Article 317. Procedure for Tax Recording of Individual Kinds of Extra-Sales Incomes

When defining the extra-sales incomes in the form of fines, penalties or other sanctions imposed for violating contractual liabilities, as well as of the sums of recompense for the inflicted losses or damages, the taxpayers defining incomes using the method of calculation, shall reflect the due sums in conformity with the terms of the contract. If the terms of the contract do not establish the amount of penalty sanctions or a recompense for the losses, no liability arises with the taxpayer for calculating the extra-realisation incomes from these kinds of incomes. And if the debt is exacted by court decision, the liability involved in the calculation of this extra-sales income arises with the taxpayer on the grounds of a court decision, which has entered into legal force.

Article 318. Procedure for Defining the Sum of the Outlays on Production and Sale

1. If the taxpayer defines the incomes and the outlays by method of calculation, the outlays on the production and on sale shall be defined taking account for the provisions of this Article.

For the purposes of this Chapter, the outlays on the production and sales made in the course of the reporting (tax) period shall be subdivided into:

1) direct;

2) indirect.

To direct outlays there shall pertain:

the material expenses determined in compliance with Subitems 1 and 4 of Item 1 of Article 254 of this Code;

the outlays on paying labour wages to the personnel participating in the production of commodities, carrying out works and rendering services, as well as the sums of the uniform social tax on said amounts of outlays on paying labour wages;

the sums of accrued depreciation of the fixed assets used in the production of commodities, works and services.

To indirect outlays there shall pertain all other sums of outlays, safe for the extra-sale outlays determined in compliance with Article 265 of this Code and made by a taxpayer within a report (tax) period.

2. The sum of indirect outlays on production and sales effected in the reporting (tax) period, shall be in full volume referred to the outlays of the current report (tax) period subject to the requirements provided for by this Code.

The sum of direct outlays made in the reporting (tax) period shall pertain to the outlays of the current report (tax) period with the exception of the sums of direct outlays distributed between the residuals of the incomplete production, of finished products kept in warehouses and of those shipped but not sold in the reporting (tax) period.

3. Where in respect of individual outlays limitations with regard to the amount of outlays accepted for the purposes of taxation are stipulated under this Chapter, the base for calculating the ultimate amount of such outlays shall be determined in progressive total, as of the start of a tax period. With this, as regards the outlays of a taxpayer connected with voluntary insurance (retirement insurance) of his workers, the term of a contract's validity in a tax period, starting from the date of entry of such contract into force, shall be taken into account, when determining the ultimate amount of the outlays.

Article 319. Procedure for Estimating the Residuals of Incomplete Production and of Those of Finished and Shipped Products

1. For the purposes of this Chapter, interpreted as incomplete production (hereinafter referred to as the NZP) shall be those which have not gone through all the processing (finishing) operations stipulated by the technological process. Into the incomplete production shall be included products finished but not completely accepted by the customer, as well as works and services finished but not accepted by the customer. To the incomplete production shall also be referred the residuals of the non-fulfilled orders of the productions and the residuals of semi-finished products of domestic manufacture. The materials and semi-finished products still in production shall be referred to work in progress only if they have already been processed.

The residuals of incomplete production as at the end of the current month shall be estimated by the taxpayer on the grounds of the data of the basic accounting documents on the movement and on the residuals (in quantitative terms) of raw, materials and finished products in workshops (works and other industrial subdivisions of a taxpayer) and the data of the tax records on the sum of direct outlays made in the current month.

As regards the taxpayers whose production is connected with treatment and processing of raw materials, the amount of direct outlays shall be distributed in respect of the residuals of NZP in proportion to the share of such residuals in feedstock (in quantitative terms), less technological losses. With this, for the purposes of this Chapter, raw shall mean a material used in production as the material basis which transforms into finished products as a result of sequential technological treatment (processing).

As regards the taxpayers whose production is connected with carrying out works (rendering services), the amount of direct outlays shall be distributed in respect of the residuals of NZP in proportion to the share of unfinished (or finished but not accepted as on the end of the current month) orders for carrying out works ( rendering services) in the total volume of orders for carrying out works (rendering services) completed within a month.

As regards other taxpayers, the amount of direct outlays shall be distributed in respect of the residuals of NZP in proportion to the share of direct outlays in the planned (normative, estimated) cost of products.

The sum of the residuals of the incomplete production as at the end of the current month shall be included into the composition of the material outlays in the next month. When the tax period comes to an end, the sum of the residuals of the incomplete production as at the end of the tax period shall be included in the composition of the next tax period in the order and on the terms stipulated in this Article.

2. The residuals of finished products left in warehouses as on the end of the current month shall be assessed by the taxpayer on the grounds of the data of basic accounting documents on the movement and residuals of finished products left in warehouses (in quantitative terms), as well as of the sum of direct outlays made in the current month, reduced by the sum of direct outlays related to the residuals of NZP. The assessment of the residuals of finished products in warehouses shall be determined by a taxpayer as a difference between the amount of direct outlays falling at the residuals of finished products as on the start of the current month increased by the amount of the direct outlays falling at the output in the current month (less the amount of the direct outlays falling at the residuals of NZP), and the amount of the direct outlays falling at the products shipped within the current month.

