According to generally accepted rules, enterprises can hope to receive a refund of previously paid VAT only after a sufficiently long period (from 2 months), since the Federal Tax Service requires time to check the submitted declaration and make a decision (to refund or refuse). Thus, during this time period, taxpayers become creditors to the state, and if the amounts to be reimbursed are impressive, then the diversion of funds from circulation is just as impressive, which reduces the profitability of the company and negatively affects its financial condition.
In order to avoid such consequences, funds can be returned to the account upon application. This means that VAT can be refunded before the declaration is verified and the tax office is convinced of the company’s right to a tax refund. This option is enshrined in Art. 176.1 of the Tax Code of the Russian Federation, but it is acceptable only for enterprises with significant turnover and budget allocations.
Who has the right to expect a VAT refund upon application?
A company has the right to apply for a VAT refund if it:
- has been operating for over 3 years and over the last 3 years has transferred a total of 2 billion rubles in taxes. and more (VAT, mineral extraction tax, profit tax, excise taxes). In this case, the refunded VAT is subtracted from the total amount of taxes;
- provided a valid bank guarantee;
- is a resident of the territory of the OER or the free port of Vladivostok (with a guarantee from the management company);
- provided a guarantee from a company created more than 3 years ago and which has paid taxes in the amount of 2 billion rubles over the last 3 years. The guarantor must not be in bankruptcy, liquidation/reorganization proceedings or have a debt to the budget. The amount of the guarantee cannot be more than half the value of the net assets of the guarantor company.
Let's talk about the role of a bank guarantee for VAT reimbursement in the application form.
How the inspection releases the guarantor bank from obligations
The declarative procedure (Article 176.1 of the Tax Code of the Russian Federation), in contrast to the usual procedure (Article 176 of the Tax Code of the Russian Federation), provides for the reimbursement of VAT by the tax inspectorate to the taxpayer until the end of the desk audit of the relevant tax return, subject to certain conditions. Let us remind you that a desk audit is carried out by the inspectorate within three months from the date of submission of the declaration (clause 2 of article 88 of the Tax Code of the Russian Federation). One of the conditions for early VAT refund is that the taxpayer, along with the tax return in which VAT is claimed for refund, provides a valid irrevocable bank guarantee. In this case, the bank guarantees the payment to the budget on behalf of the taxpayer of the amounts of tax excessively received by him (credited to him) in a declarative manner, if, based on the results of a desk audit of the taxpayer’s declaration, violations are revealed and the early VAT refund is fully or partially canceled (clause 2, clause 2 Article 176.1 of the Tax Code of the Russian Federation).
Such a bank guarantee provides the opportunity to apply the declarative procedure for VAT refund to taxpayers who are not classified as the largest, who do not need a bank guarantee provided that other conditions established by paragraphs are met. 1 item 2 art. 176.1 of the Tax Code of the Russian Federation for early VAT refund.
The inspectorate will only accept a guarantee from a bank included in a special list maintained by the Ministry of Finance. This list is subject to posting on the website of this ministry on the Internet (clause 4 of article 176.1 of the Tax Code of the Russian Federation).
Bank guarantees issued by branches of banks included in the list, on behalf of these banks, are accepted by tax inspectorates as bank guarantees issued by the banks themselves (Letter of the Bank of Russia dated 01.06.2010 N 04-15-7/2630, communicated to the inspections by Letter of the Federal Tax Service of Russia dated 15.06 .2010 N ShS-37-3/ [email protected] ).
From January 1, 2012, the taxpayer submits a bank guarantee to the inspectorate (if one is required) within the same time frame as the application for an “accelerated” VAT refund (clause 6.1 of Article 176.1 of the Tax Code of the Russian Federation). If the VAT has already been refunded to the taxpayer by application and the desk audit was completed without any comments, then the tax inspectorate must, within seven days after the end of the desk tax audit, notify the taxpayer in writing about its completion and the absence of identified violations. And to the guarantor bank no later than the next day after sending the specified message to the taxpayer, the inspectorate sends a written application to release the bank from obligations under this bank guarantee (clause 12 of Article 176.1 of the Tax Code of the Russian Federation).
The commented Letter emphasizes that such a situation is the only reason for the tax inspectorate to send such a written application to the guarantor bank. In other cases, notification by inspectors of banks that issued bank guarantees to taxpayers for the purposes under consideration is not provided for by the norms of the Tax Code of the Russian Federation.
What is a bank guarantee for VAT refund?
A bank's guarantee for tax refund is a document confirming its obligations to fulfill the agreed conditions by the company. Those. The guarantor bank undertakes to compensate for losses if, after checking the declaration, it is discovered that the company does not have the right to a VAT refund, and it did not return the refunded amount at the request of the Federal Tax Service.
