In what cases does the zero VAT rate apply in 2021?

Confirmation of the zero VAT rate VAT is an indirect tax levy introduced to withdraw in favor of the budget a certain part of the cost of services, goods or work.

The amount of value on which tax is levied is formed throughout the entire process of creating a product, and VAT is transferred to the budget after the product or service is sold in a free market. This state of affairs increases the cost of production and reduces its competitiveness. However, in some cases the law establishes a zero tax rate . Entrepreneurs are interested in when the zero percent VAT rate is applied and under what conditions such a relaxation can be achieved by the Federal Tax Service.

Types of VAT rates

First, let’s figure out what types of VAT there are and how much money at each rate, and most importantly, under what conditions, will have to be transferred to the budget:

1. VAT 18%. The main value added tax introduced as a surcharge to the tariff or price.
2. The 0% VAT rate is established by the Tax Code, determined by clause 1 of Art. 164. It applies to products exported from the country under the export customs procedure and included in the free zone, however, provided that the documents specified in Art. 165 NK. Services and goods officially used by international companies and their Russian representative offices on the basis of international treaties requiring tax exemption are subject to the zero rate.
3. VAT 10% is paid on the basis of clause 2 of Art. 164 NK. This applies to food products, children's products, medical equipment and medicines, as well as products related to culture, books, science, and the education system.

Sale of goods through a commission agent

The VAT rate of 0 percent is established in this case and implies the sale of goods through a proxy or agent, which is specified in the commission agreement, agency agreement or agency agreement. Under a commission agreement, the signatory, for a certain amount of remuneration, also has the right to complete a transaction on his own behalf, but at the expense of another (Clause 1, Article 990 of the Civil Code of the Russian Federation).

When does the 0% VAT rate apply?

Let's look in detail at when the 0% VAT rate is applied, and which entrepreneurs can count on preferential taxation in relation to the goods and services produced.

This concerns, first of all, export activities, which make it possible to attract foreign exchange earnings to Russia. A taxpayer trading with counterparties in other countries has the right to submit an application, as a result of which the state will return to him the value added tax he previously paid.

A zero VAT rate is established for the export of goods and services outside the EAEU. Tax authorities and customs officers verify the data provided by the entrepreneur and specified in the regulatory documentation. It is necessary to confirm the zero rate by providing a package of documents. This is easier to do for companies specializing in transporting goods using standard transport.

Who is entitled to a zero VAT rate when exporting in an accelerated manner?

As already mentioned, a zero VAT rate is applied when transporting goods and services outside the Russian Federation. In addition, this condition also applies to goods that are subject to the customs regime, in which foreign products are placed and used within the appropriate territorial borders or places (without levying customs duties, taxes and the application of economic measures). The approval of the Federal Law of May 30, 2016 No. 150 entailed important adjustments: when transporting products (except for raw materials) abroad, organizations have the right to receive a zero VAT rate in an accelerated manner. According to paragraph 10 of Article 165 of the Tax Code of the Russian Federation, raw materials are considered “mineral products, products of the chemical industry and related industries, wood and products made from it, charcoal, pearls, precious and semi-precious stones, precious and base metals and products from them." This means that confirmation of the zero VAT rate according to documents is carried out for all types of exported goods and services that are not related to raw materials (these changes are effective from 07/01/2016). It turns out that the system for selling products abroad has been modified only on the issue of refunding the specified tax. But the structure used for tax collection, period, export registration operations, product or service reporting, and property rights has not undergone any changes.

Rules for confirming the zero VAT rate

Important! The company cannot trade for export at a zero rate in supplies belonging to the category of goods of special importance for Russia, in particular resources. This is allowed if documents confirming the VAT rate of 0% are presented:

• a contract between authorized persons and taxpayers confirming the conduct of trade outside the Russian Federation;
• a customs declaration, which serves as confirmation that the goods have been checked and sent abroad through an official control point;
• accompanying and transport documents with customs marks authorizing the shipment of a specific type of goods.

If the product is planned to be sold through intermediaries, then you will have to draw up an agreement for this person, signed by both parties and indicating information about all citizens participating in the transaction and a description of the product itself. It is necessary to comply with the deadline for confirming the 0 VAT rate for export, which is 180 days after the customs declaration has been completed.

Attention! A desk review of the submitted documents will be carried out within 3 months.

