In accordance with the provisions of Art. 42 of the Law on JSC[1], a joint stock company has the right, based on the results of the first quarter, half of the year, nine months of the reporting year and (or) based on the results of the reporting year, to make decisions (announce) on the payment of dividends on placed shares, unless otherwise established by the mentioned law. This decision is made by the general meeting of shareholders. It must reflect the amount of dividends on shares of each category (type), the form of their payment, the procedure for paying dividends in non-monetary form, the date on which persons entitled to receive dividends are determined.
The decision to pay (declare) dividends based on the results of the first quarter, half-year and nine months of the reporting year can be made within three months after the end of the corresponding period.
The date on which, in accordance with the decision on the payment (declaration) of dividends, the persons entitled to receive them are determined cannot be set earlier than 10 days from the date of the decision on the payment (declaration) of dividends and later than 20 days from the date of such a decision.
If personal accounts of shareholders are opened in the register of shareholders, they receive dividends not through the depository, but directly from the joint-stock company, which acts as a tax agent. In this case, the JSC accountants are faced with the question of calculating and paying personal income tax and income tax to the budget on the amounts of dividends paid. As a rule, this is not an easy task, because often the composition of the founders is heterogeneous: there are individuals, legal entities, “foreigners”, and municipalities.
In this article we will talk about the specifics of taxation when paying dividends and filling out an income tax return.
Structure of sheet 03 of the profit declaration
First of all, we note that the income tax return, starting with the reporting campaign for 2021, must be submitted in a new form.
Find the form and example of filling it out here. The form of the new profit declaration form (approved by order of the Federal Tax Service of Russia dated September 23, 2019 No. ММВ-7-3/ [email protected] ) requires the presence of sheet 03, intended to reflect the tax withheld by the tax agent from the income paid to him.
Such income includes:
- dividends paid both on one’s own securities and on foreign ones, the issuer of which is not the reporting legal entity;
- interest accrued on state and municipal securities.
These two types of income determine the allocation of two sections devoted to them in sheet 3 of the profit declaration: A and B, respectively.
Section A of sheet 03
Section B sheet 03
But there is another section (B) in it, which reveals who exactly became the recipient of dividends or interest from which the tax agent withholds (or does not have the right to withhold) income tax.
Section B of sheet 03 Section A, dedicated to dividends, in comparison with section B, turns out to be quite voluminous and provides the following information:
- about the issuer of securities; in this case, the issuer’s TIN is provided only if dividends are accrued on securities other than its own;
- about the nature of accruals: interim, carried out at the end of the reporting period or final (for the year);
- on the total amount of dividends paid and their distribution between the main groups of recipients (Russian and foreign organizations, Russian and foreign individuals, persons not considered recipients of income in the form of dividends), and in relation to Russian legal entities and foreign individuals, the amounts are detailed at the rates applied to them ;
- on the calculation of tax withheld from income paid to Russian legal entities, indicating the indicators involved in such calculation (the amount of dividends received by the reporting entity itself and the tax rates used in the calculation).
Section A will need to be completed separately for each issuer.
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The number of sections B in the report will be determined by the tax rate applied to the interest paid. This section is easy to fill out: tax base, rate, tax amount.
What Sections A and B have in common is the presence of lines in them that allow you to see separately the amounts of tax accrued for the last period of the year included in the declaration and for the periods preceding it.
Registration
Lines 042 and 043 are filled out by companies that have provided for the so-called “depreciation bonus” in their accounting policies. This is up to 10% (up to 30% for the third to seventh depreciation groups) of the cost of a fixed asset, which the company can immediately write off as expenses.
In line 047, show the costs of acquiring land plots specified in paragraphs 1 and 2 of Article 264.1 of the Tax Code. For lines 048 - 051, provide their decoding.
On line 052, provide expenses for scientific research in accordance with Articles 262 and 267.2 of the Tax Code of the Russian Federation. In the next line 053, specify how much scientific developments that did not produce a positive result cost the company. From the amount on line 052 in line 054, highlight R&D expenses according to the list approved by Decree of the Government of the Russian Federation of December 24, 2008 No. 988. Such expenses are included in expenses in the amount of actual expenses with a coefficient of 1.5. And in line 055 , specify which expenses from those indicated on line 054 did not give a positive result.
Let us note that for the purpose of maintaining tax accounting, R&D expenses according to the mentioned list are recognized as expenses accounted for using a coefficient and expenses accounted for on the basis of paragraph 5 of Article 262 of the Tax Code of the Russian Federation. That is, amounts exceeding the 75 percent limit. The specified amounts of R&D expenses according to the list are reflected on line 054 of Appendix No. 2 to sheet 02 of the income tax return, including taking into account the excess of the 75 percent limit (see letter of the Federal Tax Service of Russia dated May 6, 2013 No. ED-4- 3/ [email protected] ).
In line 059, indicate the value of the realized property rights that your company created or acquired. It also shows the cost of goods sold when exercising the right to claim the debt (after the payment deadline (letter of the Federal Tax Service of the Russian Federation dated June 25, 2015 No. GD-4-3 / [email protected] ).