The key provisions that define the term “bank guarantee” are set out in Art. 74.1 Tax Code of the Russian Federation. It has the right to be issued by a bank listed in a periodically updated list approved by the Ministry of Finance and meeting the criteria of Art. 74.1 Tax Code of the Russian Federation. The bank must be licensed by the Central Bank of the Russian Federation, not have requirements from the Central Bank for financial recovery and comply with all regulations of Law No. 86-FZ of July 10, 2002 “On the Central Bank of the Russian Federation” for the last six months. In addition, the size of the bank's own assets must be 1 billion rubles. or more, and the period of its work on the market is at least 5 years.
A bank guarantee (VAT) cannot be revoked or transferred to another company, and its minimum validity period is 10 months from the date of submission of the VAT return with the amount of tax to be refunded.
Agreement on the issuance of a bank guarantee
An analysis of the provisions of Chapter 23 of the Civil Code of the Russian Federation shows that it is not necessary to conclude a separate agreement between the principal and the guarantor.
However, those banks that want to more precisely define their relationship with the principal include such provisions either in their general conditions or sometimes in a special agreement, which may be called a bank guarantee agreement.
The agreement on the issuance of a bank guarantee may stipulate the following conditions: the rights and obligations of the bank and the principal, the terms for the provision of bank guarantees, the basic conditions under which such bank guarantees will be issued, provisions on commissions and remuneration of the bank, reimbursement of bank expenses, guarantees and assurances of the principal, necessary security for the contract, liability of the parties under the contract, applicable law, procedure for resolving disputes and other provisions.
Bank guarantee for VAT refund: how to get it
So, if a company that meets the criteria listed above has decided to apply for a tax refund, then first it should take care of obtaining a bank guarantee. Let us remind you that in this case the company’s confidence in the right to a VAT refund must be one hundred percent.
The process of issuing a guarantee is identical to issuing a loan: you need to contact the bank with an application, to which a package of documents is attached. The conditions for issuing a guarantee usually depend on the financial position of the applicant company, but security is almost always required for the guarantee. The fee for receiving it is set by the bank and can range from 1 to 10% per annum.
For your information! The location of the company claiming a VAT refund and its guarantor bank in different regions of the country should not be the reason for the Federal Tax Service's refusal to issue a refund.
The amount specified in the guarantee cannot be less than the amount of the refundable tax (or part thereof) and should, in the event of force majeure situations, cover obligations to the budget (for example, in a situation where the Federal Tax Service has reasoned to refuse a VAT refund upon completion of an audit). The document must contain a clause stating the bank’s obligations to reimburse VAT if the payer ignores this.
Read also: Bank guarantee fee: postings
The guarantee was not useful, but you have to pay the money
The validity period of a bank guarantee issued for the purposes of applying the application procedure for VAT refund must expire no earlier than eight months from the date of filing the tax return in which the amount of tax to be refunded is declared (clause 3, clause 6, article 176.1 of the Tax Code of the Russian Federation).
The issuance of a bank guarantee is a banking operation (clause 8, part 1, article 5 of the Federal Law of December 2, 1990 N 395-1 “On Banks and Banking Activities”). For this operation, the guarantor bank is paid a fee (clause 2 of article 369 of the Civil Code of the Russian Federation). The cost of this service depends on a number of circumstances, including the duration of the guarantee, and averages from 1 to 10% of the guarantee amount.
The list of conditions for termination of a bank guarantee is established by Art. 378 Civil Code of the Russian Federation. These include:
- payment to the beneficiary (in this case, the tax office) of the amount for which the guarantee was issued;
- the end of the period specified in the guarantee for which it was issued;
- the beneficiary waives his rights under the guarantee and returns it to the guarantor;
- waiver by the beneficiary of his rights under the guarantee by means of a written statement releasing the guarantor from his obligations .
Termination of the guarantor's obligation on the grounds specified in paragraphs. 1, 2 and 4 paragraphs 1 art. 378 of the Civil Code of the Russian Federation, does not depend on whether the guarantee is returned to him.
The guarantor, who becomes aware of the termination of the guarantee, must immediately notify the principal about this (Clause 2 of Article 378 of the Civil Code of the Russian Federation).
As we found out, in order not to pay too much, a taxpayer may be interested in shortening the validity period of a bank guarantee that has become useless in various situations. However, by virtue of the provisions of Art. 176.1 of the Tax Code of the Russian Federation, the tax inspectorate (beneficiary) is obliged to ensure the termination of the bank guarantee (send a written application to the guarantor bank to release it from obligations) only in one of the cases discussed above, namely if the desk audit of the VAT return is completed successfully.
