Chapter 9. Changes in Deadlines for Payment Taxes and Dues,

and also Penalties

Article 61. General Terms of Changing the Deadline for Paying Taxes or Fees and Also Penalties

1. A change in the deadline for paying a tax or a fee shall be construed as postponement of the established deadline for paying the tax or the fee or any part thereof until a later date.

2. A change in the deadline for paying taxes and fees shall be allowed exclusively in accordance with the procedure and on the terms laid down in this Chapter.

The deadline for paying the tax may be changed with respect to the entire amount of the tax payable or a part thereof with interest accruing on the outstanding liability (hereinafter referred to in this Chapter as the outstanding liability), unless otherwise provided for in this Chapter.

3. A change in the deadline for paying a tax and a fee shall be made in the form of a deferral, an installment plan, a tax loan, and an investment tax credit.

4. A change in the deadline for fulfilling the obligation to pay taxes and fees shall not annul the existing tax or fee obligation, nor shall it give rise to a new one.

5. The change in the deadline for paying taxes and dues stated in Article 63 of this Code may be made against a pledge of the assets in conformity with Article 73 of this Code or upon a given security in conformity with Article 74 of this Code, unless this Chapter provides otherwise.

6. The term of penalty payment shall be changed in the order prescribed by this Chapter.

7. The rules provided for by this Chapter shall also apply to the changes in the term of the payment of the tax and the due to the governmental extra-budgetary funds. In this case the agencies of the governmental extra-budgetary funds, which exercise control over the payment of such taxes and dues shall enjoy the rights and bear the duties of the financial bodies, stipulated by this Chapter.

Article 62. Circumstances Ruling out Changes in the Deadline for Tax Payment

1. The deadline for paying a tax shall not be changed if in respect of a person applying for such change (hereinafter referred to as the person concerned):

1) a criminal case has been initiated upon the signs of a crime in connection with abuse of the tax legislation;

2) proceedings in tax or administrative offence related to abuse of the tax legislation have been under way;

3) there are sufficient grounds to believe that the person would use such change to conceal his monetary assets or other property subject to taxation, or such person is going to leave the Russian Federation for good to find a permanent residence elsewhere.

2. In the presence of circumstances at the time of passing a decision on the change of the term of tax payment specified in Item 1 of this Article, no decision to change the deadline for fulfilling a tax obligation shall be made, and if passed, such decision shall be cancelled.

Within three business days after this decision has been ruled ineffective, the person concerned and the tax service body at the place of registration of that person shall be given a written notice thereof.

The person concerned shall have the right to appeal the decision in accordance with the procedure established by this Code.

Article 63. Bodies Authorized to Make Decisions to Change the Deadline for Paying Taxes or Fees

1. The bodies in charge of making decisions to change the deadline for paying a tax or a fee (authorized bodies) shall be:

1) for federal taxes and dues - the Ministry of Finance of the Russian Federation (except for the cases stipulated by Subitems 3-5 of this Item, Item 2 of this Article and the third paragraph of Item 1 of Article 66 of this Code);

2) with respect to regional and local taxes and fees - regional and local financial bodies of a subject of the Russian Federation and a municipal entity, respectively (with the exception of cases specified in 3) through 5) of this part and Item 3 of this Article);

3) with respect to taxes and fees payable in connection with the movement of goods across the customs border of the Russian Federation, the State Customs Committee of the Russian Federation or other customs bodies authorized thereby;

4) with respect to the stamp duty - authorized bodies monitoring the payment of the stamp duty;

5) with respect to taxes and fees receivable by off budget funds, bodies of the respective off budget funds.

2. If a federal law on the federal budget provides for sharing of a federal tax and a fee amount between the budgets of various levels, the deadline for paying such tax or fee with respect to the amounts due to the federal budget, shall be changed by a decision of the Ministry of Finance of the Russian Federation, and with respect to the amounts due to the budget of a subject of the Russian Federation or the local budget, by a decision of the respective financial body.

3. If the legislation on taxes and dues or the budget legislation of the respective subject of the Russian Federation provides for sharing of a regional tax and fee between budgets of various levels, the deadline for paying such tax and fee with respect to the amount payable to the budget of the subject of the Russian Federation shall be changed by a decision of the financial body of the subject of the Russian Federation, and with respect to the amounts payable to the local budget, by a decision of the financial body of the municipal entity in question.

