Today (27.07.06), the Governmental Order from 22.07.06 N 455 "About the Statement of Rules of Applying the Zero Percent Value Added Tax Rate to the Taxation of Goods (Work, Services) Sold for the Official Use of International Organizations and Their Representations Carrying out Activity on the Territory of the Russian Federation" has come into force.

The Order will apply to all sales of specified goods dating from Jan 01, 2001.

Below are the details of the Order as printed in the official government publication “Rossiiskaya Gazeta.”

1. The following rules define, according to the international agreements of the Russian Federation, the method of applying the zero percent value added tax rate to the taxation of goods (works, services) sold for official use by international organizations operating within the territory of the Russian Federation.

2. The tax rate in question is for those organizations included in the list kept by the Ministry for Foreign Affairs of the Russian Federation together with the Ministry of Finance of the Russian Federation which grants exemptions from the value added tax based on the status of the contracts kept with such businesses (international organizations, representative offices).

3. The organizations or private businessmen selling the goods (works, services) for official use must submit invoices indicting the zero tax rate for the value added tax. These invoices must also be marked "For the official needs of the international organization" and must be submitted with the following:

The contracts with the international organization or its representative concerning the delivery of goods (performance of works, rendering of services) for official use; these must specify which goods are to be delivered (works to be performed, services to be rendered) and indicate their cost.

An official letter of the international organization or its representative signed by the head of the organization or its representative (the main officer of the representative appointed by the international organization, or any official appointed to perform the corresponding duties during absence of the main officer) and certified by the stamp of the organization or its representative confirming that the delivered goods (works, services) are intended for the international organization or its representative. The letter must specify the name and tax identification number of the organization or private businessman (indicate surname, name, and patronymic [middle name]) selling the goods (works, services) for official use by the international organization or its representative.

4. The organization or individual businessmen selling the goods (works, services) for official use by the international organization or its representation must submit all documents (or a copy of the documents) listed in item three above to the tax authorities in order for an application for the zero percent value added tax to be considered valid. The organizations or private businessmen must also submit:

The invoice indicating that the goods (works, services) sold to the international organization or its representative were sold with zero percent value added tax applied. A copy of the receipt or money order confirming the actual monetary transfer by the international organization or its representative for payment of the goods (works, services) sold.

5. The organizations or individual businessmen selling the goods (works, services) for official use by the international organization or its representative, shall declare tax deductions as stipulated by clause 171 of the Tax Code of the Russian Federation, and in accordance with item 4 of clause 176 of the Tax code of the Russian Federation.

6. The value added tax paid since Jan 01, 2001 by the international organization or its representative to its suppliers of goods (works, services) since January, 1st, 2001, is refundable to the international organization or its representative on the basis of an application signed by the head of the international organization or its representative (authorized person).

If the application is signed by an authorized person, the tax authority must be presented with a letter signed by the head of the international organization or its representative which specifies the term of appointment of such person and the person’s post.

The application must be submitted with the invoices showing a value added tax of 10 or 18 percent (or 20 percent if after January 1st, 2004) charged for the sold goods (works, services). The application must be submitted to the tax authority representing the local place of business of the international organization or its representative with all documents confirming the actual payment for the acquired goods (works, services).

7. The tax body will consider the materials submitted as specified in item six above for a period of three months after the date of receipt of all application materials for compensating the value added tax. The tax body shall deliver a reasoned decision for a refusal or a full or partial refund to the applicant of the value added tax. A copy of the decision will be delivered to the applicant five days after it is issued.

If the application indicates that the original documents must be returned to the applicant, the tax body shall first check them and stamp them with “Value-Added Tax Refunded” (in the case of refusal to refund the value added tax – “Value Added Tax Not To Be Refunded”) and validate them with the stamp of the tax body. The documents shall them be returned to the applicant. 8. Refunds of the value added tax to the international organization or its representative shall be made by transfer of the corresponding sums to the accounts specified on the application. The accounts must be opened by the international organization or its representative in an authorized bank registered on the territory of the Russian Federation.

Source: Rossiiskaya Gazeta 27.07.2006