Paper F6 (RUS)
Fundamentals Level – Skills Module
Tuesday 6 December 2011
Reading and planning: 15 minutes
Writing: 3 hours
ALL FIVE questions are compulsory and MUST be attempted.
Tax rates and allowances are on pages 2–4.
Do NOT open this paper until instructed by the supervisor.
During reading and planning time only the question paper may
be annotated. You must NOT write in your answer booklet until
instructed by the supervisor.
This question paper must not be removed from the examination hall.
The Association of Chartered Certified Accountants
1. Calculations and workings need only be made to the nearest RR
2. All apportionments should be made to the nearest month, unless the law requires otherwise
3. All workings should be shown
TAX RATES AND ALLOWANCES
The following tax rates and allowances are to be used in answering all questions on this paper unless the question
Personal and children allowances
Standard personal allowance 400 RR (up to 40,000 RR)
Children allowance 1,000 RR per child (up to 280,000 RR)
General limitation on ‘property’ allowance
Investments in residential property and land for tax purposes 2,000,000 RR (upper limit)
Statutory exclusions from taxable income
Prizes and awards 4,000 RR (upper limit)
Gifts at work 4,000 RR (upper limit)
Support payments 4,000 RR (upper limit)
Maximum limit for social deductions listed below 120,000 RR (upper limit)
(medical, personal educational, non-state pension insurance, voluntary pension insurance and additional insurance
contributions for the accumulated part of labour pension – subject to certain conditions set out in the law)
Educational deduction for children 50,000 RR (upper limit)
Professional deduction – general 20%
– architects 30%
– for music writer 40%
– for sculptor 40%
Gains on property sales
– immovable property 1,000,000 RR (upper limit)
– movable property 250,000 RR (upper limit)
Housing allowance (deduction) 2,000,000 RR (upper limit)
Statutory per diem rate for personal income tax
– for domestic business trips 700 RR per day
– for foreign business trips 2,500 RR per day
Threshold interest rates for personal income tax purposes
Rouble bank deposits CB refinancing rate increased by 5%
Foreign currency bank deposits 9%
Rouble loans 2/3 of the CB refinancing rate
Foreign currency loans 9%
Threshold interest rates for profits tax purposes
From 1 January 2011 to 31 December 2012
Foreign currency loans 0.8 of the CBR refinancing rate
Rouble loans received 1.8 of the CBR refinancing rate
Single threshold for social insurance contributions for the year 2011
Income amount in 2011 Rate
For employers (general) and individual entrepreneurs up to 463,000 RR 34%
For employers (licences, copyrights, civil contracts) up to 463,000 RR 31.1%
Expenses for profits tax purposes
Voluntary medical insurance expenses (subject to conditions set out in the law) are limited to 6% of labour costs.
Voluntary life insurance expenses (subject to conditions set out in the law) are limited to 12% of labour costs.
Voluntary personal insurance against accidents at work resulting in death or permanent physical disability are limited to
15,000 RR per employee per annum.
Certain advertising expenses are limited to 1% of sales revenue.
Reimbursement of interest on employees’ mortgage loans is limited to 3% of labour costs.
Entertainment expenses (subject to conditions set out in the law) are limited to 4% of labour costs for the reporting period.
Special depreciation ratios
Non-current assets received under financial leasing 3 (upper limit)
Historic cost of non-current assets 40,000 RR per unit (minimum)
Allowances for receivables
General limitation 10% of sales
Aged 0 to 44 days 0% of receivables
Aged 45 to 90 days 50% of receivables
Aged more than 90 days 100% of receivables
Value added tax (VAT)
General profits tax rate 20%
Tax on dividends for residents 9%
Tax on dividends for foreign companies 15%
Property tax rate 2.2%
Personal income tax rates
Basic rate 13%
Higher rate 35%
Tax on dividends for residents 9%
Central Bank refinancing rates (notional)
1 January to 30 June 2011 25%
1 July to 30 September 2011 20%
1 October to 31 December 2011 10%
Number of calendar days in calendar months for the year 2011
This is a blank page.
