Accounting in Russia 

What are the specifics of Accounting in Russia?

Specifics of Accounting in Russia

Accounting in Russia is the proper recording of all business transactions of a company operating in Russia. The accounting department is usually the department within a company that takes over the bookkeeping.

Specifics of Accounting in Russia include:

  • An invoices is not enough for a booking
  • Internal guidelines have to be officially defined
  • Comprehensive reporting is required
  • International payments are subject to currency control
  • Reports are submitted quarterly
  • Balance adjustment is not common

Here we will discuss these different areas and explain what Accounting in Russia is.

You want to know how Accounting in Russia works? No problem!

Within the framework of our starsacademy, we can offer business workshops and training on “Accounting in Russia”. These introductory training courses are particularly suitable if:

  • You want to get a good overview of accounting in Russia,
  • You want to know how accounting in Russia differs from the accounting in your home country,
  • You are the Heads of a branch office in Russia,
  • You trust your Russian accountants, but would like to have a general understanding of accounting in Russia yourself.

These training can be carried out at our company or at your office. Learn more about our training on accounting in Russia and other topics.

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Sign up for our monthly accounting tip and receive regular selected tips which will help you to maintain control over your accounting in Russia and stay up to date. You will receive:

  • Clever tips on how to increase your efficiency and cut down costs of your accounting in Russia 
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Specifics of Accounting in Russia
Important points of Accounting in Russia

Accounting in Russia is heavily influenced by tax law in Russia. Decisive in the Russian accounting practice are less economic facts and more formal requirements. It can be assumed that with the same volume of business in Russian accounting, compared to most western countries, double the number of bookings is to be made and a multiple of documents has to be collected or prepared itself. This can be illustrated by the following examples:

Invoice is not enough

A contract, such as a consulting services agreement with fixed monthly payments is not sufficient evidence to support consulting expenses. Even a monthly invoice is not sufficient. The invoice is the basis for authorizing a bank transfer; however, the payment has to be initially recorded as an advance payment to a service provider. Only after the provider has issued a so-called “act” (a formal statement of acceptance of a service) which contains a breakdown of the services provided can the advance payment be transferred to the expense account.

Define Internal Policy

As there are some optional accounting principles for both tax and financial accounting, each company, on a yearly basis, has to define which principles it intends to apply. Then they must document this in their “Accounting and Tax Policy”, and strictly follow these rules. This document should be provided to the tax authorities at their request.

Comprehensive reporting

In addition to tax returns and reports to the social security funds, additional reports have to be submitted to the statistics office. The submission periodicity of statistical reports depends on their nature, and may occur on a monthly basis, yearly basis, or anything in-between. Altogether, at the end of a quarter, a company may have to submit more than 10 reports to the state authorities.

Currency control

Payments to or from a foreign company are subject to currency control procedures. Before the bank can make payments for a contract of the total amount of 50,000 USD or higher (incl. VAT), the Russian company has to submit the underlying contract, the related invoice and numerous other forms to the bank in order to open a “passport of deal”. Within it, special forms and supporting documents for each currency operation are provided to the bank. Also, the bank may have additional requirements when processing these documents.

Quarterly submission

Profit tax returns, as well as the majority of other tax returns, have to be submitted to the authorities on a quarterly, rather than a yearly basis.

Balance adjustment is not common

Matching revenue and expense, as practiced in the West, is not widely practiced in Russia, especially in small and medium-sized companies. Russian Accounting Standards require such matching; however accountants still tend to recognize revenue and expenses based on the actual receipt of supporting documents, as this is an obligatory requirement for tax accounting.

SCHNEIDER GROUP Buchhaltung in Russland: Was muss man wissen

It should be pointed out that the Managing Director of a company bears significant
responsibility for the company’s accounting function and compliance of its operations with legislation.

To a large extent, Russian accounting practices are aimed at proper accounting for the purposes of tax calculations rather than presenting a true and fair view of the financial position of a company.

Electronic Document Interchange in Russia
aka B2B EDI

The specifics and practical aspects of Russian accountancy are very well known to foreign companies which are operating in the Russian
Federation. Documents like the act, nakladnaya and schet-factura require hours of printing, manual stamping and signing, mailing and storing. All these processes are very time consuming.

