting policy the principles and procedure of representation of such business operations for the purposes of taxation.
Custom-made accounting policy for the purposes of accounting record keeping and taxation complying will all the applicable laws, special requirements and customer’s expectations.