Question 1 begins on page 6.
ALL FIVE questions are compulsory and MUST be attempted
1 OOO Botillion (‘Botillion’) is operating as a company engaged in the production of exclusive tailor-made shoes in
Russia and CIS. Botillion is 60% owned by a Russian company, Snegir; 10% by a French company, Chaussure SA;
and 30% by a Dutch company, Lim BV.
Botillion always applies the accruals method for both value added tax (VAT) and corporate profits tax purposes. In
respect of profits tax reporting, Botillion uses a quarterly profits tax reporting period. Botillion applies the non-linear
method of depreciation for tangible non-current assets and linear amortisation to intangible assets for tax purposes.
In its tax policy for the year 2011 Botillion stipulates its right to an immediate 30% write-off of tangible non-current
Botillion uses the standard social insurance contribution rates without any incentives on wages and salaries.
The following information is available for the year 2011. All figures are inclusive of VAT, unless stated otherwise. All
products sold in Russia during the year 2011 were subject to VAT at the standard rate.
Sales, receivables and prepayments for the year 2011 (in RR):
Domestic sales of goods 318,718,000
Confirmed export sales 17,700,000
1 January 2011 31 December 2011
Prepayments from domestic customers 15,080,400 6,690,600
Trade receivables 6,195,000 3,292,000*
* In October 2011 Botillion received a positive court decision for penalties and interest charges in respect of an
outstanding debt from its customer Krona, for the value of 4,500,000 RR (non-vatable item). The principal amount
receivable of 2,903,000 RR had been paid by Krona in November 2011.
During the year 2011 only 85% of the shoes produced were sold, the remaining 15% were kept in the year-end
Direct expenses incurred in the production process in 2011 (in RR):
Materials (annual expense) 59,354,000
Monthly wages of the 200 employees directly involved in the production of shoes were 16,967 RR per capita per
month. 10% of the employees were hired on temporary labour contracts for periods of less than three months each,
and were subject to rotation.
Depreciation of non-current assets:
Category Quantity Historic cost per Monthly tax Date brought
of non-current asset unit in RR depreciation rate into use
Production equipment 1 35,400,000 1.8% February 2011
Indirect expenses incurred for the year 2011 (in RR):
Botillion acquired the following patent for a seven year period.
Name Quantity Historic cost per Patent term Date brought
unit in RR into use
Patent 1 1 554,600 7 years December 2010
Category Quantity Historic cost per Monthly tax Date brought
of non-current asset unit in RR depreciation rate into use
Computers 35 53,100 5.6% June 2010
For the year 2011 Botillion incurred the following gross monthly salaries for administrative personnel:
General director – 500,000 RR
Middle management – 47,000 RR each for 25 employees
Professional training for employees was provided for both permanent (90%) and temporary employees (10%) to the
value of 590,000 RR. The training agreement was concluded with a licensed Russian educational entity.
Botillion provided both voluntary medical insurance for its permanent employees for 3,700,000 RR and voluntary
medical insurance to permanent employees’ relatives for 1,700,000 RR. The term of each insurance agreement was
During the year 2011 the following business entertainment expenses were incurred in respect of a visit of French
colleagues from Chaussure SA. The amounts include VAT, where applicable.
Official dinner in a restaurant 73,986
Interpreter’s services rendered by a professional firm 18,054
Air tickets Lyon–Paris–Moscow 75,000
Hotel expenses in Moscow 53,600
Transportation in Moscow to the office and back (taxi firm invoice) 6,136
On 9 November 2011 Botillion received a seven-year loan for €2,700,000 from Chaussure SA with interest at the
rate of 10% per annum. Interest is payable on the last date of each month (i.e. the first interest instalment was
payable on 30 November 2011). No repayments of the loan principal were made in 2011.
