The Tax Code (clause 2, article 264 of the Tax Code of the Russian Federation) does not contain direct indications of which facilities are suitable for holding entertainment events, but excludes the possibility of taking into account expenses for entertainment and recreation.
There are cases in arbitration practice of recognizing expenses for organizing negotiations in cafes and restaurants. For example, the FAS of the Moscow District in its ruling of September 12, 2005 in case No. КА-А40/8426-05 agreed with the arguments of a company that rented halls in entertainment establishments to hold official receptions, since the organization's own premises were not suitable for this purpose. The expenses were recognized as representative, since the tax authorities were unable to prove that the events were of an entertaining nature.
However, sometimes the physician data package arbitration court sides with the regulatory authorities. Thus, in the ruling of the FAS of the North-West District of October 27, 2005 in case No. A56-3124/2005, the illegality of including expenses for renting bowling lanes in the taxable base was recognized. The organization claimed that these were entertainment expenses, but the court decided otherwise.
Souvenirs and alcoholic drinks
Companies conducting negotiations practice exchanging various items - pens, lighters, notepads, calendars, flash drives, etc. Letter of the Ministry of Taxes and Duties of Russia dated August 16, 2004 No. 02-5-10/51 prohibits recognizing the cost of souvenirs as part of advertising costs, since these products are intended for a certain circle of people. It should be taken into account under the item of entertainment expenses. If a trademark is applied to a souvenir, it is recognized as an advertising product, since it is distributed among an indefinite circle of people.
As for alcohol, there are no differences of opinion among arbitration courts, taxpayers and regulatory authorities: expenses for its purchase are subject to accounting as entertainment expenses. Information on this is contained in the letters of the Ministry of Finance of Russia dated June 9, 2004 No. 03-02-05/1/49, dated November 19, 2004 No. 03-03-01-04/2/30 and in many other cases.
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