Who pays VAT tax. What is VAT and why is it needed in simple words
A question that often worries ordinary people and aspiring businessmen, who pays VAT: the seller or the buyer?. It is not so easy to give a definite answer to this. Therefore, first things first.
Two-faced tax
On the one hand, if you carefully read the laws, the burden VAT payers lies with organizations and businessmen who sell various goods and services in Russia. This follows from the meaning of the Tax Code. By the way, it also contains a list of those who may, for some reason, be exempt from paying this tax.
But at the same time, each of us, buying almost any product in a store, can see the following phrase on the price tag - “including VAT.” In fact, it means that this tax is already included in the final cost of the product or service. And it turns out that the buyer directly pays for it. Meanwhile, it goes into the seller's pocket. And the seller already transfers this tax to the treasury.
Thus, it turns out that the burden of paying VAT lies on the shoulders of sellers, and they are direct VAT payers. But the buyer actually pays.
Transactions with tax
List of those who pays VAT and who needs to make payments to the country’s budget at the end of the tax period is specified in Article 146 (clause 1) of the Tax Code. The following points are given there:
- the tax is paid by those who are involved in the sale of all kinds of goods, services, works in our country, as well as the transfer of property rights;
- Those who transfer various valuables for the needs of their own business (within the Russian Federation) are also subject to taxation;
- this burden also falls on those who carry out various construction and installation works for their own needs.
Persons falling under one of these clauses are required to pay VAT to the treasury. Its amount is determined according to the rules of Articles 171 and 172 of the Tax Code. They clarify what deductions a VAT payer can count on and under what conditions.
But Articles 167 and 174 of the Tax Code determine the tax payment mechanism. They say that you need to share VAT with the budget every quarter (3 months). Moreover, payments are not made once, but are spread out over one-third each month. Payment of VAT amounts is due no later than the 25th day of each month.
The amount indicated in the VAT reporting must be given in rubles. Moreover, pennies must be rounded: they do not appear in the document.
Other obligated persons
Besides those who is the VAT payer, those who decide to introduce some goods into the territory of Russia are also required to pay the tax. Moreover, these can be foreign citizens and companies. A passport from another country does not exempt them from paying tax. But the deduction procedure and timing may vary. In this case, they are determined not by the Tax Code of the Russian Federation, but by the customs procedure under which the goods fell.
Also in the category of those who pays VAT, tax agents are subject to this tax. All VAT deductions fall on their shoulders if a business partner is unable to comply with the law regarding the payment of this tax.
How do special regime officers pay?
At the very beginning of the article, we said that there are companies and merchants who pay taxes not according to generally accepted schemes. These cases are called special modes. For them, taxes are paid according to special systems: UTII, simplified tax system, patent taxation system or unified agricultural tax.
By and large, in fact, they cannot be called those who pays VAT. But they can also be forced to remit this tax if they issue invoices to their customers that indicate “including VAT.”
Who pays VAT - the buyer or the seller? This is a philosophical question. It is paid by the sellers, but in reality it is kept out of the buyer’s pocket, since it is included in the price. Everything is further complicated by the fact that for each payer, VAT exists in two versions: the tax to be transferred to the budget, and also the one that is paid to suppliers as part of the price for goods and services purchased from them.
Usually the contract directly states that the price includes VAT, and also reflects its amount. But sometimes the parties miss this point, which results in additional risks - from conflicts with counterparties to litigation.
Taxation mechanism
The object of taxation is sales operations, including gratuitous transfer. By default, any sale must be subject to VAT unless it falls within the exceptions specified in the Tax Code. In addition, if the subject falls under certain conditions, among which the main one is a small amount of revenue, then there may be an exemption from VAT. In this case, the responsibilities of the payer are removed from him, and the goods and services he sells are not subject to this tax.
VAT payers are organizations and entrepreneurs that apply the basic tax system (OSNO). The law requires that they add the amount of this tax to the cost of the goods and present it to buyers for payment. Typically, the tax is included in the price and is highlighted as a separate line in the documents. In this case, the question of who pays VAT, the buyer or the seller, does not arise. Having received funds from the buyer, the seller-taxpayer must transfer the tax to the budget. At the same time, he has the right to reduce the tax payable by the amount of input VAT that suppliers present to him in the price of goods and services.
Simple practice
To avoid any discrepancies, most often the tax amount is calculated in advance and highlighted in the documents as a separate line. That is, the provision of the contract regarding the price is usually written something like this: the cost is 236,000 rubles, including VAT of 36,000 rubles. This is true if an object subject to VAT is sold and the seller is its payer, that is, does not apply tax exemption or any special regime.
Who must pay VAT - the buyer or the seller - in the above example? Such a record implies an unambiguous interpretation. The final cost of the transaction is indicated, this amount includes VAT - the seller will have to transfer it to the budget.
