Calculations with “simplified people”: about misconceptions regarding VAT

"VAT" - what is it?

VAT is a 20% tax (in most cases) on value added. It is levied on organizations operating under the general tax system (OSNO) and creating additional market value. Simply put, this is when organizations add an additional amount to the cost, and then part of this amount is returned to the budget. Organizations offer goods, perform work, provide services at a higher price than their cost.

From 2021, for general cases the rate is 20% (0% for international transport, 10% for the sale of food, newspapers, magazines, medical products, etc., this is stated in Article 164 of the Tax Code of the Russian Federation).

The difference between the cost of production and the price at which it is sold will be considered such a tax.

In our country, VAT has been applied since 01/01/1992. Initially, it was calculated in the manner approved by the law “On Value Added Tax”; since 2001, it has been subject to Chapter 21 of the Tax Code of Russia.

You can calculate VAT on the website https://www.ndscalc.ru/ using the online calculator. VAT calculation is a key accounting criterion for any organization working with OSNO. Beginning businessmen and managers do not understand enough the VAT allocation procedure. However, mistakes are unacceptable here; the fee may be very high. An online calculator will help you allocate and calculate value added tax without delving into mathematical complexities.

An agreement without indicating VAT is not a reason for refusal to deduct

One of the grounds for refusing a deduction is the absence of references in contracts to the need to pay VAT. Companies using the simplified tax system often forget to indicate the tax amount separately in the documents. Simply because they are not VAT payers. At the same time, tax may be highlighted in invoices for the purpose of paying it to the supplier. It turns out that civil contracts do not always coincide in content with invoices. On the basis of this, tax authorities sometimes build their arguments about their intention to receive unjustified tax benefits from the budget.

It should be remembered that civil law contracts are only the basis of business relations, which reveals the intentions of the parties, the subject of the transaction and responsibility for failure to fulfill their obligations. Agreements do not apply to payment documents. They also do not apply to the documents on the basis of which tax deductions for VAT are made. This is stated in the Decree of the Government of the Russian Federation dated December 26, 2011 No. 1137 “On the forms and rules for filling out (maintaining) documents used in calculations of value added tax.” The basis for presenting VAT to the budget is the amount of VAT allocated as a separate line in payment documents and invoices. Buyers and sellers issue invoices, maintain journals of received and issued invoices, a purchase ledger and a sales ledger, and also create additional sheets of the purchase ledger and additional sheets of the sales ledger. There is not a word about contracts here.

The Tax Code of the Russian Federation also does not oblige payers and tax agents to indicate the amounts of taxes payable in contracts. Article 173 of the Tax Code of the Russian Federation directly states that the amount of tax payable to the budget is determined as the amount of tax indicated in the corresponding invoice transferred to the buyer of goods (works, services). The fact that the provisions of the agreement do not matter for the purpose of obtaining tax benefits was confirmed by the Volga-Vyatka District Administration in its resolution dated 01.08.16 No. A11-9618/2015. From the case materials it followed that the simplifier presented an agreement for signature in which the amount to be paid was indicated without VAT. There were discrepancies between the invoices and the contract. Consequently, in the opinion of the tax authority, the submitted invoices contained false information and could not serve as a basis for providing a VAT deduction.

The court rejected this argument of the fiscals, pointing out that the primary documents were drawn up with the allocation of VAT. Thus, when drawing up the primary documents, the parties assumed that the transaction price included VAT. Despite the absence of VAT in the contract. The Presidium of the Supreme Arbitration Court of the Russian Federation also agreed with this conclusion. In information letter No. 51 dated January 24, 2000, the judges confirmed the possibility of collecting VAT on top of the price of work in cases where the tax was not included in the calculation of this price in the contract. The court indicated that VAT is payable by the buyer regardless of the presence of a corresponding provision in the contract. The obligation to pay tax comes with the corresponding right to claim tax deduction. Consequently, the absence of an indication of the VAT amount in the contract does not prevent this amount from being presented for deduction.