3. The residuals of the shipped but not sold products as on the end of the current month shall be assessed by a taxpayer on the basis of the data on the shipment (in quantitative terms) and the amount of the direct outlays made in the current month decreased by the amount of the direct outlays related to the residuals of NZP and the residuals of finished products in warehouses. The assessment of the residuals of shipped, but not sold products as on the end of the current month shall be determined by a taxpayer as a difference between the amount of the direct outlays falling at the residuals of shipped but not sold finished products as on the start of the current month increased by the amount of the direct outlays falling at the products shipped in the current month (less the amount of the directs outlays falling at the residuals of finished products in warehouses), and the amount of the direct outlays falling at the products sold in the current month.

Article 320. Procedure for Defining the Outlays on Commercial Transactions

Taxpayers engaged in wholesale small-batch wholesale and retail shall formulate the outlays on the sale (hereinafter referred to in this Article as the expenses of circulation) taking account of the following specifics.

In the course of the current month, the expenses of circulation shall be formed in accordance with this Chapter. In the sum of the expenses shall also be included the outlays of the tax paying purchaser of commodities on the delivery of these commodities, if such delivery is not included in the price of acquisition of commodities under contract terms, those on storage and other outlays of the current month connected with the acquisition and the sale of commodities. To the expenses of circulation there shall not be referred the cost of purchased commodities which shall be accounted when selling them in compliance with Subitem 3 of Item 1 of Article 268 of this Code. The cost of purchased commodities which are shipped but not sold as on the end of a month shall not be included by the taxpayer into the composition of the outlays connected with production and sale thereof pending the moment of their sale.

The outlays of the current month shall be divided into direct and indirect. To direct outlays shall be referred the cost of the purchased commodities sold in the given report (tax) period and the sums of the outlays on delivery (transportation costs) of the purchased commodities to the warehouse of the tax paying purchaser of commodities, if these outlays are not included in the price of acquisition of these commodities. All the other outlays save for the extra-sale outlays determined in compliance with Article 265 of this Code, made over the current month shall be recognised as indirect and shall reduce the incomes from sale in the current month. The amount of direct outlays referred to the residuals of commodities in the store-house shall be defined at an average interest for the current month, taking account of the transferred residual as at the start of the month in the following order:

1. The cost of direct outlays shall be defined which fall onto the cost of the residual of commodities in the warehouse as at the beginning of the month and which are made in the current month.

2. The sum of commodities shall be defined which were sold in the current month, as well as the residual of commodities in the warehouse as at the end of the month.

3. An average interest shall be calculated as the ratio of the sum of direct outlays (Item 1 of this Article) to the cost of commodities (Item 2 of this Article).

4. By multiplying the average interest by the cost of the residual of commodities as on the end of a month the sum of direct outlays related to the residual of commodities in warehouses shall be determined.

Article 321. Specifics in Keeping the Tax Records by Organisations Set Up in Conformity with the Federal Laws Regulating the Activity of These Organisations

Organisations set up in conformity with federal laws (the Central Bank of the Russian Federation, the Agency for Restructuring Credit Institutions and the federal postal communication service), regulating the activity of these organisations, shall keep separate records on the incomes and outlays received (made) in the performance of an activity involved in the discharge of the functions envisaged by legislation, as well as of the incomes and outlays received (made) in the performance of other kinds of commercial activity.

When carrying out the tax recording of commercial activities, such organisations shall apply the general norms of this Chapter, regulating the order of delineating the incomes and the outlays, as well as the special norms (specifics) envisaged for the individual taxpayer categories, or the norms stipulated for particular circumstances. A non-profit organisation applies the given norms if it performs such kinds of activity in conformity with federal laws.

If such non-profit organisations make obligatory uncompensated outlays in conformity with the demands of the legislation of the Russian Federation, such outlays shall be recognised as outlays of this organisation, subtracting the incomes from its commercial activity.

Article 321.1. Specifics in Keeping Tax Records by Budgetary Institutions

1. The tax payers - budgetary institutions, financed at the expense of funds from the budgets of all levels and of the state extra-budgetary funds, allocated in accordance with an estimate of the incomes and the outlays of the budgetary institution and deriving incomes from the other sources, shall also be obliged, for the purposes of taxation, to keep a separate recording of the incomes (the outlays), received (made) in the framework of the goal-oriented financing at the expense of the other sources.

For the purposes of this Chapter, recognized as the other sources - the incomes from the commercial activity - shall be the incomes of budgetary institutions, received from legal and natural persons on transactions, involved in the realization of commodities, works and services, and of the property rights, as well as the extra-realization incomes.

The tax base of budgetary institutions shall be defined as the difference between the sum of an income, derived from the realization of commodities, from the performed works and rendered services, as well as the sum of extra-realization incomes (not taking into account the value added tax, the sales tax and the excise duty for excisable commodities), and the sum of the actually made outlays, involved in the performance of the commercial activity.

Transactions, involved in the computation of incomes from the commercial activity and of the outlays connected with the performance of this activity, shall be reflected on the tax records in accordance with the procedure, established in the present Chapter.