If there is no tax in the agreement
Sometimes, for some reason, the parties to a transaction miss the need to include a tax clause in the contract. Then the question arises whether its amount is included in the price. In other words, who pays VAT - the buyer or the seller - if VAT is not specified in the contract?
On the one hand, the Tax Code states that the seller charges VAT in addition to the cost of goods or services. This may give the impression that the price in the contract may be indicated without taking into account tax, since it must be calculated “on top”.
On the other hand, the Civil Code requires that the value indicated in the contract be final. If the seller “forgot” to include the tax, this should not be a buyer’s problem.
Therefore, according to current practice, confirmed, among other things, by court decisions, the absence of a mention of VAT in the contract becomes a problem for the seller. After all, he is the taxpayer, which means he is obliged to provide all the conditions for paying taxes to the budget.
What to do if the seller “forgot” about the tax
So, it is in the interests of the parties to correctly spell out the terms of the agreement regarding VAT. But it happens that this moment is missed. Who pays VAT - the buyer or the seller - in such circumstances? This issue is resolved by agreement. It is good if the buyer agrees to pay the tax amount in excess of the contract value. In this case, you can draw up an additional agreement.
However, the buyer can refuse, and the law will be on his side. The seller in such a situation will not be able to demand payment of tax even through the court. In this case, the arbitrators will be guided by the resolution of the Plenum of the Supreme Arbitration Court of the Russian Federation dated May 30, 2014 No. 33. Paragraph 17 of this document states that the amount of tax must be taken into account when determining the final price of the contract.
Therefore, all that remains for the seller to do under such circumstances is to pay VAT from his own pocket.
How to calculate tax if nothing is said about it in the contract
So, there is no mention of VAT in the agreement. How to calculate the tax in this case? This will depend on what the parties have agreed on: who pays the VAT, the buyer or the seller.
If the buyer agreed to pay additional tax, then there are no special features in the calculation. VAT will be equal to 18% (10%) of the transaction amount. If the buyer refuses, then the seller should allocate tax from the amount received from him. In this case, the so-called settlement rate is accepted. It is equal to 18/118 or 10/110 depending on the rate at which the object of the operation is taxed.
Let's explain with an example. The seller is a VAT payer, but the buyer is not. The contract indicates a cost of 590,000 rubles, but does not contain any mention of VAT. The seller approached the buyer with an offer to pay tax at a rate of 18% above the price specified in the contract, but was refused.
590,000 * 18 / 118 = 90,000 rubles - VAT amount;
Accordingly, the seller’s income after tax will be 500,000 rubles.
If one of the parties uses the simplified tax system
A fairly common situation is when one of the parties to a transaction applies the simplified tax system. Who pays VAT under simplified taxation - the buyer or the seller?
In general, the simplified supplier does not pay VAT, so the tax is not charged and is not included in the price. The exception is certain transactions, as well as situations when the buyer asks the seller to highlight the tax in the documents in a “simplified” manner. In this case, the seller will be required to pay tax, despite the fact that he applies the simplified tax system. The tax allocated by the seller in the invoice is subject to payment.
Another example is when the seller is on OSNO, and the buyer is on the simplified tax system. Selling goods to a VAT evader does not relieve the seller of the obligation to pay this tax. Therefore, it is advisable to indicate the transaction amount in the documents and highlight VAT. This does not entail any consequences for the buyer using the simplified tax system - he must pay the total amount specified in the contract.
When is the tax paid by the buyer?
Sometimes the terms of the contract contain a provision that the price is reflected without VAT. Under such conditions, who pays VAT - the seller or the buyer? If the circumstances of the transaction or other terms of the agreement do not imply otherwise, the buyer is obliged to pay the amount of tax in addition to the price specified in the contract. Such an explanation is contained in the above-mentioned resolution of the Plenum of the Supreme Arbitration Court No. 33.
So, the solution to the question of who pays VAT - the buyer or the seller, if there is no mention of tax in the contract - depends on the specific circumstances. In most cases, this responsibility remains with the seller. It is in the interests of both parties to clearly state the terms and conditions associated with this tax in the contract. However, the seller needs to be more careful, because ignorance or forgetfulness can cost him a pretty penny.
In 2018, the rules for calculating VAT changed. Let's look at when the buyer pays VAT and when the seller pays it.
Buyers will more often pay tax instead of the seller. For example, when purchasing raw animal skins. Other cases where the buyer needs to pay VAT as an agent and the condition under which this tax can be deducted. Let's look at how to calculate VAT according to the new rules.
- Important article:
When VAT is paid by the buyer instead of the seller
If during the first quarter you bought raw hides from a VAT payer, then tax should be charged instead. The same rule applies when purchasing scrap and waste ferrous and non-ferrous metals, secondary aluminum and its alloys. If you did not transfer the prepayment and did not claim VAT for deduction on it, calculate the tax using the formula:
On January 24, a general mode buyer received raw animal skins worth RUB 50,000. The supplier is a VAT payer. This means that the buyer must pay tax on the transaction. To do this, a calculated rate of 18/118 must be applied to the cost of hides including VAT. It turns out 9000 rubles. ((50,000 ₽ + 50,000 ₽ × 0.18) × 18/118).
