Article 323. Specifics in Keeping the Tax Records of Operations with Depreciable Property

The taxpayer shall determine the profit (loss) from the sale or retirement of the depreciated property on the grounds of analytical accounting on every object as on the date of recognising the income (outlays).

The incomes and the outlays on the depreciated property shall be recorded by the object.

Analytical accounting shall contain information on:

- the original cost of the depreciated property sold (retired) in the reporting (tax) period;

- the changes in the original cost of such fixed assets as their construction or equipment is completed as they are reconstructed or partially liquidated;

- the time terms for the beneficial use of the fixed assets accepted by the organisation;

- the methods for the calculation and the sum of the depreciation charged on the depreciated fixed assets for the period from the date of the start of charging the depreciation until the end of the month when such property is sold (retired);

- the price of sale of the depreciated property, proceeding from the terms of the purchase and sale contract;

- the date of acquisition and the date of sale (retirement) of the property;

- the date of putting property into operation, the date of exclusion from the composition of depreciable property for the reasons provided for by Item 3 of Article 256 of this Code, the date of re-activating property, the date of termination of a contract on the gratuitous use, the date of completing reconstruction works, the date of modernization;

the outlays incurred by a taxpayer which are connected with the sale (retirement) of depreciable property, especially the outlays provided for by Subitem 8 of Item 1 of Article 265 of this Code, as well as the outlays on the storage, servicing and transportation of sold (retired) property;

A taxpayer shall determine the profit (loss) from the sale of depreciable property in compliance with Item 3 of Article 268 of this Code, as on the date of making the transaction.

In analytical accounting as on the date of sale of the depreciated property shall be fixed the sum of the profit (loss) on the said operation, which shall be taken into account for the purposes of defining the tax base, in the following order:

The profit derived by a taxpayer shall be subject to the inclusion in the composition of the tax base in the reporting period in which the sale of the property took place.

The losses of a taxpayer shall be shown in the analytical accounting as other outlays of the taxpayer in compliance with the procedure established by Article 268 of this Code.

The analytical accounting should contain information on the denominations of the objects in respect of which there are amounts of such outlays, on the number of months within which such outlays may be included into the composition of other outlays connected with production and sale, and the amount of outlays falling at each month. The term shall be determined in months and shall be calculated in the form of a difference between the number of months of the term of beneficial use of this property and the number of the months of operation of property prior to the moment of sale thereof, including the month when the property was sold.

Article 324. Procedure for Keeping Tax Records on the Outlays on Repairs of Fixed Assets

1. As regards the analytical accounting, a taxpayer shall form the amount of outlays on repairs of fixed assets subject to the grouping of all outlays made, including the cost of spare parts and disposables used for repairing, the outlays on labour wages of the workers engaged in repairing, and other outlays connected with carrying out said repairing by own means , as well as subject to the outlays on paying the works carried out by outside forces.

2. A taxpayer forming a reserve for forthcoming outlays on repair shall calculate allocations to such reserve reasoning from the aggregate cost of fixed assets calculated in compliance with the procedure established by this Item and from the normative standards of allocations endorsed by the taxpayer independently in the accounting policy thereof for the purposes of taxation.

The aggregate cost of fixed assets shall be determined as the sum of the original cost of all depreciable fixed assets put into operation as on the start of the tax period where the reserve of forthcoming outlays on the repair of fixed assets is formed. For calculating the aggregate cost of the depreciable fixed assets put into operation prior to entry into force of this Chapter, the replacement cost determined in compliance with Item 1 of Article 257 of this Code shall be accepted.

When determining normative standards of allocations to the reserve of forthcoming outlays on the repair of fixed assets, a taxpayer shall be bound to determine the ultimate amount of allocations to the reserve of forthcoming outlays on the repair of fixed assets reasoning from the periodicity of repairing an object belonging to fixed assets, the frequency of changing elements of fixed assets (especially the units, parts and structures thereof) and the estimated cost of said repair. With this, the ultimate sum of the reserve for forthcoming outlays on said repair may not exceed the average value of actual outlays on the repair formed within the last three years. Where a taxpayer accumulates assets for especially complex and expensive types of major repair of fixed assets within more than one tax period, the ultimate amount of allocations to the reserve of forthcoming outlays on the repair of fixed assets may be increased by the amount of allocations to financing said repair falling at an appropriate tax period in compliance with a schedule of carrying out said types of repair on conditions that in the previous tax periods the aforesaid or similar repair works have not been conducted.

The allocations to the reserve of forthcoming outlays on the repair of fixed assets within a tax period shall be written off as outlays in equal portions on the last day of an appropriate report (tax) period.

Where a taxpayer forms the reserve for forthcoming outlays on the repair of fixed assets, the amount of actually made expenses on the conduct of the repair shall be written off at the expense of the funds of said reserve.

