The current Russian tax legislation and bookkeeping rules allow companies to revalue their fixed assets in order to keep the assets’ book value relevant. The recent amendments to the Russian Tax Code have significantly changed the rules for accounting of fixed assets revaluation results. Now, any adjustments to the book value of assets made after 1 January 2002 are only reflected in accounting records. The tax value of these assets remains unchanged.
The companies, registered in Russia, may still revalue fixed assets (either all assets or homogeneous asset groups) at the beginning of each year. The difference is that, firstly, any changes in the book value of assets do not affect the taxable income of the company and, secondly, the tax value of the assets remains unchanged, which means that the company’s asset amortization charges and methods remain the same as before making adjustments to the book value of assets.
The assets acquired before 1 January 2002 are treated in a special way. If the company did not revalue these assets as at 1 January 2002, their replacement value for tax purposes is determined on the basis of accounting data as of 1 January 2002. If it did adjust the book value of fixed assets as of this date, then in accordance with Russian Tax Code Art. 257 the revaluation result for tax purposes is recognized in the amount which may not exceed 30 percent of the replacement value of respective assets as at 1 January 2001. Any changes in the amortization amounts are recognized for tax purpose in a similar way.
The requirements applicable to revaluation of fixed assets are stipulated by the Russian Tax Code, Art. 256 “Procedure for Determination of Gross Book Value of Depreciable Assets”. The detailed procedure for reflecting changes in the book value of assets in accounting records is stipulated by Accounting Rules 6/01 dated 18.05.2002.
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