On January 25, the farm paid the seller, and on January 26, he handed over an invoice with the note “VAT is calculated by the tax agent.” According to this document, the accountant claimed 9,000 rubles as a deduction for himself. VAT payable is zero.
If the farm operated in a special mode, there would be no deduction. However, VAT for the seller is 9,000 rubles. - you would still have to pay and file a tax return.
If a farm purchases skins on an advance payment basis, calculate the tax using the formula:
The buyer in general mode made an advance payment on January 24 - 50,000 rubles. for raw animal skins. Based on the invoice with the mark “VAT is calculated by the tax agent” from the seller - a VAT payer, the buyer assessed tax - 9,000 rubles. ((50,000 ₽ + 50,000 ₽ × 0.18) × 18/118) and declared VAT deductible on the prepayment. On January 30, the buyer capitalized the skins for 50,000 rubles, and the seller handed over an invoice for shipment with the note “VAT is calculated by the tax agent.”
After this, the buyer recovered 9,000 rubles. tax on prepayment and deducted the same amount on delivery. For the seller, I accepted VAT deduction from the advance payment in the amount of 9,000 rubles. and charged the same amount for shipment. As a result, VAT payable is zero. If the farm operated in a special mode, there would be no deduction. However, VAT for the seller is 9,000 rubles. - you would still have to pay and file a tax return.
When the seller pays VAT instead of the buyer
A business does not pay VAT if it uses an exemption from this tax or applies a special regime. However, if the company subsequently loses the right to exemption or special treatment, VAT will have to be charged. For what period to calculate the tax depends on what regime the company applies. Let's consider possible options in order.
General mode. Let’s say a general regime farm has a VAT exemption. Then the tax must be calculated from the 1st day of the month in which the revenue limit was exceeded - 2 million rubles. excluding VAT for every three consecutive months.
Example 3. From what point is VAT charged upon loss of the right to exemption?
The farm received a VAT exemption from January 1. However, already in February, the company’s revenue exceeded the limit of 2 million rubles. This month and in January the farm sold raw hides. It turns out that VAT needs to be charged for February, but no tax needs to be charged for January.
Simplified. There is a different revenue limit for the simplified version - 150 million rubles. However, if you lose the right to a special regime, the tax must be calculated not from the 1st day of the month in which the limit was exceeded, but from the beginning of the quarter.
Unified Agricultural Sciences. It is necessary to charge VAT from the beginning of the year if the farm has lost the right to the single agricultural tax. In this special mode, the share of agricultural products for the year is checked. If this figure is less than the required 70 percent, the farm loses the right to a special regime.
Example 4. From what point is VAT charged upon loss of the right to a single agricultural tax?
The farm has been applying the Unified Agricultural Tax since January 1. This month, we sold raw hides and gave the buyer an invoice marked “Excluding tax (VAT).” At the end of 2018, agricultural income amounted to 6,000,000 rubles, and total income - 10,500,000 rubles. The share of agricultural revenue is 0.57 (6,000,000 ₽/10,500,000 ₽). This is less than 70 percent of total revenue. This means that the farm lost the right to agricultural tax from January 1, 2018. VAT must be calculated on sold skins. You can pay it without penalties until January 31, 2019 inclusive.
VAT (value added tax) is the most difficult tax to understand, calculate and pay, although if you do not delve deeply into its essence, it will not seem very burdensome for a businessman, because... is an indirect tax. Indirect tax, unlike direct tax, is transferred to the final consumer.
Each of us can see the total amount of the purchase and the amount of VAT in the receipt from the store, and it is we, as consumers, who ultimately pay this tax. In addition to VAT, indirect taxes include excise taxes and customs duties. To understand the complexity of VAT administration for its payer, you will need to understand the main elements of this tax.
VAT elements
Objects of VAT taxation are:
- sale of goods, works, services on the territory of Russia, transfer of property rights (the right to claim debt, intellectual rights, rental rights, the right to permanent use of land, etc.), as well as gratuitous transfer of ownership of goods, results of work and provision of services. A number of transactions specified in paragraph 2 of Article 146 of the Tax Code of the Russian Federation are not recognized as objects of VAT taxation;
- carrying out construction and installation work for own consumption;
- transfer for one's own needs of goods, works, services, the costs of which are not taken into account when calculating income tax;
- importation of goods into the territory of the Russian Federation.
