Russian Cash Register Law: Compliance in Settlements with Individuals

 

BRACE Law Firm ©

August 2, 2019

 

Effective July 1, 2019, amendments to the legislation governing the use of cash register equipment (the "KKT") entered into force. Consequently, an extensive group of new entities joined the ranks of those required to use KKT in settlements with individuals.

Amendments to Federal Law No. 54-FZ dated May 22, 2003, On the Application of Cash Register Equipment in Settlements in the Russian Federation (the "Law No. 54-FZ"), which took effect on July 1, 2019, stipulate that "settlements" now also include:

• the offset and return of prepayments (advances) for goods, works, and services;
• the provision of loans to pay for goods;
• any counter-provision for goods (for example, exchange or barter).

This means that if the payment and the transfer of goods do not occur simultaneously, each action must be accompanied by the issuance of a receipt starting from July 1, 2019. A receipt must also be issued for non-monetary settlements.

Furthermore, the law establishes that a cash register receipt received by a buyer (customer) in electronic form and printed on paper has legal force and is equivalent to an original cash register receipt.

Effective July 1, 2019, individual entrepreneurs (the "IPs") applying the patent taxation system (the "PSN"), as well as organizations and IPs that are payers of the unified tax on imputed income (the "UTII"), are also required to use KKT. In accordance with Clause 7.1 of Article 7 of Federal Law No. 290-FZ dated July 3, 2016 (the "Law No. 290-FZ"), such entities were entitled to conduct settlements without using KKT until July 1, 2019, provided that, upon the request of the buyer (customer), they issued a document (sales receipt, invoice, or another document confirming the receipt of funds for the corresponding goods (work, service)) in the manner established by Law No. 54-FZ.

Now, as of July 1, 2019, legal entities and IPs are required to use KKT in the general manner. However, Federal Law No. 129-FZ dated June 6, 2019, On Amending the Federal Law On the Application of Cash Register Equipment in Settlements in the Russian Federation (the "Law No. 129-FZ"), provides that IPs without employees under labor contracts who sell self-produced goods, perform works, or provide services are entitled to refrain from using KKT until July 1, 2021. Nevertheless, it should be remembered that in the event of entering into a labor contract with an employee, IPs will be required to register KKT within 30 calendar days from the date such a contract is concluded.

It is important to note that Clause 2.2 of Article 346.32 and Clause 1.1 of Article 346.51 of the Tax Code of the Russian Federation (the "Tax Code") provide for the introduction of tax deductions for individual entrepreneurs applying the UTII and the PSN for expenses related to the acquisition of KKT in an amount not exceeding 18,000 rubles for each unit of KKT, provided that it was registered with the tax authorities between February 1, 2017, and July 1, 2019. [1]

Clause 2 of Article 4 of Federal Law No. 192-FZ dated July 3, 2018, provided that the fourth paragraph of Clause 2 of Article 2 of Law No. 54-FZ would become invalid as of July 1, 2019. This means that when a driver or conductor sells travel documents (tickets) and passes for public transport inside the vehicle, the use of KKT became mandatory as of that date. These services have been excluded from the list of activities where settlements without KKT were permitted.

Clause 4 of Article 4 of the same law established an exemption from the use of KKT or the issuance of strict reporting forms (the "BSO") until July 1, 2019, for organizations and individual entrepreneurs when conducting settlements:

• with individuals who are not individual entrepreneurs in a non-cash manner (except for settlements using electronic means of payment);
• when receiving payments for housing and communal services, including capital repair contributions;
• when offsetting and returning prepayments and/or advances;
• when providing loans to pay for goods, works, and services;
• when providing or receiving other counter-provisions for goods, works, and services.

The effect of this provision was not extended, and currently, KKT must be used when conducting such settlements. However, Article 2 of Law No. 54-FZ establishes possibilities for non-application of KKT in certain other cases from the date of publication of the new law.