Botillion has the following unutilised deductible tax losses as of 1 January 2011:
2009 2,570,000 RR
2008 1,450,000 RR
(a) Assuming that all the expenses referred to in the scenario are properly confirmed by necessary documents,
calculate the taxable profit and corporate profits tax liability of OOO Botillion for the year 2011. Show
separately all elements of taxable income and deductible expenses and the unused balance of tax losses, if
1. For social insurance contributions purposes ignore all expenses other than salaries.
2. Ignore property tax.
3. The following notional €/RR exchange rates are to be used:
9 November 2011 41.0
30 November 2011 40.5
1 December 2011 41.5
31 December 2011 42.0 (24 marks)
(b) Calculate OOO Botillion’s value added tax (VAT) liability for the year 2011. Show separately all elements of
output/input VAT. (6 marks)
2 Sergey works as a senior financial business analyst for an internationally recognised company Artisan. He is married
to Anna. They have one daughter, aged six years, and one son, aged eight years. Sergey’s gross monthly salary is
In addition to his salary, Sergey received the following benefits from his employer Artisan during the year 2011:
– Incentive trip to Vietnam with the value of 100,000 RR (it was a reward for good work, not a gift)
– I-pad with the value of 25,000 RR as a gift on the fifth anniversary of his working for the company
– A 25% discount on the purchase of a car with the market value of 850,000 RR based on the special agreement
between his employer and an automotive company
– Voluntary medical insurance for Sergey of 15,000 RR
– Voluntary insurance for his wife, Anna, of 12,000 RR and their two children of 10,000 RR for each child.
In 2011 Artisan offered all its employees participation in an additional non-state pension scheme by way of making
personal contributions of 9,000 RR per annum to the chosen licensed non-state pension fund, LJL. Sergey made an
application to this scheme for the year 2011 and the relevant amount has been withheld from his salary.
Sergey has never used his housing allowance before. On 24 February 2011 he invested his savings into the
acquisition of a plot of land for the construction of a residential house. The purchase price of the plot of land was
1,700,000 RR. In order to finance the construction of the residential house, on 1 March 2011 Sergey took a loan
from a bank of 1,000,000 RR at the interest rate of 9% per annum for a seven-year period. In addition, on 7 March
2011 Artisan provided Sergey with another mortgage loan of 3,000,000 RR at the annual interest rate of 3% for a
ten-year period. Interest on Artisan’s loan will be payable starting from the year 2012, whereas interest on the bank
loan is payable on a monthly basis starting from 1 April 2011 (the first date after the end of the preceding month).
Taking into account Sergey’s achievements at work, Artisan at its own expense redeemed all of his interest due to the
bank which accrued from 1 June 2011 onwards. The above interest was treated as a deductible expense for profits
tax purposes by Artisan.
Documents confirming the construction expenses have been collected by Sergey for the amount of 4,500,000 RR.
Title of ownership was received in December 2011 and Sergey managed to submit this along with the confirmation
from the tax authorities to Artisan’s accounting department before the 2011 year end.
In August 2011 Sergey inherited a garage with the market value of 500,000 RR from his grandfather. In December
2011 Sergey made the decision to sell the garage for 520,000 RR due to its inconvenient location to his apartment.
Sergey paid 46,000 RR for the education of his daughter in the School of Art and Ballet and 7,000 RR for a sports
school for his son respectively. Both the above educational schools are licensed institutions under the law of the
Anna works as a freelance music writer for different theatre performances for the company Sonata.
Under the agreement with Sonata, Anna’s gross remuneration was 1,000,000 RR for the year 2011 and its allocation
was as follows (in RR):
May to December 106,000 per month
Anna’s business expenses, as confirmed by documents for her music writing, were 150,000 RR.
On her birthday in April 2011 Anna received a new piano with the value of 170,000 RR from Sonata. Her husband,
Sergey, gave her a present of a bracelet which cost 35,000 RR.
In March 2011 Anna received tickets for the spring season free of charge, which had a market value of 5,000 RR,
as a gift from Moscow theatre X.
During the year 2011 Anna paid 6,000 RR for her daughter’s School of Art and Ballet and 12,000 RR for her son’s
sports school respectively.