Article 64. Procedure and Conditions of Allowing Tax Deferment or Payment of Tax and Charge by Instalments

1. Tax deferment or payment of tax by instalments means rescheduling of tax or fee collection for reasons stated in this Article, for a period of one to six months respectively, with the one-off or step-by-step payment of the arrears by the taxpayer.

2. A concerned person may be allowed to defer tax or fee payment or pay a tax or fee by instalments for one of the following reasons:

1) if such person is caused damages by natural calamity, technological accident or another extraordinary and non-preventable circumstance;

2) if a public-budget payment due to such person is delayed or if payment for an executed government order due to this person is delayed;

3) bankruptcy threatening such person provided such person makes a one-off payment of tax;

4) if the property situation of such an individual rules out the possibility of an one-off payment of a tax or fee;

5) if the production and/or sale of goods (works, services) by a person is of a seasonal nature. The list of sectors and activities being of a seasonal nature is approved by the Government of the Russian Federation;

6) other grounds provided by the Customs Code of the Russian Federation for the taxes subject to payment in connection with the movement of goods across the customs border of the Russian Federation.

3. Tax or fee deferment or payment of tax or fee by instalments may be allowed with respect to one or several taxes and charges.

4. If a tax deferment or payment of tax by instalments is allowed for reasons stated in subitems (3), (4) and (5) of Item 2 of this Article, the amount of arrears accrues interest in accordance with a rate equal to 1/2 of the refinancing rate of the Central Bank of the Russian Federation effective during the period when tax deferment or payment of tax by instalments is allowed, unless otherwise prescribed by the customs legislation of the Russian Federation with respect to the taxes/charges payable in connection with the movement of goods across the customs border of the Russian Federation.

If a deferment (payment by instalments) is allowed for reasons as per subitems 1) and 2) of Item 2 of this Article, the amount of the arrears does not accrue interest.

5. A petition for tax deferment or payment of tax by instalments is filed with an appropriate authority; the petition must state and reasons why the tax deferment or payment of tax by instalments is requested. The concerned taxpayer forwards a copy of the petition on to such taxpayer's local tax authority within ten days. This application shall be enclosed with the documents confirming the presence of the grounds indicated in Item 2 of this Article.

Upon request of an authority a concerned person presents to such authorized body documents relating to property that can be used a pledge or a guarantee.

6. A decision to allow tax deferment or payment by instalments or to withhold permission is taken by the authority within one month of receipt of the petition.

Upon request of a concerned person the authority may take a decision to suspend (for the period while the petition is being considered for a tax deferment or payment of tax by instalments) the payment of arrears by the concerned person. A copy of such decision is filed by the concerned person with the local tax authority within five days of passage of such decision.

7. Provided there are none of the circumstances described in Article 62 (1) of this Code, an authority may not deny a concerned person a tax deferment or the right to pay tax or fee by instalments for reasons stated in subitems 1) or 2) of item 2 of this Article, not exceeding the damages having been caused to the concerned person or the amount of funding shortfall or the amount that have not been paid for a government order such person has fulfilled.

8. A decision to allow a tax deferment or payment of tax by instalments shall mention the amount of arrears, tax or charge that the petitioner seeks to defer or pay by instalments, the time and procedure of payment of the amount of arrears and accrued interest, and in appropriate cases documents concerning the property that is the subject of pledge or the guarantee.

A decision to allow a deferment or payment by instalments mentions the date when such decision takes effect. The penalty payable for the entire period from the date appointed for tax or fee payment to the effective date of such decision is included in the amount of arrears if such payment date precedes the effective date of such decision.

If a deferment or payment by instalments is allowed against a property pledge, the decision to allow such deferment (payment by instalments) takes effect only after an agreement is effected on a property pledge in the manner prescribed by Article 73 of this Code.

9. A permission to defer payment or pay by instalments may not be withheld unreasonably.

If there are reasons stated in subitems 1) and 2) of Item 2 of this Article, a decision to deny a deferment or payment by instalments shall cite the circumstances preventing rescheduling of payment of a tax.

A decision to deny a deferment or payment by instalments may be appealed by a concerned person in a manner prescribed by the legislation of the Russian Federation.

10. A copy of decision allowing or denying a deferment or payment by instalments is sent by the proper authority within three days of passage of such decision to the concerned person and to the local tax authority at the place of residence of such person.