Moreover, this obligation appeared for tax authorities only starting from January 1, 2012, thanks to amendments made to Art. 176.1 of the Tax Code of the Russian Federation Federal Law dated July 19, 2011 N 245-FZ “On amendments to parts one and two of the Tax Code of the Russian Federation and certain legislative acts of the Russian Federation on taxes and fees.”
This circumstance is emphasized in the Resolution of the Federal Antimonopoly Service of the North Caucasus District dated September 1, 2011 N A32-34406/2010. In the situation considered by the court, it was expensive for the taxpayer to pay 2% of its amount per month for a bank guarantee until February 2011, since already in August 2010 the company received a message from the inspectorate about the successful completion of a desk tax audit of the declaration without any comments. The bank guarantee agreement established that the period for calculating interest (bank commission) may be interrupted if the guarantee is returned before its expiration. Therefore, the taxpayer asked the tax authorities to return the guarantee to the bank. But his request was denied. The court supported the tax authorities, citing the legislation in force during the disputed period.
Arbitration practice shows that it is possible to terminate the obligation under a bank guarantee even if the guarantee was not useful due to the taxpayer’s refusal to apply the application procedure.
The Resolution of the Federal Antimonopoly Service of the North-Western District dated May 16, 2011 N A52-3118/2010 considers the following dispute between a taxpayer and a bank with the tax inspectorate.
In order to fulfill the conditions for applying the application procedure for VAT refund, the taxpayer in July 2010 submitted to the inspectorate a bank guarantee valid until March 31, 2011. To secure the guarantee, the taxpayer pledged his property to the bank under a mortgage agreement.
The inspectorate decided to refuse to reimburse the taxpayer for the amount of VAT submitted for reimbursement in a declarative manner. He failed to challenge this decision in court. Then, in August 2010, the taxpayer asked the inspectorate to waive his rights under the bank guarantee by sending an application to the bank to release it from obligations under the issued bank guarantee, and also to return the original bank guarantee to the guarantor. The inspectorate refused this request.
The taxpayer applied to the bank for a refund of the commission paid to him for providing a bank guarantee and for the removal of the encumbrance on the pledged property. The bank also refused the taxpayer.
Then the taxpayer filed a lawsuit against the inspectorate requiring it to send a written application to the bank to release it from obligations under the bank guarantee.
The judges stated that the list of conditions for termination of a bank guarantee does not exclude the possibility of its termination according to the general rules for termination of obligations established by Chapter. 26 Civil Code of the Russian Federation.
According to Art. 417 of the Civil Code of the Russian Federation, if as a result of the issuance of an act of a state body, the fulfillment of an obligation becomes impossible in whole or in part, the obligation is terminated in full or in the relevant part.
The beneficiary (inspectorate) cannot waive his rights under the bank guarantee at the request of the principal (taxpayer). At the same time, in connection with the inspectorate’s decision to refuse to apply the application procedure, a security legal relationship did not arise. This decision is an act of a government body, on the basis of which the obligation under the bank guarantee is terminated by virtue of clause 1 of Art. 417 of the Civil Code of the Russian Federation.
Thus, the district court refused to oblige the inspectorate to send the bank a written application to release it from obligations under the bank guarantee. However, according to the court, these obligations were terminated based on the decision of the tax authority to refuse the taxpayer to apply the application procedure.
Then the bank appealed to the Supreme Arbitration Court of the Russian Federation with an application to review this case in accordance with the supervisory procedure. In the Determination dated August 24, 2011 N VAS-11102/11, the senior arbitrators confirmed that the obligation under the bank guarantee was terminated due to the impossibility of fulfilling the obligation. Having refused to reimburse the company for VAT, the inspectorate did not take advantage of the bank guarantee; therefore, the requirement that the inspection be obliged to waive a right that did not arise for it is not based on the law. The bank was refused to transfer the case to the Presidium of the Supreme Arbitration Court of the Russian Federation.
Application procedure for VAT refund: bank guarantee
The procedure for accelerated VAT refund under a bank guarantee looks like this:
- The enterprise prepares documents confirming the legality of the VAT refund (as in the general procedure) and submits a VAT return;
- Over the next 5 days, completes:
— bank guarantee;
— an application for the implementation of the application procedure for a VAT refund in any form (with the obligatory indication of the account details to which the refund will be made);
- Over the next five days, the Federal Tax Service Inspectorate reviews the application and makes a decision on tax refund or refusal. The decision is also communicated to the company within 5 days. The refusal of the tax authorities must be justified - the decision indicates which clause of the Tax Code of the Russian Federation was violated by the enterprise;
- If a positive decision is made, the Federal Tax Service sends an order to the treasury, from where the money is transferred to the company’s bank account.