In addition Anna provided 10,000 RR in cash and 12,000 RR of educational toys in kind, as donations to an
Assuming that all the expenses incurred by Sergey and Anna in 2011 are confirmed with proper supporting
documents, unless the question specifically states otherwise:
(a) Calculate the personal income tax of Sergey withheld at source by Artisan for the year 2011, assuming that
Sergey has asked Artisan for all possible deductions to be given; (11 marks)
(b) Calculate the final settlement of Sergey’s personal income tax liability (additional payment or refund) upon
submission of his 2011 personal income tax return; (4 marks)
(c) Calculate the final settlement of Anna’s personal income tax liability for the year 2011. (10 marks)
Notes relevant to all subparts:
1. To the extent possible use all personal income tax deductions that are potentially available to Sergey and Anna.
2. State separately the amounts of all personal income tax deductions claimed and the deductions (if any) carried
forward to future years.
3. Ignore social insurance contributions.
3 (a) OOO Rostock (‘Rostock’) reviewed the situation with regards to its customers’ debts in October 2011 and decided
to write off the debt from Platan, based on the market situation for this company, and to sell two further
outstanding debts (as listed below) to ZAO Pine Tree under the following conditions:
Customer Due date Receivable Date of sale/ Proceeds received Amount
including write-off of from ZAO Pine written-off
VAT in RR the receivable Tree in RR in RR
Birch 1 October 2010 826,000 12 October 2011 660,800
Oak 24 February 2011 472,000 15 October 2011 554,600
Platan 30 November 2010 295,000 30 October 2011 295,000
Rostock has applied the accrual basis for value added tax (VAT) from the beginning of its activity and all of its
sales are subject to the standard VAT rate.
(i) Explain the impact on OOO Rostock’s VAT liability of each of the above transactions which occurred
during October 2011, clearly identifying the VAT amount, if any, of each transaction; (2 marks)
(ii) State the VAT impact, if any, of prepayments received from (1) foreign customers for export sales and
(2) from local customers for the domestic sale of goods. (1 mark)
(b) ZAO Panacota (‘Panacota’) concluded an agency agreement with OOO Promode (‘Promode’) to sell its goods in
the region. Promode is an agent participating in settlements. It receives the full sales proceeds from customers
and withholds the relevant agent’s fee. Under the above agreement, Promode carried out the following sales (in
RR) on behalf of Panacota:
Date of shipment Date of sale 100% prepayment Date of revenue Date of Promode’s
from Panacota by Promode received by received by invoice to Panacota
Promode Panacota from
from customers Promode
(notes 1 and 2) (note 3) (note 4)
26 July 2011 3 August 2011 454,300 1 September 2011 15 September 2011
5 August 2011 15 August 2011 678,500 30 August 2011 30 September 2011
15 September 2011 2 October 2011 359,900 31 October 2011 1 November 2011
1. All the above amounts are inclusive of value added tax (VAT), where applicable. All the sales of goods by
Panacota are subject to VAT at the standard rate.
2. The customers all made prepayments to Promode in the same month in which the relevant sale of goods
was carried out by Promode.
3. The agent’s fees withheld by Promode from all the sales revenues received from customers were 5%.
4. The date of Promode’s invoice is the date when Promode provided the agent’s report together with the VAT
invoice to Panacota.
5. Both Panacota and Promode account for VAT on an accruals basis.
(i) State how value added tax (VAT) on the sales made to customers by OOO Promode should be
documented and declared by OOO Promode; (1 mark)
(ii) Calculate the VAT for both OOO Panacota and OOO Promode for the third quarter (Q3) of the year 2011,
based on the above transactions. Show separately the output VAT, input VAT and VAT
payable/recoverable. (5 marks)
(iii) Assume that the date of Promode’s invoices to Panacota for the sales to customers on 3 August 2011 and
15 August 2011 were 7 October 2011 and 8 November 2011 respectively, but that all the remaining
information stays the same as in the original scenario.