Goods and services listed in Article 149 of the Tax Code of the Russian Federation are not subject to VAT. Among them there are socially significant ones, such as: sales of certain medical goods and services; nursing and child care services; sale of religious items; passenger transportation services; educational services, etc. In addition, these are services on the market valuable papers; Bank operations; insurer services; legal services; sale of residential buildings and premises; public utilities.
Tax rate VAT can be equal to 0%, 10% and 18%. There is also the concept of “settlement rates”, equal to 10/110 or 18/118. They are used in operations specified in paragraph 4 of Article 164 of the Tax Code of the Russian Federation, for example, when receiving advance payment for goods, work, services. All situations in which certain tax rates are applied are given in Article 164 of the Tax Code of the Russian Federation.
Please note: from 2019 the maximum VAT rate will be 20% instead of 18%. The calculated rate instead of 18/118 will be 20/120.
Export transactions are subject to a zero tax rate; pipeline transport of oil and gas; electricity transmission; transportation by rail, air and water transport. At a 10% rate - some food products; most products for children; medicines and medical products that are not included in the list of essential and vital; breeding cattle. For all other goods, works and services, the VAT rate is 18%.
Tax base for VAT in the general case, it is equal to the cost of goods, works, and services sold, taking into account excise taxes for excisable goods (Article 154 of the Tax Code of the Russian Federation). At the same time, articles 155 to 162.1 of the Tax Code of the Russian Federation provide details for determining the tax base separately for different cases:
- transfer of property rights (Article 155);
- income from mandate, commission or agency agreements (Article 156);
- when providing transportation and services international communications(Article 157);
- sale of an enterprise as a property complex (Article 158);
- carrying out construction and installation work and transferring goods (performing work, providing services) for one’s own needs (Article 159);
- importation of goods into the territory of the Russian Federation (Article 160);
- when selling goods (work, services) on the territory of the Russian Federation by taxpayers - foreign persons (Article 161);
- taking into account the amounts associated with settlements for payment for goods, works, services (Article 162);
- during the reorganization of organizations (Article 162.1).
Tax period, that is, the period of time at the end of which the tax base is determined and the amount of tax payable under VAT is calculated, is a quarter.
VAT payers Russian organizations and individual entrepreneurs are recognized, as well as those who move goods across the customs border, that is, importers and exporters. Taxpayers working under special tax regimes do not pay VAT: , (except when they import goods into the territory of the Russian Federation) and participants in the Skolkovo project.
In addition, taxpayers who meet the requirements of Article 145 of the Tax Code of the Russian Federation can receive an exemption from VAT: the amount of revenue from the sale of goods, work, and services for the three previous months, excluding VAT, did not exceed two million rubles. The exemption does not apply to individual entrepreneurs and organizations selling excisable goods.
What is a VAT deduction?
At first glance, since VAT must be charged on the sale of goods, works, and services, it is no different from sales tax (turnover). But if we return to its full name - “value added tax”, then it becomes clear that not the entire sales amount should be subject to it, but only added value. Added value is the difference between the cost of goods, works, services sold and the costs of purchasing materials, raw materials, goods, and other resources spent on them.
From this it becomes clear the need to obtain tax deduction according to VAT. The deduction reduces the amount of VAT accrued upon sale by the amount of VAT that was paid to the supplier when purchasing goods, works, and services. Let's look at an example.
Organization “A” purchased goods from organization “B” for resale at a cost of 7,000 rubles per unit. The VAT amount was 1,260 rubles (at a rate of 18%), the total purchase price was 8,260 rubles. Next, organization “A” sells the product to organization “C” for 10,000 rubles per unit. VAT on sales is equal to 1,800 rubles, which organization “A” must transfer to the budget. In the amount of 1,800 rubles, the VAT (1,260 rubles) that was paid during the purchase from organization “B” is already “hidden”.
In fact, the obligation of organization “A” to the budget for VAT is only 1,800 - 1,260 = 540 rubles, but this is provided that the tax authorities offset this input VAT, that is, provide the organization with a tax deduction. Receiving this deduction is accompanied by many conditions; below we will consider them in more detail.
In addition to deducting VAT amounts paid to suppliers when purchasing goods, works, services, VAT on sales can be reduced by the amounts specified in Article 171 of the Tax Code of the Russian Federation. This is VAT paid when importing goods into the territory of the Russian Federation; when returning goods or refusing to perform work or provide services; when the cost of shipped goods (work performed, services provided) decreases, etc.
Conditions for obtaining input VAT deduction
So, what conditions must a taxpayer fulfill in order to reduce the amount of VAT upon sale by the amount of VAT that was paid to suppliers or when importing goods into the territory of the Russian Federation?
- must have a connection with taxable objects(Article 171(2) of the Tax Code of the Russian Federation). Tax authorities often wonder whether these purchased goods will actually be used in transactions subject to VAT? Another similar question is whether there is an economic justification (orientation to making a profit) when purchasing these goods, works, services?
