Methodology for determining the tax base for profit tax on financial instruments not traded on the organised market

On November 9, 2010, the Federal Financial Markets Service (FFMS) issued a decree determining the estimated settlement value (price) of the securities and financial instruments of futures contracts that are not traded on the active market, approved by FFMS Order Nos. 10-67 and 10-66/pz-n / PP-H, respectively.
FBK analysed this decree’s proposed provisions in order to create technology capable of determining the parameters of the tax base for income tax for these types of transactions and to develop software to calculate algorithms.

FBK experts developed technology for determining the settlement price of financial instruments, including:
  • consideration of the parameters of financial instruments;
  • automatic calculation of the value (price) of financial instruments based on their type, timeframe and other parameters;
  • calculation of the tax base and the amount of tax payments for each financial instrument type.
FBK has automated the process of determining the settlement value (price) of financial instruments through the software product “Settlement Price Calculator” (hereinafter - SPC), which includes software that implements mathematical calculations and contains a set of user, technical and training materials, including recommendations and the technology that must be followed in the calculations.



In order to implement the provisions set out in the decree, FBK has analysed the proposed algorithms to fix bugs or inaccuracies in the published formulas. In order to facilitate calculations, FBK has also developed additional algorithms for the calculation of the individual values that make up the elements of calculations, such as sums discounted back on the cost of storing the goods and the amount discounted back on dividends, interest or other income on securities purchased on term forward contracts.

The SPC software has an original interface capable of handling calculations by the suggested methods, takes into account the wide diversity of financial products, allows for easy entry of primary information and minimises user error. In implementing the technology to make the calculation, the software system allows for the flexible configuration of types and kinds of base (basis) of assets, defines for them a temporary base for calculations automatically included in the calculation formulas.

The SPC program contains no limits to the number and parameters of component parts of transactions in financial instruments (such as the number of interest periods, etc.), while its interface interacts with the user to prevent unnecessary or incorrect data input which would lead to the wrong result.

The result of the calculation of the value (price) of the instrument can be printed out in the form of an order for an account of the operation which contains the primary accounting data for each type of financial instrument and the result of determining the settlement price in the appropriate units.



FBK experts also offer technology that can determine the estimated value (price) of the financial instrument, the calculation of the tax base and the tax amount for each instance of a financial instrument of its type, currency, time schedules and amounts. Other elements of the technology include tax calculation templates, accounting registers and the methodology for calculating the tax base for income tax.

For more information, and to purchase the SPC software, please contact the Oleg Matveyev and Mikhail Vinnikov at FBK or send an e-mail to bank@fbk.ru

If you are interested in our services for financial institutions, please call your FBK partner Aleksey Terekhov, vice president for audit and consulting services to financial institutes.

E-mail: bank@fbk.ru

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