Article 268. Specifics in Defining the Outlays in the Sale of Goods

1. When selling goods, taxpayers shall have the right to reduce the incomes from such operations by the cost of the sold goods, defined in the following order:

1) in the sale of the depreciated property - by the residual cost of the depreciated property, defined in conformity with Item 1 of Article 257 of the present Code;

2) in the sale of other property (with the exception of securities, of the products of one's own manufacture and of the purchased commodities) - by the cost of the acquisition of the given property;

3) in the sale of the purchased commodities - by the cost of the acquisition of the given commodities, defined in conformity with the accounting policy accepted by the organisation for taxation purposes, with the use of one of the following methods for the evaluation of the purchased commodities:

- in accordance with the cost of the commodities which are the first acquired by the time of acquisition (FIFO);

- in accordance with the cost of those commodities which are the last acquired by the time of acquisition (LIFO);

- in accordance with the average cost;

- in accordance with the cost of commodity unit.

When selling the property indicated in this Article, the taxpayer shall also have the right to reduce the incomes from such operations by the sum of the outlays directly involved in such sale, in particular, by the outlays involved in the storage, handling and transportation of the sold property. When selling the purchased commodities, the outlays involved in their acquisition and sale shall be formed with account taken of the provisions of Article 320 of the present Code.

2. If the price of acquisition of the property indicated in Subitems 2 and 3 of Item 1 of this Article with account taken of the outlays involved in its sale exceeds the earnings from its sale, the difference between these values shall be recognised as the taxpayer's loss which shall be recorded for the purposes of taxation.

3. If the residual cost of the depreciated property mentioned in Subitem 1 of Item 1 of the present Article, with account taken of the outlays involved in its sale, exceeds the earnings from it realization, the difference between these values shall be recognised as the tax payer's loss, which is recorded for the purposes of taxation in the following order. The incurred loss shall be included in the composition of the taxpayer's other outlays in equal parts in the course of the term defined as the difference between the term of beneficial use of this property and the actual term of its use until the moment of sale.

Article 269. Specifics of Referring Interest on Debt Liabilities to Outlays

1. For the purposes of the present Chapter, seen as debt liabilities shall be credits, commodity and commercial credits, loans, bank deposits, banking accounts or other borrowings, regardless of the form of their legalisation.

Recognised as outlays shall be the interest calculated on any kind of debt liability under the condition that the amount of interest calculated by the taxpayer on the debt liability does not essentially deviate from the average level of interest collected on debt liabilities issued in the same quarter (month - for the taxpayers which have passed to the calculation of monthly advance payments reasoning from actually received profits) on comparable terms. Seen as debt liabilities issued on comparable terms shall be the debt liabilities issued in the same currency for the same time terms in comparable amounts against similar securities. When determining the average level of interest on inter-bank credits, only information on the inter-bank credits shall be taken into account. This provision shall likewise apply to interest in the form of discount which a noteholder gets as a difference between the price of repurchase (payment) of a promissory note and the price of sale thereof.

Seen as essential deviation from the amount of the computed interest on a debt liability shall be deviations by more than 20 per cent towards a rise or a reduction from an average level of interest calculated on similar debt liabilities issued in the same quarter on comparable terms.

In the absence of debt liabilities issued in the same quarter on comparable terms at the taxpayer's option, the ultimate amount of interest recognised as outlays shall be taken as equal to the refunding rate of the Central Bank of the Russian Federation, increased 1.1 times if the debt liability is formalised in roubles, and equal to 15 per cent for debt liabilities in foreign currency.

2. If a taxpaying Russian organization has a debt liability in respect of a foreign organization which directly or indirectly has under its ownership more than 20 per cent of the authorized (pooled) capital (fund) of this Russian organization (hereinafter referred to in this Article as controlled debt) and if the amount of debt liabilities on the credits granted by the foreign organization and not settled by this Russian organization exceeds more than three-fold (for banks and organizations engaged in leasing activity - more than twelve times and a half) the difference between the sum of its fixed assets and the amount of liabilities (hereinafter for the purposes of the present Item - one's own capital), as on the last day of every reporting (tax) period, the following rules shall be applied to define the ultimate amount of interest to be included into the composition of the outlays.

A taxpayer shall be obliged on the last day of every report (tax) period to calculate the ultimate amount of interest on controlled debt, recognized as an outlay, by way of dividing the amount of interest on the controlled debt in every report (tax) period, calculated by the taxpayer, by the capitalization coefficient calculated as on the last report date of an appropriate report (tax) period.

The capitalisation coefficient shall in this case be defined by dividing the amount of the corresponding unsettled controlled indebtedness by the size of one's own capital, corresponding to the share of this foreign organisation's direct or indirect participation in the authorised (summed up) capital (the fund) of the Russian organisation, and by dividing the obtained result by three (for the banks and for the organisations engaged in the leasing activity - by twelve and a half).

For the purposes of this Item, when determining the amount of one's own capital, the sums of debt liabilities in the form of indebtedness of taxes and fees, including the current indebtedness of taxes and fees, the sums of postponements and installments, tax credits and investment tax credits, shall not be taken into account.

3. Into the composition of the outlays shall be included interest on controlled indebtedness, calculated in conformity with Item 2 of the present Article, but no more than the actually calculated interest.

The rules laid down by Item 2 of the present Article, shall not be applied to interest on the borrowed funds if the unsettled indebtedness is not controlled.

4. The positive difference between the calculated interest and the ultimate interest calculated in conformity with the order established by Item 2 of the present Article shall be equated for taxation purposes to the dividends and shall be levied with tax in conformity with Item 3 of Article 284 of the present Code.