That is, the tax authority is trying to refuse to receive a tax deduction for VAT, based on its assessment of the feasibility of the taxpayer’s activities, although this does not apply to the mandatory conditions for deducting input VAT. As a result, VAT payers file many lawsuits against unfounded refusals to receive deductions in this regard. - Purchased goods, works, services must be registered(Article 172(1) of the Tax Code of the Russian Federation).
- Availability of a correctly executed invoice. Article 169 of the Tax Code of the Russian Federation provides requirements for the information that must be indicated in this document. When importing, instead of an invoice, the fact of VAT payment is confirmed by documents issued by the customs service.
- Until 2006, to obtain a deduction it was condition on actual payment VAT amounts. Now, Article 171 of the Tax Code of the Russian Federation provides only three situations in which the right to deduction arises in relation to the VAT paid: when importing goods; on business travel and entertainment expenses; paid by tax agent buyers. For other situations, the turnover of “tax amounts presented by sellers” applies.
- Prudence and caution when choosing a counterparty. We have already talked about ““. Refusal to receive a VAT tax deduction may also be caused by your connection with a suspicious counterparty. If you want to reduce the VAT that you must pay to the budget, we recommend that you conduct a preliminary check of your transaction partner.
- Isolation of VAT as a separate line. Article 168 (4) of the Tax Code of the Russian Federation requires that the amount of VAT in settlement and primary accounting documents, as well as in invoices, be highlighted as a separate line. Although this condition is not mandatory to receive a tax deduction, it is necessary to monitor its presence in the documents so as not to cause tax disputes.
- Timely issuance of invoices by the supplier. According to Article 168 (3) of the Tax Code of the Russian Federation, an invoice must be issued to the buyer no later than five calendar days, counting from the day of shipment of goods, performance of work, provision of services. Surprisingly, even here the tax authorities see a reason for refusing the buyer a tax deduction, although this requirement applies only to the seller (supplier). The courts on this issue take the position of the taxpayer, reasonably noting that the five-day period for issuing an invoice is not a prerequisite for a deduction.
- The integrity of the taxpayer himself. Here it is already necessary to prove that the VAT payer himself, who wants to receive a deduction, is a bona fide taxpayer. The reason for this is the same resolution of the Plenum of the Supreme Arbitration Court of October 12, 2006 N 53, which defines the “defects” of the counterparty. Paragraphs 5 and 6 of this document contain a list of circumstances that may indicate that a tax benefit is unjustified (and the deduction of input VAT is also a tax benefit)
Suspicious, according to YOU, are:
- the impossibility of the taxpayer actually carrying out business transactions;
- lack of conditions for achieving the results of relevant economic activity;
- carrying out transactions with goods that were not produced or could not be produced in the specified volume;
- accounting for tax purposes only those business transactions that are associated with obtaining tax benefits.
These are conditions that are quite harmless at first glance, such as: the creation of an organization shortly before a business transaction; one-time nature of the operation; use of intermediaries in transactions; carrying out the transaction at a location other than the taxpayer's location.
Based on this resolution, tax inspectors acted very simply - they refused to receive a VAT deduction, simply listing these conditions. The zeal of its employees had to be restrained by the Federal Tax Service itself, because... the number of those “unworthy” of receiving tax benefits simply went off scale. In a letter dated 05/24/11 No. SA-4-9/8250, the Federal Tax Service notes that “... in the practice of tax control there are cases when the tax authority, avoiding clarity in qualifying the circumstances of the taxpayer receiving an unjustified tax benefit, limiting itself to references to paragraphs 1 , 5, 6, 10 of the Resolution of the Plenum of the Supreme Arbitration Court of the Russian Federation dated October 12, 2006 No. 53 draws conclusions about the receipt by the taxpayer of an unjustified tax benefit. At the same time, other circumstances that clearly indicate that a business transaction has been completed are not taken into account.”
- Additional terms To obtain a VAT tax deduction, there may be a whole series of requirements from the tax authorities for the preparation of documents (accusations of incompleteness, unreliability, and contradictoryness of the specified information are typical); to the profitability of the activities of the VAT payer; an attempt to re-qualify contracts, etc. If you are sure that you are right, in all these cases it is worth at least appealing the decisions of the tax authorities to refuse to receive a VAT tax deduction in a higher tax authority.
VAT on export
As we have already said, when exporting goods, their sale is taxed at a rate of 0%. The company must justify the right to such a rate by documenting the fact of export. To do this, along with the VAT return, you must submit a package of documents to the tax office (copies of the export contract, customs declarations, transport and shipping documents with customs marks).
The VAT payer is given 180 days from the date the goods are placed under export customs procedures to submit these documents. If the necessary documents are not collected within this period, then VAT will have to be paid at a rate of 10% or 18%.
