New Rules for Accreditation of IT Companies

On 30 September the Government approved Resolution No. 1729, which established new rules for the accreditation of Russian IT companies, replacing the procedure that was effective until 1 August.

This is one of the core pieces of regulation for tax benefits granted to IT companies and its adoption is highly important for the industry.

Criteria required for the accreditation

Only a Russian company may be accredited. For IT projects created by individual entrepreneurs the accreditation is not available.

The following list of criteria necessary for obtaining the state accreditation has been established:

  1. The main type of activity for the company is one of those listed in Annex No. 1 to the Resolution (OKVED codes out of groups 62 and 63 that are usual for IT companies, as well as Internet trade, education, TV/cinema/radio, data protection and some others). In presence of certain non-specialized main types of activities, OKVED codes out of groups 62 and 63 are sufficient as supplementary codes.
  2. The average monthly remuneration of employees of an IT company for the last 3 months prior to the date of submission of the application for accreditation exceeds the average monthly salary in the Russian Federation or the relevant region of the Russian Federation for the penultimate quarter before the submission date.
  3. The share of income from IT activities for the last year before the application date is more than 30% of the company’s total income. If the documents are submitted in the year of the company’s formation and its income exceeds RUB 1 million, this amount is calculated based on the company’s income for the current year.
  4. The official website of the company contains up-to-date information about the directions of its activities in the IT area, as well as information about the inclusion of products created and used by the company (if any) in the unified register of Russian computer programs and databases.
  5. The Company has granted a consent to the tax authorities to disclose an information constituting a tax secret.
  6. There are no grounds for refusal of state accreditation set forth by the Resolution.

At the same time, if the second criterion (employees’ remuneration) is not met, the accreditation is still possible if two additional criteria are met:

  • The company is the copyright holder of a computer program and databases included in the unified register of Russian computer programs and databases.
  • The Company received income from the sale of rights to such a software for 1 year prior to the date of submission of the application.

Another exception is made for companies that are entitled to receive accreditation without meeting the third criterion (share of income). Such companies must meet the following criteria:

  • Established less than 3 years before the application date
  • The income does not exceed RUB 1 million from the moment of formation
  • Included in the register of startups

Also, for companies operating under OKVED codes 58, 60.10, 60.20, 63.91, 73.20.1, in order to obtain accreditation, compliance with the third criterion is not required.

The procedure for obtaining accreditation

To obtain accreditation, the company must submit an application and accompanying documents to the Ministry of Digital Development, Communications and Mass Media through the public services portal using an enhanced qualified or certain enhanced unqualified EDS. The application is considered within 15 business days. A state service on accreditation is free of charge.

At the same time, to verify the applicant’s compliance with the said requirements, the Ministry of Digital Development, Communications and Mass Media may request additional documents from the latter, as well as to carry out verification by sending requests to the executive authorities.

Grounds for refusal of accreditation

  1. The applicant’s non-compliance with the established criteria.
  2. The share of direct or indirect participation of the Russian Federation, a region of the Russian Federation or a municipality in the company exceeds 50% (except for certain organizations – Autonomous NGOs, budget-owned and autonomous institutions).
  3. The company is a state or municipal institution, a state or municipal unitary enterprise, a state-owned company, a state corporation or a public law company (except for certain organizations).
  4. The Company is a bank, a non-bank credit institution, a non-credit financial institution, an insurance organization, an operator (having a significant position in the public communication network), a public joint-stock company of which the Russian Federation is a shareholder and the determination of the position of the Russian Federation in which takes place on the basis of the Governmental Decree No. 91-r dated 23 January 2003.
  5. The company has arrears on taxes, levies, social payments, penalties and fines in the amount of more than RUB 3 thousand.
  6. The sole executive body of the company has an unexpunged or outstanding criminal record.
  7. At the date of application the company has not granted a consent on the disclosure of tax secrets.

Retroactive effect

The Resolution do not contain any provisions on its retroactive effect and on application of new requirements to companies that received accreditation before the entry into force of the Resolution, except for the following.

Firstly, companies that have received accreditation before the Resolution comes into force must grant to the tax authorities their consent to disclose tax secrets within 1 month from the date of its adoption, i.e. by 31 October 2022. Otherwise, the accreditation of such a company should be canceled.

Secondly, accredited companies, regardless of the rules by which their accreditation was carried out, may be subject to extraordinary inspections for compliance with the accreditation criteria established by the Resolution. At the same time inspections of companies accredited before 1 July is not carried out only with respect to the first criterion – the type of activity.

Accordingly, companies accredited before the entry of the Resolution into force are recommended to bring their activities in line with the new criteria. Afterwards the statement that the criterion on the share of income from IT activities is met should be filed annually by 1 June.

Despite that the Resolution refers to the Tax Code provisions, it contains a number of provisions that in our view are not fully harmonized with the tax legislation. We may expect official clarifications thereof from the Ministry of Digital Development, Communications and Mass Media.

For the full-scope application of the Resolution it is also required that the Ministry of Digital Development, Communications and Mass Media adopts the list of IT activities, an income of which will be used for calculation of the 30% share, as well as the guidelines for the state service of accreditation. The Government has granted for this the term by 1 November.

We will be glad to assist your business to verify whether it is compliant with criteria for an accreditation of IT companies, and to eliminate risks in that area.