Russia clarifies R&D expense accounting for tax purposes, associated reporting

The Russian Ministry of Finance on July 20 published guidance on the procedure for accounting for research and development (R&D) expenses for income tax purposes under article 262 of the Russian tax code (Letter No 03-03-06/1/49733, dated June 24). The guidance also covers associated R&D reporting requirements.

The guidance states that taxpayers generally may include R&D expenses in other expenses in the tax reporting period in which the R&D is completed. However, for R&D projects that correspond to a list prescribed by the government, taxpayers may take the costs into account for income tax purposes in the amount of actual costs using a coefficient of 1.5.

Taxpayers carrying out R&D according to the government list may include R&D expenses in other expenses in the tax reporting period in which the R&D is completed or include the R&D expenses in the initial cost of certain specified depreciable intangible assets in the amount of actual costs using the 1.5 coefficient. If only a single stage of the taxpayer’s overall R&D corresponds to the government list, the special R&D tax treatment may be applied exclusively to that stage.

Taxpayers that take advantage of the right to recognize the costs of government-list R&D in the amount of actual costs using the 1.5 coefficient generally must submit to the tax authority a report on the R&D performed. The report is submitted concurrently with the tax return for the period in which the R&D is completed. The R&D report must be submitted for each separate stage of work and comply with certain requirements.