State contract with supplier using simplified tax system

The tax is applied in 2 stages:

1. Formation of the initial (maximum) contract price (ICP).
2. Contract price.

If we turn to Order of the Ministry of Economic Development No. 567 dated October 2, 2013, which defines the methods for forming the NMCC, we will see that the ministry does not give recommendations on the inclusion of VAT in the NMCC. But he reports that the cost must correspond to the conditions of the upcoming purchase. That is, if the subject of the order is included in the list of objects of taxation, the auction organizer must take into account this contribution to the NMCC (operations that are not recognized as an object of taxation are listed in Part 2 of Article 146 of the Tax Code of the Russian Federation).

In fact, when the customer specifies the NMCC, he must already take into account the value added tax.

If the contractor, for example, works using the “simplified tax system” (USN), then in the contract, in the price column, a dash is placed, or the wording “VAT is not subject to” is written.

According to the general rule, organizations and individual entrepreneurs operating under the simplified taxation system are not VAT payers. Therefore, when concluding a contract with a customer, they do not charge him VAT (they do not issue invoices).

In this case, the amount of value added tax, which is taken into account by the customer when determining the NMCC, will be an additional income of the procurement participant. This position is held by:

• The Federal Antimonopoly Service in its letter dated October 6, 2011 No. ATs/39173;
• The Ministry of Finance of the Russian Federation in a letter dated 02.02.2011 No. 03-07-07/02;
• Ministry of Economic Development of the Russian Federation in letters dated September 27, 2010 No. D22-1740, No. D22-1741;
• Federal Tax Service in letter No. SD-4-3/ [email protected] dated November 8, 2016.

The FAS letter dated October 6, 2011 No. ATs/39173 states:

From the text of the letter, we can conclude that organizations or individual entrepreneurs working under the simplified tax system are in a more advantageous position, in contrast to participants in the OSNO.

Let's figure it out in practice:

Let’s say 2 applications have been submitted to participate in the request for quotations. The first was submitted by a participant on the simplified tax system with a price of 110 thousand rubles, and the second by a participant on the OSNO with a price of 120 thousand rubles. including VAT.

The procedure was won by the participant who offered the most favorable conditions for the customer, i.e. participant on the simplified tax system with a contract price of 110 thousand rubles.

The second participant immediately included the VAT amount in his price offer. If it were not for VAT, its price would be 100 thousand rubles. and he would be the winner.

It should be noted that comparison of prices excluding VAT is popular among customers under 223-FZ.

In the Letter of the Ministry of Finance of the Russian Federation dated 02.02.2011 No. 03-07-07/02 we find the following opinion:

In Letters of the Ministry of Economic Development of the Russian Federation dated September 27, 2010 No. D22-1740, No. D22-1741 on this issue the following wording:

Federal Tax Service - letter No. SD-4-3/ [email protected] dated November 8, 2016:

Position of judicial practice:

However, the judges do not share the opinion of the above departments. So, for example, in the Resolution of the Supreme Court of the Russian Federation of August 18, 2014 No. A82-3316/2013, the Resolution of the Federal Antimonopoly Service of the Eastern Military District dated May 15, 2014 in case No. A29-6032/2012, the Resolution of the SZO Court of August 6, 2014 in the case No. A21-9158/2013, Resolution of the FAS SZO dated 02.20.2014 in case No. A21-2287/2013, Resolution of the FAS SZO dated 09.25.2013 in case No. A67-294/2013, the court sided with the customer, who paid the contractor for the obligations in the amount of the contract value minus VAT.

In the Decision of the Arbitration Court of the Krasnodar Territory in Case No. A32-32818/2015, the court also ruled in favor of the customer, who in the draft contract indicated the amount offered by the winner of the electronic auction, including VAT, despite the fact that the winner was on the simplified tax system.

Here is a screenshot of a snippet from this solution:

The same decision was made in the Decision of the Arbitration Court of the Kurgan Region in case No. A34-6052/2015.

It should be noted that there are examples when a decision was made in favor of the executor who is on the simplified tax system. An example of this is the Resolution of the Federal Antimonopoly Service No. F03-3381/2013 of August 13, 2013.

The buyer is not obliged to find out whether the supplier is a VAT non-payer

According to the law, a company can reduce the total amount of VAT by tax deductions guaranteed by the Tax Code of the Russian Federation.
Tax amounts presented to the payer upon the acquisition of goods, works and services acquired for the implementation of transactions recognized as objects of taxation are subject to deductions (Article 171 of the Tax Code of the Russian Federation). To obtain the deduction, an invoice is required, and the goods purchased must be registered and used in transactions subject to VAT. Thus, upon receiving an invoice from the simplified tax system payer with VAT allocated in it, the company has the right to claim a deduction. However, tax authorities think differently. In their opinion, VAT deduction and the special regime are incompatible. They refer to the position of the Russian Ministry of Finance (letter dated 10/05/15 No. 03-07-11/56700). Officials believe that on simplified invoices, VAT deductions from the buyer are not accepted.

