VAT increase in Russia. Necessary actions
New amendments to the Tax Code changing VAT rate for the first time since 2004 will come into force on January 1, 2019. VAT rate will rise by 2% from 18% to 20 % from next year.
Thus, it is necessary:
To find out if VAT rate increase will have impact on final prices for customers. It is also necessary to check how price is determined in contracts – “VAT inclusive price” or “VAT exclusive price” and to make appropriate amendments. In case of ambiguous interpretation of the price in the contract, tax authorities will assume that VAT is included in the price.
To consider some peculiarities of VAT calculation in contracts concluded and prepaid in 2018, which shall be implemented after January 1, 2019. In this case at first VAT shall be paid at the rate of 18% in 2018, then after the sale of goods VAT shall be recalculated at 20% rate. The difference between the amounts paid in 2018 and recalculated in 2019 should be paid into the budget.
If company sells goods or services for cash, it is necessary to indicate 20 % VAT rate in the issued cash receipts. In this regard it is necessary to update cash registers software at additional cost. In case of indicating old VAT rate in receipts, company could be fined up to 10 000 Rubles.
Subsidiaries of international companies, which concluded services agreements with the head office, should inform head office on a price increase on the invoices issued in 2019.
We would also like to draw your attention to the fact that 10% VAT rate on social goods such as certain food items, goods for children, medicines and other medical products will remain unchanged.