Doing Business in Russia
Doing Business in Russia 27
the counterparty is agreed, it must be
conducted in accordance with specific
legal requirements).
The taxpayer is obliged to register its
issued VAT invoices in the sales book
and its received VAT invoices in the
purchase book in all cases when the
respective transaction is subject to
VAT in accordance with the Russian
VAT law. In some cases, taxpayers are
not required to issue VAT invoices, in
particular if they perform transactions
that are VAT exempt. If supplies are
provided to buyers that do not pay VAT
or that are exempted from the obligation
to pay VAT, it is permissible - upon the
mutual consent of both parties - for VAT
invoices not to be issued.
When the value of goods, work or
services has been changed (in particular,
when changes have taken place in the
price of the goods, work or services or
the amount), the seller should issue a
corrective VAT invoice and the parties
should correct their VAT obligations in the
way prescribed by Russian VAT law.
VAT Rates
Generally, the sale of goods, work and
services is taxable at a standard VAT
rate of 18%.
A reduced VAT rate of 10% applies to
the sale of certain types of medical
goods, books and periodicals, foods
and children's goods (in accordance
with a list of goods provided by the
Government of the Russian Federation).
The sale of certain types of goods,
work and services is subject to a zero-
percent VAT rate. The zero percent
VAT rate applies, inter alia to: export
sales; international transportation
services and related freight forwarding
services; transportation and the
rendering of certain services related to
the transportation of oil, oil products,
natural gas and electricity power
outside Russia; certain types of
air transportation; certain services
rendered at river and sea ports; and
certain services rendered by Russian
railway carriers in relation to the
international transportation of goods.
To apply a zero-percent VAT rate, the
supplier should collect the necessary
supporting documents within the
established time limit and submit a VAT
return with the supporting documents
to the Russian tax authorities.
Generally, sales of goods, works
or services on the territory of
Russia are taxable at a VAT rate
of 18%. A VAT rate of 10% or 0%
applies in certain cases.
Exemptions
Certain activity types are subject to
exemption from VAT, in particular:
-
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- Leasing premises located in Russia
to foreign individuals and foreign
entities accredited in Russia (if there
are reciprocity rules applying in the
respective foreign jurisdiction);
Selling residential real estate, certain
medical goods, medical services,
foods produced by school cafeterias,
public conveyance services
on specific types of transport,
ceremonial services, supply of
religious goods, educational services
rendered by licensed nonprofit
educational institutions, certain
services in the sphere of art and
culture, etc.;
- Repair and technical maintenance
services rendered free of additional
charge within the warranty period
of the goods (including the value of
spare parts related to these goods);
Banking operations and insurance
services; REPO operations;
The transfer of certain types of
intellectual property (IP) rights or
the transfer of rights allowing for IP
to be used on the basis of a licence
agreement.
The import of certain types of goods
into Russia can also be VAT-exempt.
The Russian Tax Code provides
for certain types of VAT
exemptions, in particular
exemptions related to financial
and social welfare services.
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