Article 265. Extra-Sale Outlays

1. Into the composition of the extra-realisation outlays, not connected with production and the sale, are included the justified outlays on the performance of an activity which is not directly involved in the production and (or) in sale. To such outlays are, in particular, referred:

1) outlays on the maintenance of the property handed over under a rental contract (of leasing) (including on the depreciation of this property);

For organisations which hand over on a systematic basis for payment into temporary use and (or) into temporary possession and use their property and (or) the exclusive rights arising from the patents on inventions, on industrial samples and on other kinds of intellectual property, seen as outlays involved in the production and realisation shall be the outlays connected with this activity;

2) outlays in the form of interest on any kind of debt liabilities, including interest calculated on securities and other liabilities, issued (emitted) by the taxpayer subject to the specifics provided for by Article 269 of this Code (for banks, the specifics in defining the outlays in the form of interest shall be established in conformity with Articles 269 and 291.

Recognised as outlays shall, in this case, be interest on any kind of debt liabilities, irrespective of the character of the granted credit or loan (current and /or/ investment). Recognised as outlays shall be only the sum of interest calculated over the actual time of use of the borrowed funds (the actual time of the said securities being placed at the disposal of third persons), and of the profitability established by the emitter (loan-giver);

3) the outlays on organizing the issue of own securities, especially on the preparation of the prospectus of the emission of securities, on the manufacture or acquisition of blank forms, on the registration of securities, outlays connected with servicing own securities, including outlays on the services for keeping a register of the owners of securities, on depository services, on the services of agents for paying interest (dividends), the outlays connected with keeping a register, providing information to share holders in compliance with the laws of the Russian Federation, and other similar outlays;

4) outlays connected with servicing the securities acquired by a taxpayer, including payment for the services related to keeping a register of the owners of securities, for depository services, outlays connected with the receipt of information in compliance with the laws of the Russian Federation, and other similar outlays;

5) outlays in the form of negative currency exchange rates arising from revaluating the property in the form of currency values and claims (liabilities) whose cost is expressed in foreign currency, including on currency accounts in banks, which is carried out in connection with a change in the official exchange rate of foreign currency to the rouble of the Russian Federation, fixed by the Central Bank of the Russian Federation;

For the purposes of this Chapter, a negative currency exchange rate shall be recognized as the currency exchange rate arising in the course of discounting property in the form of currency values or claims expressed in foreign currency or in the course of revaluating liabilities expressed in foreign currency;

5.1) outlays in the form of the sum difference which a taxpayer has, when the sum of arising liabilities and claims calculated on the basis of the exchange rate of conventional monetary units established by agreement of the parties on the date of sale (posting) of goods (works, services) or property rights does not comply with the actual amount of money in roubles received;

6) outlays in the form of negative (positive) difference emerging as a result of deviations in the rate of sale (purchase) of foreign currency from the official exchange rate of the Central Bank of the Russian Federation, established on the date of the transfer of ownership of foreign currency (the specifics of determining outlays of banks on these operations shall be established by Article 291 of this Code);

7) outlays of taxpayers who apply the method of calculation, on setting up the reserves against risky debts (in conformity with the order established by Article 266 of the present Code);

8) outlays on the liquidation of fixed assets withdrawn from operation, including the amounts of depreciation which is not fully accrued in compliance with the established time period of beneficial use thereof, as well as outlays on the liquidation of incomplete construction projects and other property whose installation is not completed (outlays on dismantling, disassembling and removal of disassembled property), on guarding mineral wealth and other similar works;

9) outlays on temporary closing down and re-activating industrial capacities and objects, including expenditure on the maintenance of conserved industrial capacities and objects;

10) court outlays and arbitration fees;

11) outlays on cancelling production orders, as well as outlays on production which has not yielded any products. Outlays on canceling production orders, as well as outlays on production which has not yielded any products, shall be recognized on the basis of acts of a taxpayer endorsed by the head thereof or by a person authorized by him in the amount of direct factor costs determined in compliance with Articles 318 and 319 of this Code;

12) outlays on operations with tare, if not otherwise provided for by the provisions of Item 3 of Article 254 of this Code;

13) outlays in the form of fines, penalties and (or) other sanctions for violating the contractual or debt liabilities recognized by debtors and subject to payment by debtors on the basis of effective court decisions, as well as outlays on the recompense of inflicted damage;

14) outlays in the form of the sums of taxes referred to the delivered commodity-material values, works and services, if the credit indebtedness (the liabilities to the creditors) on such delivery is written off in the reporting period in conformity with Item 18 of Article 250 of the present Code;

