On taxes and other obligatory payments to the budget (Tax Code)

Article 245. Deduction of representation expenses

1. Representation expenses include expenses for hosting and entertaining persons, including individuals that are not the taxpayer’s staff, which are incurred in the conduct of the following representational events, regardless of their venue, aimed at:

1) establishing or maintaining mutual cooperation;

2) organizing and (or) holding meetings of the taxpayer’s board of directors, another management body, except for executive bodies.

Representation expenses include, but are not limited to:

1) transport support to persons participating in representational events, except for expenses allocated to compensations for business trips in accordance with subparagraph 1) of paragraph 1 of Article 244 of this Code;

2) meals for such persons at representational events;

3) payment for services of interpreters that are not the taxpayer’s staff;

4) rent and (or) decoration of premises hosting representational events.

2. Expenses for the accommodation of invited persons, issuance of visas for such persons, organization of their leisure time, entertainment, recreation, as well as expenses not allocated to those for transportation of persons participating in representational events in accordance with part two of this paragraph are neither representation expenses nor subject to deduction.

Expenses for transport support do not include those for travel by rail, sea and air by participants of representational events.

3. Grounds for deducting representation expenses are as follows:

1) a taxpayer’s written order or written instructionon conducting a representational event with an indication of its purpose and persons responsible for conductingit;

2) the estimated cost of such an event approved by the taxpayer;

3) the responsible persons’ report on the representational event held, indicating its date and venue, results, participants, program, actual costs incurred;

4) source and other documents confirming the grounds for and incurrence of representation expenses.

4. Representation expenses shall be allocated to deductibles in the amount not exceeding 1 percent of the amount of the employer’s expenses for employees’ income subject to taxation specified in paragraph 1 of Article 322 of this Code for a taxable period.