According to Article 2 of Law No. 54-FZ, the following entities are exempt from using KKT without time limits:

• Credit organizations.
• Organizations and individual entrepreneurs when engaged in the following types of activities:
  • sale of newspapers and magazines on paper;
  • sale of securities;
  • providing meals to students and employees of educational organizations during classes;
  • trading at retail markets, fairs, and exhibition complexes, with certain exceptions;
  • peddling food and non-food products, with certain exceptions;
  • trading in kiosks selling ice cream, as well as the sale of soft drinks, milk, and drinking water on tap;
  • trading from tankers selling kvass, milk, vegetable oil, live fish, and kerosene, and seasonal bulk sales of vegetables;
  • accepting glass containers and scrap materials from the public, except for scrap metal, precious metals, and precious stones;
  • repair and coloring of footwear;
  • manufacturing and repair of metal haberdashery and keys;
  • childcare and care for the sick, elderly, and disabled;
  • sale of folk arts and crafts by the manufacturer;
  • plowing gardens and sawing firewood;
  • porter services at stations and ports;
  • leasing (renting) of owned residential premises by an individual entrepreneur, including parking spaces;
  • retail sale of shoe covers.
• Individual entrepreneurs applying the patent taxation system, with certain significant exceptions.
• Individual entrepreneurs applying the "Professional Income Tax" special tax regime.
• Organizations and individual entrepreneurs conducting settlements in remote or hard-to-reach areas, with certain exceptions.
• Pharmacy organizations located in paramedic and obstetric centers situated in rural settlements.
• KKT may be omitted when providing services for religious rites and ceremonies, as well as when selling religious items and religious literature.
• KKT is not used for non-cash settlements between organizations and/or individual entrepreneurs, except for settlements made using an electronic means of payment with its presentation.

KKT may be omitted when conducting non-cash settlements by:

• real estate owners' associations, housing, and housing-construction cooperatives for services provided to their members and when receiving payments from them for housing and communal services;
• educational organizations when providing educational services to the public;
• physical culture and sports organizations when providing services to the public in the field of physical culture and sports;
• cultural centers, clubs, and other similar enterprises when providing services to the public in the field of culture.

KKT may be omitted by individual entrepreneurs when selling entrance tickets and passes for state and municipal theaters by hand or from a tray.

Another important innovation is the introduction of additional requisites for the cash register receipt when conducting settlements between organizations and/or individual entrepreneurs using cash and/or presenting electronic means of payment. Specifically, such a cash register receipt must contain additional requisites such as: the name of the buyer (customer) (the name of the organization, or the surname, first name, and patronymic (if any) of the individual entrepreneur); the Taxpayer Identification Number (the "INN") of the buyer (customer); information on the country of origin of the goods (when conducting settlements for goods); the amount of excise tax (if applicable); and the registration number of the customs declaration (when conducting settlements for goods) (if applicable). Furthermore, when paying out winnings during the organization and conduct of lotteries in an amount equal to or exceeding 15,000 rubles, the cash register receipt must also contain the name of the customer or the policyholder (the name of the organization, or the surname, first name, and patronymic (if any) of the individual entrepreneur or individual); and the INN of the customer or policyholder (if the individual does not have an INN — the series and number of the individual's passport).

Specifics of Using KKT Outside the Place of Settlement

Specifics for settlements conducted remotely from the location of the KKT have been included in the legislation governing the application of KKT.

New Clauses 5.6 – 5.10 were included in Article 1.2 of Law No. 54-FZ. They establish that from the moment of publication of the new law, users are permitted to use KKT (except for KKT used in a mode that does not provide for the mandatory electronic transfer of fiscal documents to tax authorities through a fiscal data operator) located outside the place of settlement, primarily in the following cases:

• when conducting settlements (except for non-cash settlements on the Internet) for goods sold via peddling or remote sales;
• when conducting settlements at the place where work is performed and/or services are provided, if such settlements are performed by the user outside a retail facility, retail space, building, structure, or land used by the user for performing work and/or providing services on the basis of ownership, lease, or other legal grounds.

Regarding settlements for peddling and remote sales, the specified rule does not apply if, in accordance with Clause 5.1 of Article 1.2 of Law No. 54-FZ, the user exercises the right:

• not to issue a paper KKT receipt or BSO during settlements;
• in the event that the buyer (customer) fails to provide a phone number or email address to the user by the time of settlement, not to send an electronic KKT receipt or BSO to the buyer (customer);
• to use KKT outside the housing of an automated settlement device.

The possibility of conducting settlements remotely from the location of the KKT is provided to users for settlements using electronic means of payment with automated settlement devices when providing services for the transportation of passengers, baggage, cargo, and cargo-luggage. Additionally, a user may do so when conducting settlements for goods sold (except for excise goods, technically complex goods, and goods subject to mandatory labeling) using automated settlement devices that contain equipment inside their housing for dispensing the goods.

