Russian VAT on e-services: Breaking news

As you know, under the Russian Federal Law No. 335-ФЗ of 27.11.2017 all foreign e-services providers must register with the Russian tax authorities and pay Russian VAT themselves. This has given rise to many questions and technical difficulties. On 24April 2019 the Russian Federal Tax Service (“FTS”) issued the long-awaited guidance letter No. СД-4-3/7937@, where they attempted to adequately address these issues. The major conclusions discussed in the letter can be summarized as follows:

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Non-electronic services by e-services providers: VAT payment procedure

Dentons’ tax experts are keeping you posted on the latest news regarding payment of VAT on electronically supplied services (“e-services”). Today, we would like to elaborate on the topic in the light of article 161 of Russian Tax Code (“RTC”). This provision states that Russian companies should withhold VAT (act as a tax agent in the terms of the RTC) for goods/services supplied from Russian territory only if the foreign supplier does not have Russian tax registration. Continue reading “Non-electronic services by e-services providers: VAT payment procedure”

Development of court practice on tax disputes over charging personal income tax on amounts paid to employees by agreement at termination of employment

On 16 June 2017 the RF Supreme Court rendered a ruling in case No. А42-7562/2015. In this case the court considered a dispute between Murmansk Trawl Fleet PJSC (hereinafter MTF) and the Federal Tax Service Interdistrict Inspectorate for Major Taxpayers in Murmansk Region. One of the subjects of the case was the charging of personal income tax on amounts paid to an employee by agreement between the employee and the employer at termination. Continue reading “Development of court practice on tax disputes over charging personal income tax on amounts paid to employees by agreement at termination of employment”

Development of court practice on tax accounting of inventory shortages

On 19 May 2017 the Arbitration Court of the Moscow Region rendered a decision in case No. А41-69837/2016 under the claim of KVINTMADI Closed Joint Stock Company (the “Company”). Continue reading “Development of court practice on tax accounting of inventory shortages”

Unjustified tax benefit resulting from overstatement of expenses incurred for an investment project

On 7 March 2017 the Arbitrazh Court of Moscow passed a decision on case No. А40-121647/16-107-1043 (the Decision) initiated by Otkrytoye Prostranstvo LLC (the Company) aimed at challenging a decision of Federal Tax Service Inspectorate No. 3 for Moscow taken as a result of a field tax audit. The case concerned the receipt by the Company of an unjustified tax benefit in connection with overstatement of expenses incurred in course of construction of a residential building. Continue reading “Unjustified tax benefit resulting from overstatement of expenses incurred for an investment project”

Registration with the RF tax authorities aimed at payment of VAT by foreign e services providers

Dentons’ Russia Tax practice would like to remind readers that, starting 1 January 2017, foreign companies providing e-services are required to undergo special tax registration according to the procedure of Clause 4.6 of Article 83 of the RF Tax Code, to file tax reporting and to pay VAT on such transactions. Continue reading “Registration with the RF tax authorities aimed at payment of VAT by foreign e services providers”