This opinion contradicts the Tax Code. The status of the counterparty and the tax regime applied by it do not affect the possibility of obtaining deductions. Indeed, simplifiers are not required to issue invoices to their customers (clause 3 of Article 169 of the Tax Code of the Russian Federation). But this article is specifically about the right not to issue invoices, and not about the prohibition to do so. Article 168 of the Tax Code of the Russian Federation states that the responsibility for drawing up invoices that serve as the basis for the application of a tax deduction by the taxpayer rests with the seller. Tax legislation understands sellers as all companies without exception that sell goods, works and services. Not only VAT payers. Moreover, paragraph 5 of Article 173 of the Tax Code of the Russian Federation directly states that a VAT evader can issue invoices with an allocated tax amount. If this happens, he is obliged to pay VAT to the budget. However, does this mean that the counterparties of such a seller (who allocated VAT in the invoice and paid it to the budget) have the right to claim a deduction?

The Constitutional Court of the Russian Federation believes so. In Resolution No. 17-P dated July 3, 2014, the judges indicated that the Tax Code of the Russian Federation establishes the right of persons who are not VAT payers to enter into legal relations for the payment of this tax. At the same time, the law imposes on such persons the obligation to issue an invoice to the buyer indicating the amount of tax. And accordingly calculate the amount of this tax payable to the budget. The invoice issued to the buyer subsequently serves as the basis for him to accept the tax amounts indicated in it for deduction. In addition, the code does not oblige buyers to find out what taxation system the supplier of the goods is on and whether he is a payer of a particular tax.

Government contract with an individual

Guided by the provisions of clause 2, part 13, article 34 of 44-FZ, mandatory conditions are introduced into the text of the contract: on reducing the amount payable by the customer to a legal entity or individual, including one registered as an individual entrepreneur, by the amount of taxes, fees and other obligatory payments in budgets of the budget system of the Russian Federation related to payment for the contract , if, according to the legislation of the Russian Federation on taxes and fees, such taxes, fees and other obligatory payments are subject to payment to the budgets of the budget system of the Russian Federation by the customer.

If a contract is signed with an individual, the text must reflect the condition that the amount payable to the individual be reduced by the amount of tax payments (personal income tax - 13%) associated with the payment of obligations.

Thus, the customer pays the individual an amount reduced by the amount of tax payments. The tax amount is transferred by the customer to the appropriate budget in fulfillment of the duty of a tax agent when paying remuneration to an individual (Article 226 of the Tax Code of the Russian Federation).

We are talking specifically about the amount of payments to an individual, and not about a reduction in the contract price.

Let's summarize the above:

• procurement is carried out on a basis common to all participants, regardless of the tax regime;
• when paying for work, the customer is obliged to be guided by the price offered by the winner and specified in the contract;
• the terms of the contract are not affected by the “special regime” applied by the winning bidder;
• The customer does not have the right to make changes to the contract price without agreement with the contractor.

The judges did not reach a consensus on this issue. Some of them share our point of view and make decisions in favor of suppliers on a “simplified” basis, others take the customer’s side.

Recommendations for the procurement participant

1. Carefully study the procurement documentation before participating in the procedure for payment. If you do not find the wording “Without VAT”, then take the opportunity to send the customer a request for clarification, ask to clarify this point and add the necessary wording.

Important point! If the purchase is carried out with the customer’s own money, and not from the budget, and this is stated in the documentation, then the customer’s requirement to conclude a contract with VAT is legal. The judiciary is of this opinion.

1. If the purchase has already taken place and you have received a draft contract with VAT from the customer, send him a protocol of disagreements with a request to indicate the price “Without VAT”, because you work for the simplified tax system.
2. If the contract is signed with VAT, do not send an invoice to the customer.
3. In the application, immediately indicate that you are on a “simplified” tax and are not VAT payers. Additionally, you can submit, along with the application, a Notification of the transition to the simplified tax system (form No. 26.2-1) with a mark from the tax office.
4. If the customer organized the procedure at his own expense and indicated the price including VAT, then think carefully about the profitability of such work. In most cases, such conditions will be unprofitable for simplifiers.