In total, the VAT refund procedure on an application takes 11 working days from the date of its submission. If after this period the money has not been credited to the account, then the untransferred amount begins to be indexed at the current Central Bank refinancing rate.
Warranty period
Of all the listed requirements, we will focus on one - the period of the bank guarantee, since it is this point that raises a number of questions related to the vagueness of the wording.
It is not clear what the legislators were guided by when establishing the minimum warranty period of eight months. After all, the period for a desk audit is only three months, after which the inspectorate will still have to make a decision whether to reimburse the tax from the budget or not. This may be explained by the fact that the guarantee should also be valid during the period of appealing the inspector’s decision to refuse compensation. Then why exactly during this period of time should the company incur additional costs for a bank guarantee, especially if it manages to prove the legality of VAT deductions?
In addition, the question remains: how to correctly indicate the period in the text of the bank guarantee itself? The wording “a bank guarantee is valid for eight months from the date of filing a tax return in which the amount of VAT to be reimbursed is declared” is unacceptable and does not give rise to a guarantee obligation. As a general rule, a bank guarantee comes into force from the date of its issue. According to Article 190 of the Civil Code, the period established by the transaction is determined by a calendar date or the expiration of a period of time in years, months, weeks, days or hours. It can also be defined by an indication of an event that must inevitably occur. Of course, companies are required to submit a VAT return, but the occurrence of this event cannot be considered inevitable, since it depends on the will of the company itself. That is, it is entirely possible for a situation in which the expiration date of the warranty cannot be determined. And this is a non-compliance with the requirements.
The refusal of controllers to refund VAT in the application form does not mean that it is impossible to apply for a refund in the general manner.
Another problem associated with the warranty period is its extension. If a company submits an updated VAT return and, along with it, an additional agreement with the bank to extend the period of a previously submitted guarantee, the inspector will most likely refuse to apply for a VAT refund. Usually this decision is motivated by the fact that changes cannot be made to the conditions for providing a bank guarantee. However, this position is not indisputable and in court a similar dispute was resolved in favor of the company. The arbitrators justified their decision as follows: since a bank guarantee is a unilateral transaction, the guarantor bank has the right to increase its obligations under such a transaction, including by concluding an additional agreement, which was drawn up by the bank by agreement with the principal organization (resolution of the Federal Antimonopoly Service of the East Siberian District dated September 8, 2011 No. A19-4801/2011).
Bank guarantee of VAT refund upon export
Exporting enterprises often encounter situations where the amount of VAT deduction exceeds the amount of tax payable, i.e., the right to a refund arises. They can carry out a VAT refund either according to the general rules or upon application, having secured a bank guarantee and in the same manner as presented above.
Thus, only large companies can recover VAT under a bank guarantee. The quick return of substantial sums to circulation is an undoubted advantage of this procedure, but you must remember that there is also a disadvantage - the bank will have to pay for providing a guarantee (and sometimes this is quite a significant amount).
Bank guarantee in the Civil Code of the Russian Federation
According to Art. 368 of the Civil Code of the Russian Federation, a bank guarantee is a method of ensuring the fulfillment of obligations in which a bank, other credit institution or insurance organization (guarantor) issues, at the request of the debtor (principal), a written undertaking to pay the creditor (beneficiary) a sum of money when they present a demand for its payment.
Thus, at least three persons are involved in the relationship related to the issuance of a bank guarantee: the principal; beneficiary and guarantor.
The guarantor of a bank guarantee can only be a special entity that meets the requirements of the law, namely a bank, another credit institution or an insurance organization.
The principal is the debtor of the main obligation, at whose request the guarantor issues a bank guarantee. The principal can be any person.
The beneficiary is the creditor of the entrepreneur under the main obligation, in whose favor the guarantor issues a bank guarantee. In this case, the beneficiary is a creditor both under the bank guarantee and under the main obligation. The role of beneficiary can be any individual or legal entity, including government authorities, as well as tax and customs authorities.
In other words, the main purpose of providing a bank guarantee is to ensure the proper fulfillment by the principal of his obligations to the beneficiary (Part 1 of Article 369 of the Civil Code of the Russian Federation).
Moreover, in accordance with Part 2 of Art. 369 of the Civil Code of the Russian Federation, the issuance of a bank guarantee is a paid service of the guarantor bank, therefore a fee is charged for its issuance. As a rule, the amount of such remuneration is 1 - 10% of the security amount. It may be paid as a fixed payment or as a percentage of the guarantee amount in one lump sum or in installments depending on the duration of the guarantee.
Thus, a bank guarantee is a banking service. Accordingly, the cost of paying remuneration to the bank for issuing a bank guarantee is payment for banking services.