VAT on import
When importing goods into the territory of the Russian Federation, importers pay VAT at customs, which is calculated as part of customs payments (Article 318 of the Customs Code of the Russian Federation). An exception is the import of goods from the Republic of Belarus and the Republic of Kazakhstan; in these cases, payment of VAT is formalized in tax office on Russian territory.
Please note that when importing goods into Russia, all importers pay VAT, including those working under special tax regimes (USN, UTII, Unified Agricultural Tax, PSN), and those who are exempt from paying VAT under Article 145 of the Tax Code of the Russian Federation.
The VAT rate for imports is 10% or 18%, depending on the type of goods. An exception is the goods specified in Article 150 of the Tax Code of the Russian Federation, for the import of which VAT is not charged. The tax base on which VAT will be charged when importing goods is calculated as the total sum of the customs value of goods, customs duties and excise taxes (for excisable goods).
VAT under simplified tax system
Although simplifiers are not VAT payers, issues related to this tax nevertheless arise in their activities.
First of all, why do OSNO taxpayers not want to work with suppliers on the simplified tax system? The answer here is this: the supplier on the simplified tax system cannot issue an invoice to the buyer with allocated VAT, which is why the buyer on the OSNO will not be able to apply a tax deduction for the amount of input VAT. The solution here is possible in reducing the selling price, because unlike suppliers to , simplified sellers do not have to charge VAT on sales.
Sometimes simplifiers still issue the buyer an invoice with a allocated VAT, which obliges them to pay this VAT and submit a declaration. The fate of such an invoice may be controversial. Inspections often deny buyers a tax deduction, citing the fact that simplifiers are not VAT payers (even though they actually paid VAT). True, the majority of courts in such disputes support the right of buyers to deduct VAT.
If, on the contrary, a simplifier buys goods from a supplier working on OSNO, then he pays VAT, for which he cannot receive a deduction. But, according to Article 346.16 of the Tax Code of the Russian Federation, a taxpayer using a simplified system can take into account input VAT in his expenses. This applies, however, only to payers, because... On the simplified tax system, income does not take into account any expenses.
VAT return and tax payment
The VAT return must be submitted at the end of each quarter, no later than the 25th of the next month, that is, no later than the 25th of April, July, October and January, respectively. Reporting is accepted only in electronic form; if it is presented on paper, it is not considered submitted. Starting from the report for the 1st quarter of 2017, the VAT return is submitted in an updated form (as amended by Order of the Federal Tax Service dated December 20, 2016 N ММВ-7-3/696@).
The procedure for paying VAT differs from other taxes. The tax amount calculated for the reporting quarter must be divided into three equal parts, each of which must be paid no later than the 25th day of each of the three months of the next quarter. For example, according to the results of the first quarter, the amount of VAT payable amounted to 90 thousand rubles. We divide the tax amount into three equal parts of 30 thousand rubles each, and pay it within the following deadlines: no later than April 25, May, June, respectively.
We draw the attention of all LLCs - organizations can pay taxes only by non-cash transfer. This is a requirement of Art. 45 of the Tax Code of the Russian Federation, according to which the organization’s obligation to pay tax is considered fulfilled only after presentation of a payment order to the bank. The Ministry of Finance prohibits paying LLC taxes in cash.
If you did not manage to pay taxes or contributions on time, then in addition to the tax itself, you will also have to pay a penalty in the form of a penalty, which can be calculated using our calculator.
“Value added tax (abbreviated VAT) is a form of withdrawal to the budget of part of the value created at all stages of production and is defined as the difference between the cost of goods (work, services) sold and the cost of material costs attributed to production and distribution costs.”
This is how VAT is defined in several authoritative reference books. What can be understood from this decoding of the term? Offhand, this tax applies to those who produce and sell. But if we carefully study any fiscal receipt given to us at the checkout in a supermarket or pharmacy, there will be a line at the bottom: “including VAT so and so percent, the amount is so and so.” It turns out that it is paid by us - the final consumers of goods and services, never producers and legal entities, ordinary citizens?
Actually, VAT or value added tax is called the most difficult to understand, the main source for filling and forming the budget, is considered the most confusing in calculation, and some speak of it as a “universal evil” that ruins the domestic economy and creates a favorable platform for corruption schemes
What is VAT - “for dummies” and “on the fingers”
Value added tax is indirect in nature and applies to everyone who creates additional market value. Those who sell at a premium are subject to it, and it doesn’t matter whether they themselves produced the product/service or just sold it.
Even more detailed and clear:
- Company A is engaged in sewing pants.
- For one product, she buys fabric, threads, that is, materials (in total, only 100 rubles). It does this for various enterprises that pay VAT.
- She bears “general shop” expenses (pays for rent, repair of equipment) for one product in the amount of 10 rubles. It also purchases services from organizations that pay VAT to the budget.