In line 060 , provide expenses for the sale of other property, with the exception of securities, products of own production, purchased goods, depreciable property, namely: raw materials, materials, returnable waste.
In line 061, indicate the value of the net assets of the enterprise sold as a property complex.
Line 070 is filled out only by professional participants in the securities market. They reflect here the costs of buying and selling securities.
Lines 072 and 073 . Line 072 shall indicate expenses associated with the acquisition and sale of securities traded on the organized securities market. Line 073 reflects the amount of deviation of actual costs for their acquisition outside the organized securities market above the maximum price of transactions on the organized market on the date of the transaction.
The next line 080 is also not for everyone. It is filled out by those companies that sold property rights, fixed assets, and products of service farms. Transfer the expense data in line 080 from line 350 of Appendix 3 to sheet 02.
The company has the right to repay losses of service industries and farms for previous years within 10 years. Reflect their amount in line 090.
Losses from the sale of fixed assets are written off over the remaining useful life of them (clause 3 of Article 268 of the Tax Code of the Russian Federation). Show the part of the loss relating to the reporting (tax) period in line 100. This indicator is transferred from line 060 of Appendix 3 to sheet 02.
In line 110 , reflect the loss from the sale of the right to a land plot if it relates to other expenses of the current reporting (tax) period in accordance with subparagraph 3 of paragraph 5 of Article 264.1 of the Tax Code.
In line 120, show the amount of the premium paid by the buyer for the enterprise as a property complex in the current reporting (tax) period (clause 1, clause 3, article 268.1 of the Tax Code of the Russian Federation).
Line 130 is final. Reflect in it the total amount of the above expenses and losses that reduce taxable profit in the reporting (tax) period. Data for line 130 can be obtained by summing the indicators of lines 010, 020, 040, from 059 to 070, 072 and from 080 to 120.
On lines 131 – 134, reflect the amount of accrued depreciation for the reporting (tax) period using linear (line 131) and non-linear (line 133) methods: both for fixed assets and intangible assets. In lines 132 and 134, highlight the accrued depreciation on intangible assets using linear and non-linear methods.
On line 135 , indicate the depreciation calculation method reflected in the accounting policy: 1 – linear method; 2 – nonlinear method.
The further part of Appendix 2 is reserved for non-operating expenses and losses equivalent to them. It is filled out by all companies, regardless of the method used to account for income and expenses.
In lines 200–205 , indicate the amount of non-operating expenses and distribute them by type: interest on securities sold (except for state and municipal), contributions to “disability” reserves, fines, penalties on contractual obligations, and so on.
On line 206, professional participants in the securities market show their non-operating expenses.
In line 300 of the tax return, show losses equated to non-operating expenses. It is not necessary to reflect the loss (the negative difference between the income from the sale of the right to claim the debt and the cost of the goods (work, services) sold) separately on this line (letter of the Federal Tax Service of the Russian Federation dated June 25, 2015 No. GD-4-3 / [email protected] ) .
In line 301, show the losses of previous tax periods identified in the current reporting (tax) period.
In line 302 , reflect the amounts of bad debts, and if the company decided to create a reserve for doubtful debts, the amounts of bad debts not covered by the reserve.
The company has the right to recalculate the tax base and the amount of tax for the tax (reporting) period in which errors or distortions related to previous periods were identified if they led to excessive payment of tax (Clause 1 of Article 54 of the Tax Code of the Russian Federation) The corresponding amounts are indicated on the line 400. In particular, it is possible to reflect the expenses of the reporting year in the declaration if the primary income for them was received next year (letter of the Ministry of Finance of Russia dated April 4, 2021 No. 03-03-06/1/19798). Lines 401 - 403 provide a breakdown of the indicator in line 400 for the tax periods to which the identified errors relate.
What determines the frequency of inclusion of sheet 03 in the report?
Filling out sheet 3 in the profit declaration becomes mandatory when the reporting legal entity becomes liable as a tax agent in relation to income tax (clause 1.1 of Appendix No. 2 to Order No. ММВ-7-3/ [email protected] ). Moreover, this obligation also applies to organizations that are not payers of income tax.
The inclusion of sheet 03 in the declaration occurs in the reporting period when grounds for this appear, i.e. when the corresponding income is paid. Such a reporting period, depending on what frequency (quarterly or monthly) the organization has chosen for paying advances, may be the period ending with the end of the next quarter or month (clause 1.3 of Appendix No. 2 to Order No. MMV-7-3 / [email protected] ).
Since the declaration is prepared on an accrual basis, data included in sheet 03 in a time period that is not the last for the tax period will be reflected in this sheet (duplicated or supplemented) until the annual reporting. When preparing sections A and B, this will require monitoring the correct linking of data on the tax accrued for the reporting period: in the lines reserved for information about accruals for the last period included in the report, or in the lines referring to periods preceding the current reporting period.
