Farm equipment leasing
* These terms are tentative and supplied for information purposes only. This is not a public offer as defined by provisions of Civil Code Article 437 (2).
Equipment leasing scheme
Advantages of leasing
Leasing enables the lessee to save funds in acquiring property due to:
- 1. Accelerated amortisation
- Right to accelerated amortisation is regulated by the Russian Federation Tax Code, Chapter 25, article 259, item 7.
- The accelerated amortisation applies only to cases of mutual consent of the lease contract parties (envisioned by item 4.2.12 of the Contract).
- The depreciation deductions are made relative to the party holding the lease item on its books.
- As a rule, the parties profit by concluding a lease contract for a period of complete amortisation (accelerated in leasing by the coefficient 3).
- 2. Savings on income tax
- By fully allocating the leasing charges to expenses, the taxable base is reduced(article 264, item 10 of the Russian Federation Tax Code) “in considering the assets on the lessee’s balance sheet, the lease-related payments are regarded as spending less the amount of imposed amortisation.”
- As a result of using the accelerated amortisation, such expenses are three times higher than in case of a loan.
- 3. Savings on property tax
- The object of taxation is the residual cost of fixed assets. Due to accelerated amortisation, this cost diminishes three times faster.
- The property tax impacts on the financial results of the enterprise, thus reducing the income tax.
- 4. Advantages of paying VAT in leasing
- Payment of the outstanding part of VAT is extended over the entire period of validity of the lease contract.
- VAT payments are made during the validity of the lease contract with each leasing disbursement so that it is necessary to procure a loan to pay the VAT only based on the amount of the first instalment.
The additional financing attracted through leasing makes it possible to:
- secure even rhythm of payment in instalments;
- improve the quality of financial planning;
- increase financial capabilities without increasing the amount of involved funds;
- acquire the required property, allotting for its payment only 25 to 30% of cost. The remaining part of cost can be repaid from the proceeds obtained in business activities;
- upon completion of leasing, the leased item, which has served a third of its rated work life, will become a company asset.