The Federal Law FZ-402 caused a real “revolution” in Russian accounting. One of its most important solutions was the introduction of the Electronic Document Interchange (EDI). Accounting documents can now be created, signed, sent, confirmed and archived electronically.

EDI significantly simplifies the document flow between two companies and saves hours of work. This puts an end to piles of paperwork and facilitates document interchange transparency. Thus it is possible to create, interchange and confirm accounting documents in electronic form.

Paper-free Accounting in Russia is possible!

Create

Sign

Send

Accept & Archive

EDI significantly simplifies document flow between two companies and saves hours of work. This puts an end to piles of paperwork and facilitates document interchange transparency.

Thus it is possible to create, interchange and confirm the following documents in electronic form, legally binding and acceptable by the Tax
authorities:

  • VAT-invoice („schet-faktura“)
  • Agreement
  • Goods acceptance protocol („nakladnaya“)
  • Reconciliation act
  • Service acceptance protocol („act“)
How does it work?
SCHNEIDER GROUP provides B2B EDI in Russia and Ukraine

Petty cash payments in Russia

In order to have a cash-box, a company has to calculate and approve with the bank a certain cash-box limit. Calculations are made on the basis of one of two formulas (the company should choose the one more suitable for its activity).

If, for any reason, a company withdraws an amount of money which exceeds the set limit (e.g. salary payments) and does not pay it back within three days, it has to return the money to the bank. For all cash transactions (salary payments, expense payments to employees etc.) a company has to prepare special documents (cash receipt voucher, cash disbursement voucher) and keep a formal cashbook in prescribed formats.

Only persons employed by the company can get petty cash advances. Cash expenses incurred by the company’s employees should be supported by expense reports (its form could be defined by the company). If a company has cash receipts from sales, it must use a cash register machine. This also applies to receipts from credit card sales. Receipts and disbursements cannot be netted. All receipts must be deposited into the bank account.

Petty cash payments between legal entities, as well as between a legal entity and an entrepreneur under one single contract, are limited to 100,000 RUB. It is obligatory to make a full responsibility agreement with the employee who is dealing with the petty cash (cashier).

SCHNEIDER GROUP Buchhaltung in Russland Barzahlungen

Foreign currency control

SCHNEIDER GROUP Buchhaltung in Russland Devisenkontrolle

Foreign currency transactions are all payments between residents (Russian legal entities) and nonresidents (foreign companies, including their representative offices and branches in Russia), covering not only payments in foreign currency but also in Russian Rubles. Control over those transactions is performed by banks, customs bodies and special government institutions (e.g. Rosfinnadzor).

“Passport of deal”

A “passport of deal” is opened in the bank for each contract with all payments and cash receipt transactions exceeding the equivalent of 50,000 USD with non-residents. It is a comprehensive document with many forms. As supporting documents, copies of the related contract and the actual invoice have to be attached.

Besides the “passport of deal” other documents such as the Certificate of Currency Operations and the Certificate of Confirmation documents should be provided to the bank within a certain deadline – either 15 working days after the transaction or 15 working days after the end of the month when the transaction took place. Even if the transactions are not subject to “passport of deal” opening a submission of Certificates of Currency Operations is obligatory.

The Code of Administrative Offences of the Russian Federation set the responsibility for currency legislation violation for:

  • Not following the order or deadlines of currency operations reporting
  • Delay of revenues receipt or return of prepayment including failure to receive
One country – Three currencies

The official currency in Russia is the Ruble. Within Russia and between Russian companies, all payments, in cash or by bank transfer, can only be performed in Rubles.

However, contracts in Russia may be concluded in other currencies (most often in US Dollars or in Euros). It is important, however, that the actual payment is made in Rubles. This practice regularly leads to exchange rate differences between the date the transaction is recorded and the date of payment, and this leads to additional accounting work.

Receive our monthly accounting tip directly into your inbox

Sign up for our monthly accounting tip and receive regular selected tips which will help you to maintain control over your accounting in Russia and stay up to date. You will receive:

  • Clever tips on how to increase your efficiency and cut down costs of your accounting in Russia 
  • Simple explanations of tricky issues with ‘aha experience’
  • Current law changes, easily understandable with practical insights right in your inbox 
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