Foreign Organizations to Pay 18% VAT for Contract Services
Foreign companies are not always exempt from VAT when purchasing services. Russian Ministry of Finance Letter No. 03-04-08/239, dated November 21, 2006, states that if a company acts as an agent representing a foreign company in the Russian Federation and provides services related to coordinating carriage of goods, the Russian company may use a 0% VAT rate. These companies can justify their use of a 0% VAT rate for such services by submitting the documentation stipulated in Article 165, Clause 4 of the Tax Code to tax authorities. This documentation includes transportation documents marked by border customs officials to certify that the goods were transported out of the Russian Federation.
When it comes to providing services to enforce delivery contracts (the same Ministry of Finance Letter) for goods exported from the Russian Federation or to make arrangements for customs clearance, these services are subject to a value added tax rate of 18%, according to Article 164, Clause 3 of the Tax Code.