15) outlays on the remuneration of services rendered by banks including those connected with the installation and operation of electronic systems of documents circulation between a bank and clients, including "client-bank" systems;

16) outlays on holding an annual meeting of shareholders (participants, partners), in particular, outlays connected with renting premises, with preparing and forwarding information necessary for holding such meetings, as well as other outlays directly involved in holding the meeting;

17) in the form of outlays not subject to compensation from the budget, on performing works involved in mobilisation preparations, including expenditures on maintaining the capacities and objects which are loaded (used) only partially but still necessary for the fulfilment of the mobilisation plan;

18) outlays on transactions with the financial instruments of futures deals, taking into account the provisions of Articles 301-305 of the present Code;

19) outlays in the form of deductions to organisations included in the structure of the Russian Defence Organisation for Sports and Technologies, for the accumulation and redistribution of funds aimed at providing for the training of citizens, in conformity with the legislation of the Russian Federation, in military recorded specialities, for the military-patriotic education of youths and for the development of aviation, technical and military-applied kinds of sport;

20) other justified outlays.

2. For the purposes of the present Chapter, to the extra-sale outlays shall be equated the losses incurred by the taxpayer in the reporting (tax) period, in particular:

1) in the form of the losses of the past tax period identified in the current reporting (tax) period;

2) sums of bad debts, and where a taxpayer has decided on the creation of a reserve against doubtful debts, the sums of bad debts not covered at the expense of the reserve;

3) the losses from idle time because of internal production reasons;

4) the losses from idle time because of external reasons not compensated by the guilty persons;

5) outlays in the form of a shortage of material values in production and warehouses, as well as at trading enterprises in the absence of guilty persons, and losses from embezzlements whose culprits have not been caught. In the given cases, the fact of the absence of guilty persons shall be documentarily confirmed by an authorised state power body;

6) the losses from natural calamities, fires, accidents and other emergency situations, including the expenditures connected with the aversion or with the liquidation of the aftermath of the natural calamities and emergency situations.

7) losses in a deal of cession of the right of claim in the procedure established by Article 279 of this Code.

Article 266. Outlays on Setting Up Reserves Against Risky Debts

1. Recognised as a risky debt shall be any kind of indebtedness to the taxpayer, if this indebtedness is not settled before the deadline fixed by the contract and is not secured against with a pawn, surety or bank guarantee.

A debt in respect of which the creation of a reserve against possible loan losses is provided in compliance with Article 292 of this Code, shall not be regarded as doubtful for taxpaying banks.

For taxpaying insurance companies determining receipts and expenditures by the method of calculations under insurance contracts, co-insurance contracts and reinsurance contracts in respect of which insurance reserves have been formed, a reserve against doubtful debts in respect of the debit indebtedness connected with payment of insurance premiums (fees) shall not be set up.

2. Recognised as risky debts (unrecoverable debts) shall be those debts to the taxpayer on which the fixed term of legal limitation has expired, and also those debts on which in conformity with the civil legislation liability is terminated, because it is impossible to fulfil it, on the grounds of an act of the state body or in the face of the organisation's liquidation.

3. The taxpayer shall have the right to set up reserves against doubtful debts in accordance with the procedure stipulated by the present Article. The sums of deductions into these reserves shall be included into the composition of the extra-sale outlays on the last day of the reporting (tax) period. The present provision shall not be applied towards the outlays for the formation of reserves against debts incurred in connection with the non-payment of interest, with the exception of banks. Banks shall have the right to create reserves against risky debts with respect to the indebtedness which has accumulated because of non-payment of interest on the debt liabilities and with respect to other kinds of indebtedness, with the exception of loan indebtedness and of indebtedness equated to it.

4. The sum of the reserve against risky debts shall be determined by the results of an inventory of the debit indebtedness, carried out on the last day of reporting (tax) period, and shall be calculated in this way:

1) as concerns risky indebtedness with a term of over 90 days - in the sum of the set up reserve shall be included the full sum of indebtedness discovered on the grounds of the inventory;

2) as concerns the risky indebtedness with a term of 45 to 90 days (inclusive) - in the sum of the reserve shall be included 50 per cent from the sum of the indebtedness exposed on the grounds of the inventory;

3) as concerns the risky indebtedness with a term of less than 45 days the sum of the created reserve shall not be increased.