We received the goods without VAT and must return them

The seller, an individual entrepreneur, draws up the same documents as usual: Legislators treat this fact as a reverse sale. It doesn't matter what exactly you sell. When is a defective product returned?

In such situations, the very fact of implementation is absent. Accordingly, the goods do not become the property of the buyer. This means that paying VAT is not an obligation.

in column 9a (cost of purchases without VAT) - from column 5 of the adjustment invoice (RUB 20,000); in column 9b (VAT amount) - from column 8 of the adjustment invoice (RUB 2,000). Do the previous conclusions apply to a situation where the buyer returns a product of proper quality to the seller? No, not applicable. For example, a return is possible if the seller has delivered a product of inadequate quality11.

We will look at this later in the article.

Thus, when returning goods accepted by the buyer for registration, an invoice for the returned goods is issued to him. Therefore, in this case, the seller does not issue adjustment invoices. Let us note that the Russian Ministry of Finance has already given such clarifications more than once (Letters of the Russian Ministry of Finance dated 02/27/2012 N 03-07-09/11, dated 03/02/2012 N 03-07-09/17).

Similar conclusions are contained in the Resolutions of the Federal Antimonopoly Service of the Moscow District dated July 6, 2009 N KA-A40/2935-09, and the Federal Antimonopoly Service of the Northwestern District dated November 7, 2008 N A56-6327/2008. Considering the ambiguity of judicial practice, in order to avoid conflict situations, we still advise you to adhere to the position of the financial department. As for returns not accepted by the buyer, in this case the seller should issue adjustment invoices.

In Letter dated March 19, 2013 N 03-07-15/8473, the Russian Ministry of Finance noted that in this case it does not matter whether the buyer was registered or not, the procedure for calculating VAT will be the same.

If the buyer returns only part of what was purchased, the supplier is obliged to issue an adjustment invoice. Based on this document, the seller will clarify his tax obligations.

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VAT in 223-FZ

223-FZ does not provide clear instructions for determining the NMCC and concluding a contract. Article 4 only states that the notice must contain information about the NMCC and the procedure for its formation (with or without the costs of paying duties, taxes and other obligatory payments). The procurement regulations should regulate the comparison of price offers of potential contractors working with different tax regimes.

Opinions on this issue are again divided:

1. The Decision of the St. Petersburg OFAS Russia dated August 12, 2015 on complaint No. T02-405/15, the Decision of the Khabarovsk OFAS Russia dated September 30, 2014 No. 157 states that VAT must be taken into account when evaluating proposals , otherwise the principle of equality is violated and cost-effective spending of the budget.
2. In the Resolution of the Federal Antimonopoly Service of the East Siberian District dated May 15, 2015 No. F02-1709/2015 in case No. A33-10428/2014, the Ruling of the Supreme Court of the Russian Federation dated April 11, 2017 in case No. 304-KG16-17592, A27-24989 /2015, on the contrary, it is reported that valuation excluding VAT does not create unequal conditions for participation .

There is no consensus on calculating the cost of a contract concluded with a contractor under a special regime. A reduction in the price of a contract for the VAT rate with the winner is almost always recognized as unlawful, however, in practice, the reduction if the contractor applied the simplified system to the contract was recognized as legal (decision of the Chelyabinsk OFAS dated November 3, 2016 on complaint No. 77-03-18.1/2016).

Due to the fact that departments do not have a clear position on this issue, certain risks arise for the parties. Therefore, the Procurement Regulations are the only tool for resolving disputes; all requirements must be specifically identified in it.

Recommendations to the customer on 223-FZ

Based on the previous paragraph of this article, the customer can be given 3 simple tips for evaluating proposals from potential contractors. Compliance with them will help avoid some controversial issues in the future.

1. Decide on the approach to evaluating applications from future suppliers, which one is most convenient for you and optimal, taking into account current practice: take into account VAT or not when comparing applications.
2. Write down your clear requirements in the procurement regulations and procurement documentation.
3. Compare price offers strictly in accordance with the terms of the documentation.