Passed in its first reading, a new bill proposes giving firms the right not to apply a tax rate of 0 per cent on exports. When exporting, a 0 percent rate currently applies. You might ask: Who will voluntarily renounce such a privilege?
Exporters who can confirm that their goods crossed the Russian border and that payment was made by a foreign buyer have the right to this tax rate. In addition to exports, a zero rate can be applied when selling goods to residents of duty-free zones. In order to apply the zero rate, it is necessary to document the fact of export within 180 calendar days from the date of shipment, providing the tax inspection with a package of documents along with the tax declaration.
In order to confirm the zero VAT rate when exporting to Customs Union countries, the buyer-importer must also provide the exporter with a copy of their declaration, stamped by their tax inspector on the import of goods and the payment of excise taxes. If the foreign buyer did not pay the tax and did not submit a declaration to the Federal Tax Service, the exporting supplier will not be able to apply the zero rate. But often the problem is not even with the package of documents. Rather, we are seeing that Russian exporters are faced with both justified and unreasonable refusals of the tax refund. Accepting the package of documents, the auditors are looking for any opportunity to refuse it. For example, the receipt of funds from third parties is not considered proof of payment. At the same time, if the tax authorities refuse to refund VAT, and the exporting company bought VAT-exempt goods from other companies in thier operations, the exporting company now has to pay VAT for the entire chain at a rate of 18 percent, a serious tax risk.
Further risks also arise during periods of high exchange rate volatility, when the tax authorities, some six months after the transaction, recalculate VAT at the current exchange rate, which can be extremely unprofitable for the exporter.
After the adoption of the bill, firms engaged in exporting irregularly, selling small quantities of goods for export, will be able to abandon the zero rate to free themselves from the need to follow the rather cumbersome procedures for VAT refunds on exports. They will instead be able to pay tax at rates of 10 and 18 percent, as for sales of goods in Russia.
However, when exporting goods from Russia to the Customs Union countries, a zero VAT rate is mandatory. Therefore, the exemption from the zero rate applies only to exports to other countries that are not members of the Customs Union or the Unified Energy System.
The most serious advantage that the draft law provides is the introduction of amendments to the Tax Code of the Russian Federation for Russian online stores. In accordance with the bill, to confirm the zero VAT rate, it will be sufficient to show documents confirming that the buyer paid for the goods, and a copy of the customs declaration form CN 23, which is accepted by the Universal Postal Union when escorting international mail. This makes it possible to apply a zero VAT rate even when selling goods abroad in small batches or at retail. However, if the goods are transferred to a foreign buyer not by mail, but via private delivery service, the procedure for applying the zero rate is again complicated. Therefore, legislators should finalize the draft law in order to take into account all possible means of shipment.
Translated by Alinga Consulting Group.
About Alinga Consulting Group
Audit and Taxation Legal Accounting and Payroll
Questions? Ask Alinga's Experts!
| ||Source: Buhgalteria.ru|| |