Localisation of the Federal Accounting Standard FSBU 27/2021

Marillion kindly reminds that as of 1 January 2024 companies incorporated in Russia, as well as branches, representative offices, and other subdivisions of foreign companies operating in Russia (if they keep accounting records in accordance with the accounting standards of Russia) shall ensure that accounting documents and data contained therein are stored and the database of these data are hosted in Russia.

This requirement is established by paragraph 25 of the Federal Accounting Standard FSBU 27/2021 “Documents and document flow in accounting” (approved by Order of the Ministry of Finance of Russia dated April 16, 2021, №62n) (hereinafter - FSBU 27/2021).

Yet in certain cases FSBU 27/2021 allows the storage of accounting documents abroad: if the law or the rules of the country – the place of business outside Russia require the storage of accounting documents in this country, such storage must be ensured.

The Information Letter of the Ministry of Finance of Russia dated 06.10.2021 №IS-uchet-33, (subparagraph “c” of paragraph 9) regarding the requirements of paragraph 25 of FSBU 27/2021 clarifies that:

• accounting documents and the data contained in them must be stored in Russia, the accounting databases also must be hosted on the territory of the Russian Federation.
• FSBU 27/2021 does not impose restrictions on the use at the own discretion of an economic entity of information technologies and (or) technical means allowing to comply with this requirement.
• the requirement of paragraph 25 of FSBU 27/2021 does not mean that in certain cases, the documents and data cannot be stored outside Russia concurrently – for example, when the laws of the country of operation outside Russia require to keep accounting documents in this country.

Possible liability for the violation of the requirement to keep accounting documents and the data contained in them, as well as for the violation of the requirement on hosting of databases of these data within the territory of Russia.

Liability for the violation of the requirement to localise accounting documents and databases is not currently established, but this does not mean that it is impossible to be held liable. We assume that the violation of the requirement to localise documents and accounting data may be qualified as a lack of primary documents, accounting registers, which constitutes a gross violation of the rules of accounting of income, expenses and objects of taxation (article 120 of the Tax Code of Russia), and as a gross violation of accounting requirements (paragraph 1 of article 15.11 of the Code of Administrative Offences of Russia) and may result in:

• the company’s liability for tax offence in the form of a fine of:
  - 10 000 rubles if the violation was committed within one tax period and did not result in the understatement of the tax base (the base for accrual of social contributions);
  - 30 000 rubles if the violation was committed within two or more tax periods and did not result in the understatement of the tax base (the accrual base of social contributions);
  - 20% of the amount of unpaid tax (social contributions) if the violation resulted in the understatement of the tax base (the base for accrual of insurance premiums), but no less than 40 000 rubles.
• the liability of the company’s officials responsible for accounting
  - for administrative offences in the form of a fine from 5 000 rubles to 10 000 rubles if the offence was committed for the first time;
  - for a fine from 10 000 rubles to 20 000 rubles or disqualification for the period from 1 to 2 years in case of recurring offences.

There is also a risk of the violation of the requirement to localise personal data under paragraph 5 of article 18 of the Federal Law “On Personal Data” in case of violation of the requirement to localise documents and accounting databases since the accounting documents and databases contain personal data of individuals.

This violation may be revealed during any kind of state control that involves the review of documents and accounting databases.

In this case, the inspecting authority will have the right to apply to Roskomnadzor to initiate an inspection of compliance with personal data protection legislation by way of interdepartmental interaction. In case the violation of personal data localisation requirements is revealed, the administrative liability under part 8 of the article 13.11 of the Code of Administrative Offences of Russia may be more severe and result in fines:

• for the violation committed for the first time:
  - from 100 000 rubles to 200 000 rubles on the officials of the company;
  - from 1 000 000 rubles to 6 000 000 rubles on the company;
• for recurring violation:
  - from 500 000 rubles to 800 000 rubles on the officials of the company;
  - from 6 000 000 rubles to 18 000 000 rubles on the company.

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