Where the amount of actually made outlays on the repair of fixed assets within a report (tax) period exceeds the amount of the reserve formed for forthcoming outlays on repair of fixed assets, the remainder of the outlays for the purposes of taxation shall be included into the composition of other outlays, as on the date of the end of the tax period.

If at the end of a tax period the remainder of the reserve funds for forthcoming outlays on the repair of fixed assets exceeds the amount of the outlays on the repair of fixed assets actually made in the current tax period, the sum of such excess as on the last date of the current tax period for the purposes of taxation shall be included into the composition of a taxpayer's outlays.

Where in compliance with the accounting policy for the purposes of taxation and on the basis of a schedule of conducting a major repair of fixed assets a taxpayer accumulates assets for financing said repair within more than one tax period, at the end of the current tax period the remainder of such assets shall not be subject to inclusion into the composition of the outlays for the purposes of taxation.

3. If a taxpayer exercises the types of activities in respect of which the tax base with regard the tax is calculated separately in compliance with Article 274, then the analytical accounting of outlays on the repair of fixed assets for the purposes of taxation shall be effected according to types of production and types of activities.

Article 324.1. Procedure for Accounting Outlays on Forming the Reserve for Forthcoming Outlays on Payment of Leaves and the Reserve for Payment of Bonuses for Long Service

1. A taxpayer who has decided on the even accounting of forthcoming outlays on payment of workers' leaves for the purposes of taxation, shall be obliged to show in the accounting policy for the purposes of taxation the way of making the reserve accepted by him and to determine the ultimate amount of allocations and the monthly per cent rate of allocations to said reserve.

For that, a taxpayer shall be obliged to draw up a special calculation (estimate) to show the way of calculating the rate of monthly allocations to said reserve reasoning from the data on the supposed annual amount of outlays on payment of leaves, including the amount of the uniform social tax on these outlays. With this, the per cent rate of allocations to said reserve shall be determined as the ratio of the supposed annual amount of outlays on payment of leaves to the supposed annual amount of outlays on labour wages.

2. The outlays on forming the reserve for forthcoming outlays on payment of leaves shall be entered to the accounts for recording outlays on labour wages of appropriate categories of workers.

3. A taxpayer shall be obliged to carry out the inventory of said reserve at the end of a tax period.

The underused amounts of said reserve, as on the last day of the current tax period, shall be subject to obligatory inclusion into the tax base of the current tax period.

Where the funds of actually calculated reserve confirmed by the inventory on the last working day of a tax period are not sufficient, the taxpayer shall be obliged, as on the 31st of December of the year when the reserve was formed, to include into the outlays the amount of actual outlays on paying leaves and the accordingly the sum of the uniform social tax in respect of which said reserve has not been earlier formed.

4. The reserve for forthcoming outlays on paying workers' leaves should be specified reasoning from the number of unused vacation days, the average daily amount of outlays on labour wages of workers (subject to the established methods of calculating average wages) and the obligatory deduction of the uniform social tax.

5. Where in the course of specifying the accounting policy for the next tax period a taxpayer deems it unreasonable to form a reserve for forthcoming outlays on paying leaves, the amount of the remainder of said reserve exposed as a result of an inventory, as on the 31st of December of the year when it was formed, shall be included in the composition of extra-sale outlays of the current tax period for the purposes of taxation.

6. A taxpayer shall make allocations to the reserve for forthcoming outlays on paying yearly bonuses for long service and for the results of work during the past year in a similar procedure.

Article 325. Procedure for Keeping Tax Records on the Development of Natural Resources

1. Taxpayers who have adopted the decision on the acquisition of licences for the right to use mineral wealth shall separately reflect in the analytical registers of tax records the outlays made for the purposes of acquiring the licences. The outlays connected with the acquisition of each concrete licence shall be recorded separately.

To the outlays made on the acquisition of licences shall be, in particular, referred:

- outlays involved in the preliminary estimate of the deposit;

- outlays connected with carrying out audits of deposit stocks;

- outlays on the development of the technical and economic substantiation (of other similar works) and on projects for developing the deposit;

- outlays on the acquisition of geological and other information;

- outlays on the payment for participation in the tender.

If by the results of the tender the taxpayer concludes a licence agreement for the right to use mineral wealth (receives the licence), the outlays made by the taxpayer in connection with the procedure for taking part in the tender shall form the cost of the licence agreement (the licence), which shall be recorded by the taxpayer in the composition of non-material assets. The depreciation of the given non-material asset shall in this case be charged in the order established by Articles 256-259 of the present Code.

If by the results of the tender the taxpayer does not conclude a licence agreement for the right to use mineral wealth (does not receive the licence), the taxpayer's outlays connected with the procedure of participation in the tender shall be included in the composition of other outlays from the first day of the month next to the month of holding the tender, evenly in the course of five years. If after making preliminary outlays aimed at the acquisition of licences the taxpayer adopts the decision on the refusal from taking part in the tender or on the inexpediency of acquiring the licence, the said outlays shall also be included in the composition of the other outlays from the first day of the month next to that month in which the taxpayer adopted the said decision, evenly in the course of five years. The said decision shall be formalised with the corresponding Order (Direction) of a manager.

