No Income, No Tax. Or is There?

Income for tax purposes can be reduced for the amount of discounts (bonuses) given to distributors. This seems obvious but in Russia you have to prove this trivia again and again.

Ford Motor Company had to argue in court that when there is no income there is no income tax. The company did not include in its tax declaration the amount of discounts (bonuses) it gave to dealers. Taxmen, on the other hand, believed that the bonuses must have been taxed because they ‘do not affect retail price’.

This tedious discussion – whether cumulative discounts must be seen as a revenue adjustment mechanism or as a payment for marketing services – has been dragging for too long.

The whole debate is getting queasy since two years ago on December 22, 2009 the Supreme Commercial Court (case №11175/09) ruled that the gross income can be adjusted for the amount of cumulative bonuses.

We wish Ford Motor Company patience, stoutness and a stash of anti-nausea medication.