- The total cost will be 110 rubles, and it already includes incoming VAT. For the Russian Federation, the standard rate is 18% (some types of activities and product groups are taxed at different rates or are completely exempt). 110 rub. – this is the tax base, which we accept as 118%. To “remove” VAT from this figure, we need to divide 110 by 118 and multiply by 18. The laws of arithmetic and percentage calculations work here. That is, in this case, company A has already paid VAT in the amount of 16.78 rubles.
- Next, firm A sells its product, naturally, at a price above cost, because it needs to make a profit. Let's assume the selling price is 200 rubles. for a unit.
- The buyer is a store, let's call it company B, who gave the company 200 rubles. for pants, you also pay VAT, which is the same 18% or 30.51 rubles.
- Now company A needs to pay VAT to the budget. But! Not all 30.51 rubles received from the buyer, but only the difference between the incoming one (16.78 rubles in our example) and the one coming with the proceeds. That is, from 30.51 it subtracts 16.78. And as a result, payment is 13.73 rubles.
- If we continue the chain and consider the subsequent sale by firm B of pants to its client, citizen N, at a price of 250 rubles, then the revenue received will be 38.14 rubles. VAT.
- Company B will have to pay 38.14 – 30.51 = 7.63 rubles to the budget. “endees”, the figure of which is calculated by simply subtracting from what was received and already paid earlier to the supplier, company A.
In fact, each taxpayer pays in the form of VAT only that part that is included in the added value of the product. But the end consumer, who does not plan to resell the product at a profit or use what he purchased for business purposes where he can get a refund, pays in full. That is, the budget is filled by citizen N, who gave his money for the pants and paid every last penny of VAT, as, by the way, did. And all the widespread opinions that VAT is a serious burden on business are ultimately nullified by the simplest logical chain showing who actually pays the value added tax. Although obtaining the right to a VAT tax deduction, and even more so, its reimbursement, is still a task that entrepreneurs solve every day.
The same picture will be observed in any type of activity (in trade, provision of services, in production), for all VAT payers. Calculation and reporting for this type of tax is much more complicated than, for example, or other accounting operations.
There are a huge number of exceptions from the list, ranging from small businesses whose revenue is less than a certain value, to certain types of transactions, for example, investing.
VAT in the global “tax architecture” takes the place of a mysterious castle with dark dungeons where whispers of conspiracies can be heard. Of course, this is a colorful comparison, but nevertheless, the value added tax has a strange reputation, to say the least. Just a few facts:
- In many developed countries there is no “endeas”; Australia, the USA, and some countries in South America do not use this tax.
- It was introduced by the French economist Maurice Loret as a progressive replacement for the turnover tax in 1954, in the 70s it spread throughout Europe, in 1982 it completely replaced the turnover tax, and in 1992 it was introduced in Russia.
- A number of leading analysts consider VAT to be a kind of echo of a “world conspiracy” - it is not only difficult to calculate, but also makes it possible to replicate corruption schemes, reduce the amount of taxes paid to the budget in their physical quantity, while providing some with the opportunity to avoid payments, while depriving others of the legal right to compensation.
- The “creator” of the domestic VAT, the government under the leadership of Pavlov, the same one who “became famous” for loudly deceiving the population in his assurances about the impossibility of monetary reform (the order to confiscate banknotes in denominations of 50 and 100 rubles was signed literally the next day after this statement that led to the loss of millions of savings).
- Yegor Gaidar, who headed the Government in 1992 and became the successor of the “Russian Endeas”, in his book spoke of the scheme for calculating and collecting VAT as one that was crude, unfinished and “polished” in the process (from the moment the laws were signed until their official publication ). Today, no one doubts that profound changes are needed in this issue, because the current VAT refund scheme is an excellent “testing ground” for fraud.
- Different countries have their own values, starting from 3%, ending with 25% in Denmark and Sweden and reaching a maximum of 27% in Hungary.
- The algorithm for calculating VAT is mathematically complex. Perhaps this is precisely why many countries have adopted values of 25%, because such values facilitate the process of “deriving” the desired figure. If it’s “on your fingers”, then we get the following: to find out the amount of VAT, you need to divide the full price or base by (100 + percent of VAT) and multiply by the VAT value; This means that if our price is 100 (including VAT), and the tax is 5%, then the scheme looks like this - 100/105*5, if 20% VAT, then 100/120*20, if 18%, then 100/118* 18; bringing it into short form, calculating by removing the percentage at once, we get for 20% a number of 16.66(66), for Russian realities– 15.2542372883559, which is reduced to 15.25%, and with 25% VAT you just need to divide the price with tax by 5.
- Many experts and accountants pointed out that when calculating VAT using fractional numbers in hundredths and thousandths, not just pennies were “lost,” but tens and thousands of monetary units.
- The TAX FREE system or the possibility of a VAT refund for purchases at specialized points by non-residents when leaving the country operates in more than 50 countries that levy value added tax.
