Massive reform of the cash register legislation


Legal Update No 788

Bryan Cave Leighton Paisner (Russia) LLP (formerly Goltsblat BLP in Russia) advises that the Russian Ministry of Finance has drafted the following bills:

(1) “On amendments to Parts 1 and 2 of the Russian Tax Code to improve the cash register legislation” (“the Bill”) and

(2) “On amendments to certain legislative acts of the Russian Federation and repeal of certain legislative acts (provisions of legislative acts) of the Russian Federation”. This document introduces relevant amendments to a number of federal laws and, particularly, repeals Federal Law No.54-FZ dated 22 May 2003 “On using cash registers for settlements in the Russian Federation” (“the Cash Register Law”).

If the Bill goes through, the rules governing use of cash registers will be incorporated into the Tax Code of the Russian Federation (“the Russian Tax Code”). These legal relations will be covered by the term “settlement registration relations” and form part of the legislation on taxes and levies, with the settlement registration principles to be established by the Russian Tax Code. Such relations will be administered by tax authorities subject to the specifics provided for by the Bill.

The Bill is to come into effect on 1 January 2021.

Welcome to our report on the amendments introduced by the Bill.

Requirements on registration of settlements

1. The Bill introduces the term “settlement receipt” meaning an accounting source document created in electronic format via the Russian Federal Tax Service information resource (available on its official website) within five business days of a settlement being effected between an organisation / sole trader and a buyer (client/customer). A settlement receipt provides details and evidence of the settlement. The procedure for and cases of transferring settlement receipts and requirements on settlement receipts are subject to approval by the federal executive authority in charge of fiscal control and supervision.

The Bill requires organisations and sole traders to register settlements and provide buyers (customers) with a cash register slip or a settlement receipt. Settlement receipts are created using a cash register office in cases provided for by the Russian Tax Code. A settlement receipt is issued to a buyer in paper form and/or delivered to it in electronic format or sent to the buyer’s cash register office.

Currently, the Bill specifies one case requiring a settlement receipt: settlements by credit transfer effected by the organisations and sole traders specified in Clause 11 Article 34613 of the Russian Tax Code 1 (i.e., those benefiting from the simplified tax regime) with organisations and sole traders. Yet, the Bill clarifies that any specifics of performance by organisations and sole traders of the obligation to register settlements using their cash register office are to be approved by the federal executive authority in charge of fiscal control and supervision. Cases requiring a settlement receipt will apparently also be regulated by a special act of the Russian Federal Tax Service.

2. The Bill uses the term ‘registration of settlements’ instead of ‘use of cash registers’. Registration of settlements means any actions by an organisation or sole trader using automated tools to create (a) fiscal documents in a fiscal storage device using cash registers (including cash receipts); (b) settlement receipts.

3. The Bill has introduced new terms: “simulated” and “cover-up” settlements. Organisations and sole traders are not allowed to register such settlements. A simulated settlement is defined as a non-existent settlement registered for appearances only (including non-existent obligations and accounting events that have never occurred). A cover-up settlement is a settlement registered instead of another settlement in order to conceal the latter. Non-compliance with this requirement incurs liability.

4. The definition of “settlements” now includes acceptance (receipt) and payment of money in cash and/or by credit transfer not only for goods, services and work but also for property rights, as well as for disbursement (receipt) of any gambling establishment exchange units and disbursement (receipt) of money against presentation of such exchange units.

5. Settlements effected between organisations and sole traders by credit transfer without producing electronic payment instruments may continue without registration other than by the corporate and/or sole trader taxpayers specified in Clause 11, Article 34613of the Russian Tax Code. These organisations and sole traders are not required to use cash registers to create fiscal documents when effecting cash settlements with organisations and sole traders subject to settlement receipts being created.

6. Unlike the current Law on Cash Registers, the Bill does not regulate certain issues in detail but refers to acts of the Russian Federal Tax Service to be adopted on an individual basis. In particular, the Russian Federal Tax Service is to approve:

  • The requisite details of and formats for cash and settlement receipts, as well as the procedure for reflecting these in hard copy;

  • Rules for creating fiscal attributes and validating fiscal documents;

  • Cash register requirements and the registration, re-registration and de-registration procedures;

  • Additional requirements on fiscal data operators (in addition to those specified in the Bill) and their hardware;

  • Requirements on fiscal storage devices. Unlike the Law on Cash Registers, these are not detailed.

Regular control over compliance with the settlement registration requirements

The Russian Tax Code is to establish a new form of fiscal control, specifically, regular control over compliance with the settlement registration requirements (including the completeness of record-keeping of sale proceeds). According to the Bill, such control may be exercised in two forms: on-the spot checks and monitoring.

The procedure for on-the-spot checks is, in many ways, similar to a field tax audit, in particular:   

  • Generally, both types of inspection include identical procedures, such as a tax authority head (deputy head) taking a decision on auditing; implementing control measures (including additional ones); drawing up inspection reports, etc.

  • The Bill establishes similar procedures for contesting inspection results: submission of objections to inspection reports and any addenda thereto and appealing against tax authority decisions

  • In both types of inspection, the audited period may not exceed three calendar years immediately preceding the year in which the audit decision was taken.

  • During on-the-spot checks, tax authorities may use the inspection techniques provided for in Articles 90-98 of the Russian Tax Code, such as questioning witnesses, requesting documents and information in compliance with Articles 93 and 93.1 of the Russian Tax Code, engaging experts and specialists, etc. Furthermore, both types of inspection provide the right to request documents from banks, such as certificates on any existing bank accounts, statements of account, etc.

  • Should organisations and/or sole traders fail to perform the settlement registration obligation, tax authorities are entitled to suspend bank account transactions and electronic funds transfers by virtue of Article 76 of the Russian Tax Code.

Yet, there are certain specifics about on-the-spot checks. Particularly, these checks provide for use of dedicated inspection techniques such as a test purchase and supervision. Furthermore, proceedings on settlement registration offences may be conducted in a simplified format, subject to certain conditions.

Along with on-the-spot checks, tax authorities carry out ongoing monitoring aided by an automated information system accumulating various data, such as the inspected person’s use of cash registers, information from open and executive authority sources, etc.

Liability for tax offences related to the settlement registration obligation

The Russian Tax Code is also amended to include liability for offences relating to use of cash registers. Generally, the sanction for such offences is a penalty at a rate that sometimes depends on the settlement amount. Furthermore, the Russian Tax Code provides for other sanctions, including warning, denying access to information systems and/or software and, in certain cases, suspending activities.

1 We believe there is a misprint in the text since there is no Clause 11 in Article 34613 of the Russian Tax Code, so the reference is apparently to Clause 1 of the same Article.

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