Value Added Tax (VAT) In Russia

VAT (Value added tax) is a sales tax levied on the sale of goods and services. 

In some countries this tax is known as goods and services tax or GST.

In Russia VAT is to be paid by Russian legal entities, including those with foreign investments, foreign legal entities and legal entities involved in import-export transactions.

Russian VAT legislation provides that turnovers from the sale of goods, works and services in Russia, and goods imported to Russia are to be included in the tax base for VAT purposes.

Rates of VAT in Russia are the following - 0%, 10% and 18%. 

 
The general tax rate is 18%. 

Tax rate of 10% applies to a wide range of food products, goods for children, periodical press and some medical goods.

Tax rate of 0% is a kind of a tax benefit, and the right to its application has to be proved by certain documents. The tax rate of 0% applies, for example, for exported goods, technological equipment imported.

There are certain kinds of activity that are exempt from VAT,   e.g. insurance, banking operations. 

There are also some tax exemptions and tax benefits concerning activity of foreign organizations and Representative Offices on the territory of the Russian Federation:

Lease of premises by foreign citizens and foreign organizations that have accreditation on the territory of the Russian Federation is exempt from VAT on the reciprocity base, provided that all necessary requirements of the tax legislation are met.

Foreign organizations and Representative Offices may also have abatement of VAT assessment even conducting commercial activity but keeping in mind certain legislative conditions and practical issues.

As for foreign legal entities that are not registered with Tax Authorities, VAT payments for sale of goods, works and services by these organizations shall be withheld by tax agents.

Generally speaking, VAT returns are required to be filed and remittances (payments of VAT) paid no later than the 20th day of the month which is the tax period for VAT.

Responsibility for the timely submission of VAT returns and remittances (payments of VAT) lies entirely on the taxpayer.

Small businesses (Russian companies, not foreign Representative Offices) can apply for a "simplified accounting system" at the local tax office and, thus, become exempt from paying VAT if their turnover does not exceed a certain amount per annum.