Russia's value-added tax for electronically supplied services
With the exception of energy, transportation, banking, and defense-related sectors, most of the industry in Russia has been privatized. The country is a leading producer of oil and natural gas as well as a top exporter of metals.
The following content has been reviewed as of Mar. 27, 2018.
Legislative effective date |
Jan. 1, 2017 |
Name of tax |
Value-added tax |
Statute of limitation |
Three years prior to period under audit |
Standard rate of VAT |
18 percent |
Electronic supplies |
There has to be a payment to define that a supply of services has taken place, but with that in mind, the following are the most common categories of electronic services; this is not an exhaustive list:
Excluded from the list is the following:
|
Registration |
Foreign businesses are required to register for VAT in Russia for sales of digital services to individuals (B2C). |
Customer identification |
Russian legislation does not categorize recipients as B2B or B2C, but rather notes that services can be provided to one of the following recipients:
Of the above, if services are provided to individual entrepreneurs or organizations, they will effectively be treated as B2B in nature and general B2B rules apply. Those rules require the B2B recipient to self-assess VAT under the VAT withholding mechanism, which can have an impact on the amount received by the supplier. In order to verify whether or not the transaction is B2B or B2C, it is recommended to do the following:
There are no exemptions for certain types of organizations like, for example, nonprofit entities, charitable organizations or universities. |
Customer location |
In order for VAT to be charged in a B2C transaction, it is necessary to determine that the customer is in Russia by satisfying any one of the following tests.
|
Supplier identification |
Foreign suppliers are required to register in Russia if the supplies are made in a B2C arrangement. However, if an intermediary or agent is involved in the distribution of the services, then that party has the VAT registration and filing obligations, and the foreign supplier is not required to register. |
Procedural matters |
VAT registration is required to be completed within 30 days after the start of the taxable activity (B2C). The registration process can be completed on line, through an agent or by post. Service providers providing digital services in Russia are required to register with the "Interregional Inspectorate of the Federal Tax Service of Russia No. 7" for the largest of taxpayers. It is not necessary to raise VAT invoices or maintain books and records in regard to digital services as the VAT is accounted for in respect to the payment. VAT returns and payments should be filed quarterly by the 25th day of the following month. It is recommended that digital service providers maintain the following information:
Penalties apply for noncompliance, whether non-deliberate (20 percent of the tax owed) or deliberate (40 percent of the tax owed). An equivalent scheme to a voluntary disclosure is available to enable taxpayers to correct errors without incurring a penalty. |