Coronavirus-related benefits in the city of Moscow

Although the Resolution directly specifies that for some of the measures to be implemented certain regulations need to be adopted, we suggest that steps already be taken to use the opportunities provided by the Moscow City Government.

These measures of support are outlined below in detail.

1. The timeframes for making advance property tax and land tax payments for Q1 2020 have been extended until 31 December 2020.

This measure is aimed at supporting organisations that operate in the sphere of trade, public catering, tourism, culture, physical education and sports, leisure and entertainment, screening cinematic films, hotel services, extended education, health resort treatment, the organisation of conferences and exhibitions, and the supply of domestic services to the public.

The necessary condition is that the Unified State Register of Legal Entities, as at 1 March 2020, must contain information that the company conducts the principal types of activities classified under the All-Russian Classifier of Types of Economic Activities under the Codes listed in the annex to the Resolution.

2. The period for paying the sales fee for Q1 2020 has been extended until 31 December 2020.

This measure is relevant for all the payers of the sales fee.

Something to consider:

The provisions of the Resolution extending the timeframes for advance payments of property tax and land tax, as well as the sales fee will come into force on the date on which the federal law comes into force that grants to the federal executive bodies of constituent entities of the Russian Federation the power to decide on the extension of the payment terms for regional and local taxes (advance tax payments) and the local fee.

3. Exemption from rental payments for land and non-residential properties owned by the city of Moscow or properties located in the city of Moscow for which state ownership is not delineated

The exemption is provided for two categories of companies and individual entrepreneurs based on their application:

• those conducting business in the area of culture, physical education and sports, exhibitions, entertainment, teaching and educational activities, leisure, social and awareness-raising work with the public based on their application. An exemption from the rental payments is provided for the period starting on the date of the suspension of the lessor’s activity in connection with the Moscow City Mayor’s Decree introducing the high-alert regime and ending on the last calendar day of the month in which the suspension of activity ceases or on 1 July 2020, whichever occurs later.
• those conducting business in the area of public catering, trade and the provision of domestic services to the public, tourism and the provision of hotel services. An exemption from rental payments is provided for the period starting on 1 March 2020 and ending on the date when the high-alert regime ceases or on 1 July 2020, whichever occurs later.

To qualify for an exemption it is required to actually use the leased property for performing the specified types of activity. Moreover, the relevant purpose of use must be specified when the real estate items are provided under the lease.

4. An interest-free deferral period up to and including 31 December 2020 is granted with respect to rental payments for land plots for Q2 2020

The deferral period is granted based on the application of the tenants of land plots provided by the city of Moscow, only if such land plots have been provided for:

• locating facilities of social, cultural, domestic and utility purposes for implementing large-scale investment projects, provided that the facilities and investment projects in question comply with the criteria set out in article 8.1 of Moscow City Law No. 48 “On the use of land in the city of Moscow” dated 19 December 2007.
• the design and construction (reconstruction) of capital construction facilities

If the lease already stipulates a deferral period with respect to the first-year rental payments, then the interest for granting such a deferral will not be assessed on the unpaid rent for Q2 2020 based on the tenant’s application.

5. Interest-free deferral period with respect to the payment for changing the type of permitted use of the land plot

The deferral is granted to the owner of the land plot when it changes the type of permitted use to another type that allows the construction and/or reconstruction of a capital construction item. The deferral period is granted with respect to the payments for Q2 2020 for the period up to and including 31 December 2020 based on an application of the owner of the land plot.

6. Support for companies that are owners of land plots:

• Support is granted in the amount of the corporate property tax, land tax and rent for the land plot for the corresponding period to the extent relating to the area of this property item being leased out.
• Support is granted in the amount of half the corporate property tax, land tax and land plot rent for the corresponding period to the extent relating to the area of this property item being used by the owner itself.

The procedure for granting such support must be specifically established by the Moscow City Government

• The extension until 31 December 2020 (inclusive) of the period for making advance payments with respect to the corporate property tax and land tax that are payable at the end of Q2 2020.
• An interest-free deferral period up to and including 31 December 2020 is granted with respect to the rent for Q2 2020 under lease agreements for land lots owned by the city of Moscow or land plots for which the ownership is not delineated, if real estate items are located on them.

The above measures have been developed for companies that are owners of buildings and premises used for locating commercial facilities, including shopping centres (malls), as well as facilities for providing public catering and domestic services. The support is provided on condition that operations in such facilities have been suspended pursuant to the Moscow City Mayor’s Decree.

The amount of support is calculated with respect to the period starting from the first day of the month in which the operations were suspended under the Moscow City Mayor’s Decree and ending on the last calendar day of the month in which the suspension of activities ceased or on 1 July 2020, whichever occurs later.

Companies that are owners of buildings and premises used for locating hotels qualify for similar measures of support, with the suspension of activities in the hotel facilities not being specified as a prerequisite for the support to be granted.

Owners leasing out real estate qualify for support on the condition that they reduce rental payments (the rate of the rent) for tenants of the premises (area) by at least double the amount of the corporate property tax, land tax and land plot rent corresponding to the leased area of the real estate for the relevant period (for owners of hotels – for Q2 2020) and by at least 50 percent of the initial rate of the rent.

7. Additional measures of support for small and medium-sized enterprises (SMEs)

• An interest-free deferral period is granted with respect to payments under sale and purchase contracts for real estate items owned by the city of Moscow and municipal units of the city.

SMEs that have bought out leased real estate are granted an interest-free deferral period with effect up to and including 31 December 2020 with respect to the payments under sale and purchase contracts for Q2 2020.

• The economic support at the expense of the Moscow city budget is in the amount of interest payable under loans.

With respect to loans extended before 15 April the support amounts to 6 percent per annum and with respect to loans obtained after 15 April the support will amount to 8 percent per annum.

The procedure for granting such support must be specifically established by the Moscow City Government.