In a similar order shall be recorded the outlays made for the acquisition of licences for the right to use mineral wealth, if the said licences are issued to the taxpayer without holding a tender.

2. The outlays on the development of natural resources mentioned in Item 1 of Article 261 of the present Code shall be reflected in the analytical registers of tax records apart on every plot of the earth bowels (deposits) or on the plot of the territory (water area) reflected in the taxpayer's licence agreement (in the licence for the right to use mineral wealth).

Depending on the particular kind of outlays, they shall be grouped as:

- general outlays on the developed plot (deposit) as a whole;

- outlays related to the individual parts of the territory of the developed plot;

- outlays related to the particular object created in the course of developing the plot.

To the general outlays shall be referred, in particular:

- outlays on the search for and estimation of the deposits of useful minerals (including the audit of the stocks), on prospecting for commercial minerals and (or) on hydro-geological studies carried out on the plot of the earth's bowels in accordance with licences (permits) granted in the established order, as well as outlays on the acquisition of necessary geological and other information from third persons, including from state bodies;

Seen as outlays referred to the individual parts of the territory of the developed plot shall be outlays identified on the grounds of basic accounting documents, in particular:

- those on preparing the territory for the performance of mining, building and other works in conformity with the established demands for safety and protection of the land, the earth's bowels and other natural resources;

- the other outlays effected in connection with the development of the part of the plot area.

The sum of the general outlays shall be recorded on every part of the area of the developed plot (deposit) in the share defined proceeding from the ratio of the sum of the outlays related to the individual parts of the area of the developed plot to the total sum of the outlays made on the development of the given plot (deposit).

To the outlays related to the particular object created in the course of development of the plot shall be referred those directly involved in building structures which may be subsequently recognised, on the grounds of the taxpayer's decision, as constantly operated fixed assets objects.

3. When carrying out geological-search work and geological prospecting work aimed at finding useful minerals, the sum of the outlays made by the taxpayer shall be defined on the grounds of the acts on the works performed under agreements with the contractors and on the grounds of the expenditures actually made by the taxpayer referred to the outlays on the development of natural resources in conformity with the provisions of this Article.

The taxpayer shall organise the tax recording of the said outlays on every contract and on every object connected with the development of natural resources.

The analytical registers of tax records shall contain information on completing the works in the context of every contract involved in the said works on every particular plot of the earth's bowels.

After the works under an agreement with the contractor are completed, outlays made under the given agreement shall be included in the composition of the other outlays as from the first day of the month in which the last act on the performed works was signed with the contractor on the given agreement. The effected outlays shall be included in equal parts in the composition of other outlays within the time terms envisaged by Article 261 of the present Code.

The current outlays on the maintenance of the objects connected with the development of natural resources (including those on wage payments, the maintenance and running of temporary structures and other such expenses), as well as the outlays on bringing to an end the prospecting of the deposit or of the sections thereof which are within the limits of allotment of land or mining lease of an organization shall be included in the full sum in the composition of outlays of the reporting (tax) period in which they were made. To the outlays on bringing to an end the prospecting shall also be referred those involved in the performance of works aimed at completing the prospecting of deposits which are already put into operation and are industrially developed.

The said order of recording concerns the outlays on all geological-search and geological prospecting work, including the outlays made on those works which have been recognised as useless and unpromising, or the continuation of which has been recognised as inexpedient.

If the developed plot (the part of the area of the developed plot) is recognised by the taxpayer as unpromising, or if the continuation of its development is recognised as inexpedient, the sums of the outlays made by the taxpayer on the development of the given plot shall be included in the composition of the other outlays in the general order laid down in Article 261 of the present Code.

4. If the taxpayer's outlays made in the composition of outlays on the development of natural resources are directly connected with building the objects which subsequently, by the taxpayer's decision, may be turned into permanently operated fixed assets objects (including wells), these outlays shall be recorded in the analytical registers of tax records by every erected object of fixed assets. The said fixed assets objects shall be depreciated in conformity with the order established by this Chapter.

The outlays on building temporary structures (including temporary approach lines and roads; sites and installations for the storage of the fertile soil layer, of extracted rock and of waste; the temporary structures for accommodating members of the geological prospecting parties, and other similar objects) shall be included in the composition of the other outlays as from the first day of the month next to the month in which the works for their construction were completed on the grounds of the acts on the performed works.

5. If a certain well has proved (been recognised) as unproductive, the taxpayer's outlays on the liquidation of such well shall also be included in the composition of the outlays recorded on the given object in the tax records in conformity with the procedure established by Article 261 of the present Code. The total sum of the outlays reflected in the tax records on the given object shall be included in the composition of the other outlays in conformity with the order envisaged by this Article.