The value added tax does not have an impeccable reputation, but the fact that it is systemically important for the budget of many countries cannot be denied. For Russia, the figure for VAT revenue is impressive, accounting for up to 40% of all collections.
Who doesn't pay VAT?
There are several value added tax rates in Russia:
- 18% – standard, which applies to most goods, services, works and operations;
- 10% – valid for children’s products (with the exception of some of them), medical products and medicines not included in the list of vitally important, certain types of food products;
- 0% – intended for export operations, railway, air and water transportation, oil and gas transportation and electricity transmission.
Services for caring for the sick and children, educational, legal, insurance and a number of others, sales of religious goods, residential buildings, and some medical products are not taxed.
In addition, those business entities that operate on special preferential systems - Unified Agricultural Tax, Unified Agricultural Tax, PSN, and Simplified Tax System - do not pay VAT. Those entrepreneurs whose revenue did not exceed 2 million rubles (the calculation is made for the period of the previous 3 months and in the sales amount excluding VAT) can also receive an exemption from paying VAT. That is, only the monetary outcome of the activity is taken into account here, and some other factors do not play a role. The exceptions are taxpayers carrying out import operations and manufacturers of excisable goods.
Advice: VAT is a tax for large businesses, that is, refusing it carries the threat of falling out of the chain (trade or production) of payers. In fact, if an entrepreneur cannot issue an invoice with a column indicating the coveted figure for deduction, he becomes an unprofitable partner, because his buyer will have to pay the tax himself in full. Of course, an individual entrepreneur on a “simplified” basis or an “exempt” LLC has the right to issue such a document to their client, but then they undertake to pay the “endees” to the budget, and in full. Therefore, before writing an application for VAT exemption or switching to a special regime, analyze how beneficial this is for you, and whether the opportunity to work with any counterparties will outweigh all the delights of preferential tax systems.
On the other hand, obtaining the status of a subject exempt from VAT is not so simple; its registration cannot be compared with. In addition to the application, you will have to provide a number of other documents, statements, and accounting books. In this case, any excess of the specified amount of revenue automatically deprives the right to use the provided benefit. Exemption may be beneficial when working with end consumers of goods and services who will use/use them for their own needs (and who will not be interested in the tax deduction).
Tax deduction, or How to pay VAT
It has already been discussed in detail above that the main payer of value added tax is the final buyer. Business structures are simply agents that hold it and pay the allotted part to the budget, that is, the difference between incoming and outgoing. To receive a tax deduction, you need to fulfill three mandatory rules:
- carry out accounting of purchased goods, services, works;
- have correctly executed invoices that will be presented for deduction;
- VAT must be taken into account in the price of goods, services and works.
However, there are also a number of nuances that greatly influence the vicissitudes of obtaining a tax deduction. And they do not always have an objective, but often a subjective background. Many organizations and entrepreneurs were denied the deduction by tax authorities. And this was due to the following factors:
- Untraceable or weakly visible connection (in the opinion of the inspector) of input VAT and future transactions in which profit is planned, respectively, added value and tax. That is, a fiscal service employee may refuse to receive a deduction based on his own assessment of the feasibility of the taxpayer’s entrepreneurial activity.
- Working with “suspicious” counterparties. This reason is one of the most common when refusing to receive a tax deduction. The position of the Federal Tax Service on this issue is simple; it shifts all checks on the integrity of suppliers onto the shoulders of their partners. That is, if your counterparty is considered to be someone who does not fulfill its obligations as a taxpayer, in fact, is recognized as a “fly-by-night company,” you will be deprived of the opportunity to receive a tax benefit (VAT deduction or offset).
- Correct filling of the invoice and compliance with the deadlines for its issuance. Here you must ensure that VAT is highlighted as a separate line. And although by and large this condition is not necessary, compliance with it can protect you from disputes with the Federal Tax Service. The same applies to the timing of issuing an invoice to the buyer.
- The good faith of the taxpayer wishing to receive a deduction. Here, such trivial circumstances as the one-time nature of the transaction, the use of intermediaries, the creation of an organization shortly before the transaction, and the like may become an obstacle to obtaining a deduction.
Advice: if you are completely confident in the correctness of your actions and believe that the tax authority’s refusal to reduce the amount of VAT payable to the budget is unlawful, then you should appeal this decision. You have the opportunity to appeal to a higher authority of the Federal Tax Service or to defend your interests in court. Often, arbitration takes the side of the entrepreneur, because the laws are interpreted literally and clearly not in favor of the business by employees of the fiscal service.
The VAT return for the quarter is submitted by the 25th day of the month following the reporting period, that is, by 04/25/07/10/01. Payment can be made in equal installments during the current quarter in which the declaration was filed. All delays, understatements of the tax base, even those made by mistake, failure to submit reports and the like are punishable actions. For them, the entrepreneur may face not only fines and administrative liability, but also criminal liability.