Calculate the VAT for both OOO Panacota and OOO Promode for the fourth quarter (Q4) of the year
2011, based on the above transactions as amended. Show separately the output VAT, input VAT and
VAT payable/recoverable. (6 marks)
4 (a) Vladimir Suvorov works for the company OOO Nutellar (‘Nutellar’) with a gross monthly salary of 20,000 RR.
During the year 2011 Nutellar provided Vladimir with the following benefits:
A net bonus for the last quarter 2011, paid in April 2012 in the amount of 45,000 RR.
A semi-annual club membership of 20,000 RR.
Material aid of 35,000 RR. This benefit was booked in the accounting records of Nutellar as a non-deductible
Material aid according to the law on the occasion of his daughter’s birth in November 2011 of 45,000 RR.
Professional seminar in Moscow for the value of 13,000 RR.
Cell phone expenses reimbursed by Nutellar in the amount of 36,000 RR, but only 80% of these expenses were
related to business purposes.
Annual voluntary medical insurance for Vladimir in the amount of 50,000 RR, for his wife of 40,000 RR and
for his child of 25,000 RR;
Contributions to a non-state pension fund were paid by Nutellar for Vladimir in the amount of 60,000 RR.
Calculate the social insurance contributions (SIC) base for the year 2011 and the amount of SIC to be paid
by OOO Nutellar for Vladimir, if Vladimir works under (1) a labour agreement; and (2) a civil law agreement.
You should state where any items will not be subject to SIC.
Note: you are advised to present your answer in a tabular (columnar) format. (11 marks)
(b) Andrey Vinner works as a individual entrepreneur and runs an advertising business. His business income for the
year 2011 was 1,700,000 RR. His actual expenses for the year were 500,000 RR. In addition, he has two
employees with a monthly salary of 35,000 RR. These employees were working for the whole of year 2011.
Calculate Andrey Vinner’s personal income tax liability for the year 2011, in his current capacity as an
individual entrepreneur. You should compare the liability using actual expenses, and assuming that Andrey
has lost the primary supporting documents for all the expenses incurred, and clearly identify which method
is more tax efficient.
Note: you should ignore SIC on business income. (4 marks)
5 (a) OAO Krola (‘Krola’) had profits before tax of 340,000,000 RR for the year 2010. Krola made the decision to pay
35% of its distributable profits as dividends to its shareholders. Irina Lomova is a Russian tax resident, who owns
7,000 shares out of the total 100,000 shares of Krola. In addition to the dividend paid to Irina, Krola paid
20,000,000 RR as dividends to non-residents.
In April 2011 Krola received 45,000,000 RR as dividends for the year 2010 from the company Gumex.
The taxable profits of Krola are equal to its accounting profits.
Calculate the personal income tax to be withheld by Krola from the dividend paid to Irina Lomova and the
net amount of the dividend she received. (5 marks)
(b) OOO Langidok (‘Langidok’) is owned 70% by a US company, Superfish; 21% by a French company, Cheval SA;
and 9% by a UK company, Hitch Ltd.
On 7 July 2011 Langidok received a €1,250,000 loan for three years from Cheval at an interest rate of 7% to
finance its capital expenditure. No payments of loan principal or interest were made in 2011. No other loans
were included in Langidok’s liabilities as at 30 September 2011.
The following data is available regarding assets and liabilities as at 30 September 2011:
Assets 304,000,000 RR
Liabilities 278,000,000 RR
Including tax liabilities 96,000,000 RR
(i) Calculate the interest expense deductible for profits tax purposes for OOO Langidok in the first nine
months of the year 2011;
Note: relevant €/RR exchange rates are as follows (notional):
1 July 40.1
7 July 39.9
31 July 39.7
1 August 39.8
31 August 39.9
1 September 39.6
30 September 39.5
1 October 40.0 (7 marks)
(ii) Re-calculate the maximum deductible loan interest expense for OOO Langidok in the first nine months
of 2011, if the company’s net assets for thin capitalisation purposes as at 30 September 2011 were
equal to 15,000,000 RR. (3 marks)
End of Question Paper