If a user has exercised the right to use KKT located outside the place of settlement, they may fulfill the obligation to issue (send) a KKT receipt (BSO) to the buyer (customer) by:

• sending electronic information to the buyer (customer) at the time of settlement to a phone number or email address (if technically possible) provided by the buyer (customer) prior to the settlement, allowing for the identification of the KKT receipt (BSO) (this information includes the KKT registration number, amount, date and time of settlement, and the fiscal attribute of the document) and information on the address of the Internet resource where such a KKT receipt (BSO) can be obtained for free;
• providing the buyer (customer) with the opportunity to scan a QR code from the display of a mobile phone, smartphone, or other computer device at the time of settlement.

It should be noted that there are three other types of activities where users have the right to use KKT (except for KKT used in a mode not providing for mandatory electronic transfer of fiscal documents) located outside the place of settlement (subject to certain conditions): when providing services to the public, during settlements performed by a driver or conductor inside a transport vehicle when selling travel documents (tickets) and passes for public transport, and when receiving payments for housing and communal services.

Offset or Return of Prepayments and/or Advances

Clause 2.1 of Article 1.2 of Law No. 54-FZ establishes the specifics for processing KKT receipts and BSOs when conducting settlements in the form of an offset or return of prepayments and/or advances previously paid by individuals for services:

• in the sphere of cultural and mass events;
• for the transportation of passengers, baggage, cargo, and cargo-luggage;
• for communication services;
• in electronic form, as defined by Article 174.2 of the Tax Code;
• others, as determined by the Government of the Russian Federation.

In this case, it is possible to generate one general KKT receipt (BSO) containing information on all such settlements performed within a special timeframe, as previously indicated (before the adoption of Law No. 129-FZ): within 24 hours or for a reporting period not exceeding a calendar month or established by the legislation of the Russian Federation (but no later than the first business day following the end of the reporting period), without issuing (sending) a KKT receipt (BSO) to the client.

Law No. 129-FZ has changed this special timeframe. It is now considered a reporting period not exceeding a calendar month or established by the legislation of the Russian Federation (but no later than 10 calendar days following the end of the reporting period), also without issuing (sending) a cash receipt (strict reporting form) to the client.

Liability for Violation of KKT Legislation

According to Part 2 of Article 14.5 of the Code of Administrative Offenses of the Russian Federation (the "CAO RF"), the non-application of KKT in cases established by the legislation of the Russian Federation on the application of KKT entails the imposition of an administrative fine on officials in the amount of 1/4 to 1/2 of the amount of the settlement performed without KKT, but not less than 10,000 rubles; and on legal entities — from 3/4 to the full amount of the settlement performed using cash and/or electronic means of payment without KKT, but not less than 30,000 rubles.

The repeated commission of such an administrative offense, if the amount of settlements performed without KKT reaches 1 million rubles or more (including in aggregate), results in disqualification for officials for a term of 1 to 2 years; and for individual entrepreneurs and legal entities — the administrative suspension of activities for a term of up to ninety days.

It should be noted that Article 2 of Federal Law No. 171-FZ dated July 3, 2019, On Amending the Code of the Russian Federation on Administrative Offenses and Suspending the Operation of Certain Provisions of Article 14.5 of the Code of the Russian Federation on Administrative Offenses, suspends until July 1, 2020, the possibility of imposing fines for the non-application of KKT in settlements related to the sale of travel documents on public transport, as well as in the housing and communal services sector.

Furthermore, a number of questions currently arise regarding the possibility of third parties and agents using KKT. The Ministry of Finance provides the following clarifications. Clause 2 of Article 5 of Law No. 54-FZ establishes the obligation of the KKT user to exclude the possibility of unauthorized access by third parties to the KKT, as well as to the software and hardware within the KKT and its fiscal storage.

Thus, Law No. 54-FZ does not contain provisions restricting authorized access by third parties to the KKT, including its transfer to them. However, the use of KKT by a third party does not exempt the authorizing person from liability for failure to comply with the requirements of the legislation regulating KKT.

Moreover, the provisions of the aforementioned normative-legal act do not prohibit organizations and individual entrepreneurs acting as agents from registering and applying KKT registered by them when conducting settlements.[2]

Cases challenging decisions on administrative offenses under Part 2 of Article 14.5 of the CAO RF constitute one of the most common categories of administrative disputes considered by arbitration courts. In many cases, the tax authorities win such cases because the fact of non-application of KKT occurred. Often, the subject of the offense cannot prove otherwise.

