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The state has established a zero-rated VAT for suppliers of goods and services abroad. Zero-rated VAT confirmation for export implies a certain risk for business. For example, the refusal of the benefit or an unsuccessful attempt to confirm the validity of its application can lead to the greatest losses for the business.
Zero rate excuses the exporter from the tax burden in the future, but not from reporting to tax authorities. It is important to understand that zero-rated VAT is a benefit, but the obligation to prepare and submit tax declaration remains. Moreover, such a benefit implies the more detailed approach to the preparation of tax and accounting statements, and additional risks.
Employees of the Federal Tax Service carry out a desk audit of declarations, if exporters have taken advantage of the privilege provided by the state – to pay VAT at the rate of 0%. In this case, tax authorities will pay their attention not to individual export operations, but to the entire period reporting including compliance with certain regulations. Moreover, inspectors will examine documents confirming the actual export of goods outside the country. For example, waybills, invoices, customs declarations and bank statements.
If the company fails to confirm the validity of the zero rate application with the documents, then it will receive substantial additional VAT charges at the general rate (10 or 20%) and fines instead of the benefit. Therefore, it is necessary to pay particular attention when you draw up a declaration and get an accompanying package of documents.
The procedure for confirming of zero rate of the declaration is regulated by Article 165 of the Tax Code of the Russian Federation. It contains an exhaustive list of necessary documents, which may partially depend on the type of used transport (air, sea, etc.).
In principle, the list of the documents depends on where the goods will be delivered – to the countries of the Eurasian Economic Union (Belarus, Armenia, Kazakhstan or Kyrgyzstan) or to other states.
A simplification of custom procedures is applied in case of exporting to the EAEU member states. In this case, you will need:
To confirm export to other countries you need to prepare:
All these documents must be marked by the customs services, it indicates the fact of export.
Moreover, if any reorganizations have been carried out at the enterprise over the past six months or, for example, the legal address has changed, the inspectors will certainly want to get to know such an exporter better.
Thus, in this case a detailed audit of the company begins, and often it ends with additional VAT and penalties.
The amount of VAT may be reimbursed, when you selling goods (works, services) abroad. For example, is possible when an exporter buys goods provided with VAT from Russian suppliers for resale it with zero-rated VAT abroad, or components for production and sale of their own goods abroad. The amount of VAT paid to suppliers in Russia is subject to refund.
The taxpayer’s right to refund value added tax is confirmed by Article 171 of the Tax Code of the Russian Federation.
The participants of the transaction should not be fictitious structures that maintain economic relations with non-existent or unscrupulous companies to receive a deduction. The exporter needs to understand that tax authorities will pay attention to his counterparty too.
The letter of the Federal Tax Service of Russia No. ED-4-2/23367 dated 31.12.2015 states that the refusal of VAT deductions is possible, if tax authorities determine that your actions are aimed at obtaining unjustified tax benefits, or you simply did not show due diligence.
According to the Government resolution No. 466 of 18.04.2018 the procedure for VAT refund will depend on whether the exported goods are raw materials or not. VAT deduction for non-commodity export is carried out in a simplified manner. You can submit a declaration to the Federal Tax Service immediately after the goods (services) are accepted for accounting, and not after delivery to a foreign consumer and zero rate validity confirmation.
In accordance with paragraphs 1 and 10 of Article 165 of the Tax Code of the Russian Federation for the export of raw materials VAT refund the general procedure is applied.
A company exporting raw materials must keep separate VAT accounting when it conduct transactions, which are taxed at different rates. Its task is to calculate the tax, which falls on export operations. You can also deduct this part of VAT after the zero rate confirmation.
The Tax Code does not specify the separate accounting methods principles, so the company must independently develop them and fix them in its accounting policy. It is stated in paragraph 10 of Article 165 of the Tax Code of the Russian Federation and in the letter of the Ministry of Finance of the Russian Federation No. 03-07-08/40366 of 14.07.2015.