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

Article 277. General provisions

1. For tax purposes, derivative financial instruments are divided into those used:

1) for the purpose of hedging;

2) for the delivery of an underlying asset;

3) for other purposes.

2. Income or loss with respect to each derivative financial instrument is determined in accordance with Articles 278, 279 and paragraph 3 of Article 299 of this Code.

3. If a derivative financial instrument is used to hedge or deliver an underlying asset, its tax accounting is maintained in accordance with Articles 280 and 281 of this Code.

4. Income from derivative financial instruments is formed out of income from derivative financial instruments used for purposes other than those for hedging or delivery of an underlying asset and is determined as follows:

the total amount of income from derivative financial instruments used for purposes other than those for hedging or delivery of an underlying asset determined in accordance with Articles 278 and 279 of this Code

minus

the total amount of losses from derivative financial instruments used for purposes other than those for hedging or delivery of an underlying asset for a reporting taxable period

minus

losses from derivative financial instruments carried forward from previous taxable periods.
Article 278. Income from a derivative financial instrument, except for a long-maturity derivative financial instrument

1. Income from a derivative financial instrument, except for a long-maturity derivative financial instrument, the income from which is determined in accordance with Article 279 of this Code, is determined as excess of proceeds over expenses for a derivative financial instrument.

For tax accounting purposes, such income is recognized on the day of maturity, early or other termination of the taxpayer’s rights to or obligations for a derivative financial instrument, and also on the day of settlement of a transaction with a derivative financial instrument, the claims under which, in whole or in part, compensate the obligations under an earlier transaction with the derivative financial instrument.

2. Proceeds from a derivative financial instrument are payments (to be) received in connection with this derivative financial instrument in interim settlements during the term of a transaction, and also on the day of maturity or early termination.

3. Expenses for a derivative financial instrument are payments (to be) made in connection with this derivative financial instrument for interim settlements during the term of a transaction, and also on the day of maturity or early termination.