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Filling example
The meeting of shareholders of PJSC Brig decided to pay dividends in the amount of 900,000 rubles. In the structure of the register of shareholders there are 280,000 rubles. allocated to shares held on the personal account of the nominal holder, RUB 620,000. — for shares of shareholders who have personal accounts in the register of shareholders. All founders of PJSC are Russian companies.
Hence:
- PJSC, as an issuer, reflects on line 010 the amount of 620,000 rubles, that is, excluding amounts that are payable through the depositary;
- Lines 020 - 043 reflect all dividends to individuals and legal entities in relation to whom Brig is a tax agent;
- Line 044 is filled in with the amount of 280,000 rubles intended for transfer to the depository;
- Line 040 will indicate the amount of 620,000 rubles. This detail will differ from the calculated amount by the value of cell 044;
- Line 070 reflects dividends received from other organizations;
- In line 090 - the amount of dividends for calculating income tax. This value will diverge from the sum of lines 091-092 if the recipients include not only Russian organizations;
- Line 100 reflects the amount of income tax.
Nuances of filling out sheet 03
When filling out sheet 03, it is important to keep the following in mind:
- How many sheets 03 there will be in the report determines the number of decisions on payments (clause 14.2.1 of Appendix No. 2 to Order No. MMV-7-3/ [email protected] ).
- Sections A and B contain summary information on income paid, and payments may be made on different days. Details of payments by date are given in subsection 1.3 of section 1 of the declaration. That is, subsection 1.3, if there is data in sections A and (or) B on income on which income tax is paid, will have to be filled out, while for information that falls into sections A and B, it is formed separately. The dates in subsection 1.3 will indicate the deadlines for paying the tax withheld from income to the budget. Let us remind you that you must pay tax on income in the form of dividends and interest no later than the working day following the day it was withheld from the paid income (clause 4 of Article 287 of the Tax Code of the Russian Federation).
- Section B is not always filled out, since it is intended for information only about Russian legal entities - recipients of income who must pay income tax on it. That is, if all income is paid to persons who are not payers of this tax (foreign organizations, individuals - both foreign and Russian) or Russian legal entities through which the income is paid to its actual recipient), then section B does not need to be filled out. In the latter case (when paying to a legal entity that will subsequently perform the functions of a tax agent), the inclusion of Sheet 03 itself in the declaration becomes optional.
- The fact of non-withholding of tax (when paid to a legal entity that will subsequently perform the functions of a tax agent) in section B is recorded by adding the words “tax agent” to the name of the income recipient (clause 14.4 of Appendix No. 2 to Order No. MMV-7-3 / [email protected] ) .
- Income distributed to individuals only does not exempt you from completing sheet 03. Decoding information about such income recipients in the profit declaration is also provided. However, it is done only once (at the end of the year) and is given in a special appendix (No. 2) to the declaration (clause 1.17 of appendix No. 2 to order No. ММВ-7-3 / [email protected] ).
The quality of the person reporting with the inclusion of sheet 03 in the declaration is reflected in the form of the code for the place of submission of the report indicated on its title page: 213 or 214 - for the largest and ordinary taxpayers, 231 or 235 - for tax agents who do not report on income tax.
Who fills out the section
A tax agent is a person who has the responsibility of calculating and withholding tax from the taxpayer and paying it to the budget.
The tax agent does not have the obligation to pay tax on his own income and at the expense of his own funds.
Tax agent:
- Calculates the amount required to be withheld;
- Withholds it from the taxpayer from the income that must be paid to him;
- Transfers the withheld tax to the budget.
Typically, agents act as such in relation to individuals who receive income from them and are not taxpayers. For example, an employer acts as a tax agent in relation to its employees in terms of transferring personal income tax.
Taxpayers for income tax are:
- Russian companies;
- Foreign companies operating or receiving income in the Russian Federation;
- Trustees who are professional participants in the securities market;
- Responsible participants of consolidated groups of taxpayers.
Consequently, in terms of income tax, taxpayers are only legal entities. If dividends are paid only to individuals, then the company does not have the obligation to fill out sheet 03 of the income tax return. This is due to the fact that in relation to individuals, the enterprise is a tax agent for personal income tax, but not for profit.
If the founders of the organization include both individuals and legal entities, dividends to individuals are indicated in detail 043 of section A of sheet 03. This is due to the fact that these amounts are involved in the calculation of dividends for organizations.
At the same time, regulatory authorities may request clarification if Sheet 03 is not provided when paying dividends to individuals.
Results
Sheet 03 is drawn up in the profit declaration in case of payment of income on securities. It contains 3 sections intended for data on dividend payments (section A), interest on securities issued by the state or municipality (section B), and information about Russian legal entities receiving such income (section B). Sheet 03 is filled out during the period of income payments, and it is kept in the declaration until the end of the year. Depending on who the income is paid to, when filling out sections of sheet 03, a number of nuances should be taken into account.
Sources:
- Tax Code of the Russian Federation
- Order of the Federal Tax Service of Russia dated September 23, 2019 No. ММВ-7-3/ [email protected]
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