The sum of the established reserve against risky debts shall not exceed 10 per cent of the earnings of the reporting (tax) period, defined in conformity with Article 249 of the present Code (for banks - of the sum of incomes determined in compliance with this Chapter, safe for the incomes in the form of restored reserves).

The reserve against risky debts may be used by the organisation only for coverage of the losses from hopeless debts, recognised as such in the order established by the present Article.

5. The sum of the reserve against high risk losses not fully used by the taxpayer in the reporting period for the coverage of losses from hopeless debts may be put off by him to the next reporting (tax) period. In this case, the sum of the reserve created again in accordance with the results of the inventory of the reserve, shall be corrected by the sum of the residual of the reserve of the previous reporting (tax) period. If the sum of the reserve created again by the results of the inventory of the reserve is less than the sum of the residual of the reserve of the previous reporting (tax) period, the difference shall be included in the composition of the taxpayer's extra-sale incomes in the report (tax) period. If the sum of the reserve created again by the results of the inventory of the reserve is larger than the sum of the residual of the previous reporting (tax) period, the difference shall be included in the extra-sale outlays in the current reporting (tax) period.

If the taxpayer adopts the decision on setting up a reserve against high risk debts, the writing off recognised as hopeless in conformity with the present Article shall be made at the expense of the sum of the created reserve. If the sum of the created reserve is less than the sum of the hopeless debts subject to writing off, the difference (loss) shall be included in the composition of the extra-sale outlays.

Article 267. Outlays on Setting Up a Reserve for the Guarantee Repairs and Guarantee Servicing

1. Taxpayers selling commodities (works) shall have the right to create reserves for forthcoming outlays on the guarantee repairs and guarantee servicing, and the deductions on the formation of such reserves shall be accepted for the purposes of taxation in accordance with the procedure stipulated by the present Article.

2. The taxpayer shall adopt a decision on setting up such reserves on his own and shall establish in the accounting policy for the purposes of taxation the ultimate amount of the deductions into this reserve. The reserve shall be created in this case with respect to those commodities (works), for which, in conformity with the terms of the contract concluded with the buyer, are envisaged the servicing and repairs in the course of the guarantee period.

3. Recognised as outlays shall be the sums of deductions into the reserve as on the date of selling the said commodities (works). The size of the established reserve shall not exceed the ultimate amount defined as the share of the taxpayer's outlays on the guarantee repairs and servicing he has actually made, in the amount of his earnings from the sale of such commodities (works) for three previous years, multiplied by the amount of proceeds from the sale of said goods (works) for the report (tax) period. Where a taxpayer has been selling goods (works) on conditions of making warranty repair and servicing for a term of less than three years, the volume of proceeds from the sale of said goods (works) for the actual period of such sale shall be taken into account, when calculating the maximum amount of such reserve.

4. Taxpayers who have not sold commodities (works) under a term of the guarantee repairs and servicing shall have the right to create a reserve against the guarantee repairs and servicing of commodities (works) in an amount not exceeding the expected outlays on the said expenditures. Seen as expected expenditures shall be the outlays envisaged in the plan for the fulfilment of guarantee liabilities with account taken of the guarantee term.

After the expiry of the tax period, the taxpayer shall correct the size of the established reserve, proceeding from the share of the actually effected outlays on the guarantee repairs and servicing in the volume of the earnings from the sale of the said commodities (works) for the previous period.

5. The sum of the reserve for warranty repair and servicing of goods (works) not fully used by the taxpayer in the reporting period for repair of the goods (works) sold on conditions of providing a warranty may be put off by him to the next reporting (tax) period. In this case, the sum of the reserve created anew for the next tax period shall be corrected by the sum of the residual of the reserve of the previous reporting (tax) period. If the sum of the new created reserve is less than the sum of the residual of the reserve of the previous reporting (tax) period, the difference shall be subject to inclusion in the composition of the taxpayer's extra-sale incomes for the current tax period.

If a taxpayer adopts the decision on setting up a reserve for warranty repair and servicing of goods (works), writing off outlays on warranty repair shall only be made at the expense of the sum of the created reserve. If the sum of the created reserve is less than the sum of the expenses on repairing made by a taxpayer, the difference shall be subject to inclusion in the composition of other outlays.

6. Where a taxpayer adopts a decision on termination of the sale of goods ( of carrying out works) on conditions of providing warranty repair and warranty servicing thereof, the sum of the previously created and unused reserve shall be subject to inclusion in the composition the taxpayer's incomes upon the termination of the validity of contracts for warranty repair and warranty servicing.