The register of long-delayed construction and profits tax

This resolution clarifies:

• the procedure for keeping the federal register of unfinished construction projects;

• the consequences of including such properties in the federal register of long-delayed projects, or in a regional one.

Among the grounds for removing a property from the federal register are:

• writing it off in the manner laid down by legislation;

• transferring it from federal ownership into regional or municipal ownership.

A decision that such a transfer is appropriate is taken if it has been confirmed that completing the construction, or demolishing the property, is appropriate.

On the role this resolution may play for taxpayers in a dispute with the tax authorities, Andrey Rymarev, head of tax practice at Consul Group, comments: In a case involving Lukoil, a public joint-stock company, the Supreme Court of the Russian Federation confirmed that expenditure on creating depreciable property may be included in expenses for profits tax even if the taxpayer has abandoned completion of the construction. The taxpayer must, however, show that the abandonment was caused by objective reasons. We believe that the Government's new resolution may assist taxpayers, because the fact that a property is on the register of unfinished construction projects, and its later write-off, will confirm that completing the construction works is not appropriate.

Follow Consul Group on Telegram.