11. The rules provided for by this Article shall also apply when a delay or an instalment plan for the tax payment is granted in connection with the movement of goods across the customs border of the Russian Federation, with the exception of granting a delay or an instalment plan on the ground provided for by Subitem 5 of Item 2 of this Article.

12. A subdivision of the Russian Federation may prescribe reasons and conditions other than those stated above for allowing a deferment or payment by instalments of regional and local taxes and charges.

13. Rules of this Article shall also apply to the procedure and conditions of granting deferment or instalment plans for the purposes of paying fees, unless otherwise stipulated by the legislation on taxes and dues.

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Article 65. Procedure and Conditions of Granting Tax Credit

1. Tax credit represents a change in the term of tax payment for a period of three to twelve months in the presence of at least one of the grounds indicated in Subitems 1-3 of Item 2 of Article 64 of this Code.

2. A tax loan may be granted with respect to one or several taxes.

3. A tax loan is granted to a concerned person after such person files a petition; such tax loan is written into an agreement of appropriate format between the proper authority and indicated person.

4. A concerned person's petition for a tax loan is filed and considered, a decision on such petition is taken and becomes effective in a manner and meeting the deadlines prescribed by Article 64 of this Code.

5. If a tax loan is granted for reasons cited in subitem 3) of Item 2, Article 64 of this Code, interest on the arrears is tied to the refinancing rate of the Central Bank of the Russian Federation that is effective during the tax loan agreement period.

If a tax loan is granted for reasons specified in subitems 1) and 2) of Item 1, Article 64 of this Code, interest on the arrears does not accrue.

6. A proper authority's decision to allow the person concerned a tax loan constitutes grounds for effecting a tax loan agreement; such agreement shall be effected within seven days of the passage of such decision.

A tax loan agreement shall specify the amount of the arrears (citing the tax or charge with respect to which the tax loan is granted), the effective period of the agreement, the interest accruing on the amount of the arrears, the procedure for the repayment of the arrears and accrued interest, the documents relating to the property that is used as a pledge, security, the parties' responsibility.

A copy of a tax loan agreement is filed by the concerned person with the local tax authority at such person's place of residence within five days of the conclusion of the agreement.

Article 66. Investment Tax Credit

1. An investment tax credit constitutes a tax rescheduling arrangement under which an organisation is allowed, if there are the grounds referred to in Article 67 of this Code for the following, to reduce its tax payments during a certain period and to a certain extent, with a subsequent gradual payment of the amount of the credit and of the accrued interest.

An investment tax credit may be granted to an organisation with respect to tax on its profits (incomes), and also with respect to regional and local taxes.

A decision to grant an investment tax credit relating to the part of the tax on an organisation's income (profit) that is due to the public budget of a subdivision of the Russian Federation is taken by a financial authority of such subdivision of the Russian Federation.

An investment tax credit may be granted for a one to five year period.

2. An organisation that receives an investment tax credit may reduce its appropriate tax payments during the effective period of the investment tax credit agreement.

Each payment of the corresponding tax for which an investment tax credit has been extended is reduced during each reporting period until the amount that is retained by the organisation as a result of all such reductions (accumulated amount of credit) becomes equal to the credit amount prescribed by an appropriate agreement. A concrete order of reducing tax payments shall be determined by the concluded contract on the investment tax credit.

If an organisation effects more than one investment tax credit agreement effective at the time of the next tax payment, the accumulated credit amount is determined separately for each of these agreements. The accumulated amount of the credit is increased initially for the earliest agreement; when this accumulated amount of the credit becomes equal to the credit size stated in such agreement, the organisation may increase the accumulated amount of the credit in accordance with the next-in-line agreement.

3. In each reporting period (irrespective of the number of investment tax credit agreements) the amounts that reduce an organisation's tax payments may not exceed 50 per cent of amount of appropriate tax payments as calculated under general rules if there were no investment tax credits in existence. An amount of credit accumulated during a tax period may not exceed 50 per cent of the amount payable by the organisation as tax during this tax period. If the accumulated sum of credit exceeds the maximum amounts for which it is possible to reduce the tax and which are fixed by this item for such reporting period, the difference between this amount and the maximally admissible amount shall be shifted to the next reporting period.

If an organisation incurs losses in a reporting period that is part of a larger tax period or losses during an entire tax period, an excessive amount of credit accumulated in a tax period is carried forward to the next tax period and is recognized as an accumulated amount of credit during the first reporting period of the new tax period.