The sum of an excess of the incomes from the commercial activity over the outlays cannot be directed before the computation of the tax towards coverage of the outlays, envisaged at the expense of the funds of the goal-oriented financing, allocated in accordance with an estimate of the incomes and the outlays of the budgetary institution.

2. In the composition of the incomes and the outlays of budgetary institutions, included into the tax base, shall not be taken into account the incomes, received in the form of the funds of the goal-oriented financing and of the goal-oriented receipts for the maintenance of budgetary institutions and for the performance of the statutory activity, financed at the expense of the above-said incomes, or the outlays, made at the expense of these funds.

An analytical recording of the incomes and the outlays on the funds of the goal-oriented financing and the goal-oriented receipts shall be kept on every kind of the receipts, with an account for the demands of the present Chapter.

3. If in the estimates of the incomes and the outlays of the budgetary institution is envisaged financing of the outlays on the remuneration for the public utilities and for the communications services, as well as for the transportation expenses, involved in servicing the administrative-managerial personnel at the expense of two sources, for the purposes of taxation the acceptance of such outlays for the reduction of the incomes, derived from the business activity, and of the funds of the goal-oriented financing shall be effected in proportion to the volume of the funds, derived from the business activity, in the total sum of the incomes (including the funds of the goal-oriented financing). In this case, for the above-said purposes in the total sum of the incomes shall not be taken into account the extra-realization incomes (the incomes, derived in the form of the bank's interest on the funds, kept on the settlement and on the deposit accounts or received from letting out the property, the differences in the exchange rates, and the other incomes).

4. For the purposes of the present Chapter, when delineating the tax base, to the outlays, involved in the performance of the commercial activity, shall be referred, besides the outlays, made for the purposes of the performance of the business activity, also the sums of depreciation charges, computed on the property, acquired at the expense of the funds, derived from this activity and used for the performance of this activity. In this case, for the fixed assets, acquired before January 1, 2002, the residual cost shall be defined as the difference between the initial cost of the fixed assets object and the sum of depreciation charges, computed in accordance with the business accounting rules for the period of operation of such object.

5. In the budgetary institutions (regardless of whether such institutions possess settlement or other accounts), engaged in commercial activity, business accounting shall be kept by centralized accountant's offices in conformity with the provisions of the present Chapter.

Tax declarations shall be submitted by the centralized accountant's offices to the tax bodies at the place of location of each budgetary institution in accordance with the procedure, established by the present Code.

Article 322. Specifics in Organising the Tax Recording of Depreciated Property

1. As regards the fixed assets put into operation prior to entry into force of this Chapter, the term of their beneficial use shall be established by a taxpayer independently, as on January 1, 2002, subject to the classification of fixed assets defined by the Government of the Russian Federation and the terms of beneficial use thereof according to depreciation groups established by Article 258 of this Code.

Regardless of the method of charging depreciation on the property put into operation prior to entry of this Chapter into force which is selected by a taxpayer, the depreciation shall be charged reasoning from the residual cost of said property.

The amount of the depreciation on said property charged for one month shall be determined as:

1) the product of the residual cost and the depreciation rate (calculated reasoning from the term of beneficial use thereof left) established by a taxpayer for said property in compliance with Item 5 of Article 259 of this Code - when using the non-linear method of charging depreciation;

2) the product of the residual cost determined as on January 1, 2002 and the rate of depreciation (calculated reasoning from the term of beneficial use thereof left) established by a taxpayer for said property in compliance with Item 4 of Article 259 of this Code - when using the linear method of charging depreciation.

The depreciable fixed assets, whose actual term of use (actual term of depreciation) is longer as the term of beneficial use of said depreciable fixed assets established in compliance with the requirements of Article 258 of this Article, shall be singled out by a taxpayer as on January 1, 2002 into a separate depreciation group of depreciable property with regard to the assessment on the basis of the residual cost which is subject to inclusion into the composition of the outlays for the purposes of taxation evenly within the term determined by the taxpayer independently but no less than seven years as of the date of entry of this Chapter into force.

2. No depreciation shall be charged on fixed assets handed over by the taxpayer into gratuitous use, beginning with the first day of the month next to that month in which the said handing over took place.

A similar order shall be applied with respect to the fixed assets which are handed over by the decision of the organisation's management into conservation for over three months, and also with respect to the fixed assets which have been put by the decision of the organisation's management under reconstruction and modernisation for over twelve months.

After the end of the contract of gratuitous use and of the return of the fixed assets to the taxpayer (as well as after the reactivation or completing the reconstruction), the depreciation shall be charged in the order defined by the present Chapter of the Code, beginning with the first day of the month next to the month in which the fixed assets were returned to the taxpayer and the reconstruction or the reactivation of the fixed asset was completed.

3. As the original cost of intangible assets which were not in business accounting records in the composition of intangible assets as on January 1, 2002, but under this Chapter pertain to intangible assets, shall be recognized the amount of outlays determined as a difference between the amount of outlays on their acquisition (creation) and bringing them to the condition, when they are fit for use, and the amount of the outlays which earlier decreased the tax base of the taxpayer in the procedure effective prior to entry of this Chapter into force.