For example, in one case, a tax authority protocol established the fact of conducting cash settlements without applying KKT and without issuing a receipt.

In the specified case, the administrative body issued the challenged decision, by which the Company was held administratively liable under Part 2 of Article 14.5 of the CAO RF in the form of a fine. The specified factual circumstances of the case are confirmed by documentation and are considered established by the court. After evaluating the arguments of the parties and the evidence presented in the case, the court concluded that the challenged decision was legal, based on the following.

Actions related to the non-application of KKT in cases established by the legislation of the Russian Federation on the application of cash register equipment constitute an administrative offense, the liability for which is provided for by Part 2 of Article 14.5 of the CAO RF, and is defined in the form of an administrative fine on legal entities in the amount of 3/4 to the full amount of the settlement performed using cash and/or electronic means of payment without the application of KKT, but not less than 30,000 rubles.

By virtue of Clause 1 of Article 1 of Law No. 54-FZ, KKT is used on the territory of the Russian Federation on an obligatory basis by all organizations and individual entrepreneurs when conducting settlements, except for cases established by this Federal Law.

In accordance with Clause 1 of Article 2 of the aforementioned Law, KKT included in the State Register of KKT is used on the territory of the Russian Federation on an obligatory basis by all organizations and individual entrepreneurs when conducting cash settlements and/or settlements using payment cards in cases of selling goods, performing work, or providing services.

The case materials confirmed the fact that the Company failed to use KKT and failed to issue a receipt at the time of conducting cash settlements, which constitutes the offense in question provided for by Part 2 of Article 14.5 of the CAO RF. [3]

There is no uniform position in judicial practice on the possibility of exempting a person from liability for this type of administrative offense due to insignificance (Article 2.9 of the CAO RF), for example, in the case of a small sale amount.

There is a position expressed, in particular, in the Resolution of the Presidium of the Supreme Arbitration Court of the Russian Federation No. 391/05 dated May 17, 2005, in case No. A49-20/04-507op/2, according to which a small sale amount does not indicate the insignificance of an offense provided for by the CAO RF for the non-application of KKT.

Thus, in one case, it was established during an inspection that when paying for mobile services in the amount of 100 rubles, the payment terminal screen displayed information that the payment had been accepted, as well as an electronic receipt. A cash receipt was not issued to the client.

Considering that when accepting payment for mobile services through a payment terminal, the cash settlements were made without the application of KKT and a cash receipt was not issued to the client, the case materials confirm the occurrence of an administrative offense under Part 2 of Article 14.5 of the CAO RF. [4]

Even with an insignificant sale amount, courts tend to impose a punishment in the form of a fine several times larger than the sale amount itself.

For instance, it appears from the case materials that a payment for mobile services was made through a payment terminal in the amount of 100 rubles, with a commission of 5 rubles deducted. The payment was made without the application of KKT and without issuing any other document confirming the payment, which is a violation of Article 2 of Law No. 54-FZ.

By the decision, the IP was held administratively liable under Part 2 of Article 14.5 of the CAO RF and was sentenced to an administrative fine in the amount of 3,000 rubles.[5]

Thus, it can be concluded that the installation of KKT is mandatory for settlements with individuals, and this rule has now become stricter. The legislator decided to follow the path of a gradual introduction of KKT use by economic market participants. Currently, entrepreneurs working without hired personnel can take advantage of a deferral for the implementation of KKT until July 1, 2021.

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References

[1] Letters of the Ministry of Finance of Russia No. 03-01-15/51064 dated July 10, 2019, No. 03-01-15/51058 dated July 10, 2019, and No. 03-01-15/48756 dated July 3, 2019.

[2] Letter of the Ministry of Finance of Russia No. 03-01-15/49040 dated July 3, 2019.

[3] Decision of the Arbitration Court of the Rostov Region dated February 2, 2019, in case No. A82-21396/2018.

[4] Decision of the Arbitration Court of the Tyumen Region dated February 1, 2019, in case No. A70-16878/2018.

[5] Decision of the Arbitration Court of the Khanty-Mansiysk District dated December 9, 2016, in case No. A75-13382/2016.