Doing Business in Russia

26 Doing Business in Russia VAT Base VAT should be calculated and paid upon receipt of prepayments and/or on the total transaction price at the moment the goods are shipped, when work is performed, services are rendered or property rights are transferred. If the moment of payment differs from the moment that shipping takes place, VAT should be accounted at the earlier of the two dates. If the date the taxable base is calculated is the date of prepayment, then the taxpayer is obliged to calculate the taxable base again at the moment of shipment. VAT paid with respect to prepayments can subsequently be claimed for recovery after shipment. When VAT is calculated by the tax agent, the obligation to withhold VAT by the tax agent occurs at the moment consideration is paid to the foreign seller, not registered with the Russian tax authorities. Recovery of VAT Generally, Russian taxpayers are entitled to claim for recovery input VAT related to purchased goods, work, or services, property rights, VAT paid under the reverse-charge mechanism, and VAT paid when importing goods into Russia, provided that: - the goods, work, services and property rights are acquired in order to carry out VAT-able transactions in Russia; the goods, works, services and property rights are booked in the taxpayer's accounts and the taxpayer has the respective primary documents; the taxpayer has VAT invoices prepared in accordance with the requirements provided by the Russian Tax Code (documents confirming payment of VAT for cases involving the recovery of import VAT and payment of VAT under the reverse charge-mechanism). Under certain conditions, it is also possible for taxpayers who made prepayments to suppliers to recover the VAT amount included in the prepayment amount. When the taxpayer carries out both VAT-able and non-VAT-able activities and/or a 0% VAT rate applies to certain transactions, in most cases the taxpayer should account for supplies and the respective amount of input VAT separately. Recovery of VAT in these cases is subject to specific rules (proportional recovery, the requirement to collect additional supporting documents, etc.). VAT Invoice A VAT invoice is a special VAT document needed for VAT recovery. The structure of this document is established by the Russian Government. The VAT invoice differs from a commercial invoice and can be issued either in hardcopy or in electronic format (if electronic document exchange with Novosibirsk KPMG © 2016 KPMG. All rights reserved.

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