The tax service checks documents to identify errors and the accuracy of the information provided. If suspicions arise related to inconsistencies in the data provided, the Federal Tax Service authorities require additional documents from the taxpayer to confirm that he is right. If documents confirming the 0 VAT rate for exports are not provided at the request of Federal Tax Service employees, then the tax authorities will decide that the information provided is inconsistent. When the papers are sent to the Federal Tax Service, but later than the established period, namely 180 days, then a VAT of 10 or 18% is imposed on products exported abroad, depending on the product category. If the taxpayer was seriously late in submitting documents, he will additionally pay a penalty.

Where and when to submit documents confirming the zero VAT rate

The necessary documents must be submitted to the Federal Tax Service within six months after the procedures for drawing up the customs declaration. The period for checking the tax return and documents that the subject independently submitted to the tax office is 90 days. This period is calculated from the day the documentation is submitted to the Federal Tax Service. To confirm a zero tax rate, you must undergo the specified verification.

If during the audit process any shortcomings or errors are found, the organization must submit documentation that would prove that the taxpayer has eliminated all errors. Otherwise, the Federal Tax Service has the right to refuse to obtain a zero VAT rate.

If the period for providing the necessary documents is not met, then products exported outside the Russian Federation will be subject to a 10 percent or 18 percent tax rate (the exact amount of taxation depends on the type of goods being transported). At the same time, you should not hope for confirmation of a zero VAT rate, but you should take into account that the period for reimbursement of payments can be extremely long.

Determination of the VAT rate for the sale of goods and services through commission agents

If the goods are sold through a commission agent, then VAT is charged at the time of shipment of products to consumers or at the time they transfer the prepayment. When the product is transferred to commission agents, no taxable transactions are created. The primary document related to the sale of products can serve as confirmation of a specific transaction, and the formation of a taxable object occurs only in relation to this transaction.

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Consequently, confirmation of the zero VAT rate for exports when working with commission agents is not required and this is due to the provisions specified in Art. 167 of the Tax Code of Russia. This article defines special rules related to the formation of the tax base for the sale of products involving third parties. A prerequisite is the conclusion of appropriate agreements of assignments, agency agreements and commissions. Consequently, the taxpayer establishes the tax base in accordance with the requirements of Art. 167 of the Tax Code, if a commission agent is hired to sell the product.

When establishing VAT on exports, confirmation of the zero rate on the declaration is not required when commission agents participate in trade operations on the basis of the plenary resolution of the Supreme Arbitration Court of the Russian Federation No. 33, adopted on May 30, 2014.

Is VAT always zero when exporting?

From 2021, zero VAT on exports is not an obligation, but a right of the taxpayer (clause 7 of Article 164 of the Tax Code of the Russian Federation). Other applicable VAT rates (10% or 20%) may be applied subject to the following conditions:

• the tax rate chosen by the payer must be applied to all export transactions as a whole;
• an application must be submitted to the tax authority at the place of registration no later than the 1st day of the quarter from which the taxpayer plans to apply the regular tax rate;
• the selected VAT rates must be applied for at least a year;
• You cannot change tax rates depending on who the buyer is.

Note! Exports to the EAEU countries are subject to 0% VAT in any case. The provisions of the Treaty on the EAEU do not provide for a waiver of the zero VAT rate. And the norms of the Treaty on the EAEU take precedence over the norms of the Tax Code.

The question is, why refuse the preferential rate?

One of the reasons is this: confirming the zero VAT rate for exports requires collecting a large number of documents, that is, labor and time costs.

It happens that suppliers do not want to confirm the zero rate and highlight the regular tax in invoices.

Delay in submitting documents for VAT confirmation when exporting: what to do?

Entrepreneurs should be especially careful about delays when submitting documents to confirm the zero rate. If legal entities do not meet the allotted 180 days from the moment the products are placed under the export customs procedure carried out in accordance with clause 9 of Art. 165 of the Tax Code, the Federal Tax Service decides to calculate value added tax at a rate of 18% or 10%.

This is done in accordance with the provisions specified in the third paragraph of Art. 165 clause 9, and the tax base is calculated from the date of shipment, which is why legal entities are forced to confirm the 0 VAT rate through an updated declaration, including the shipment period in accordance with the requirements specified in Articles 81 and 167 of the Tax Code. Companies that fail to submit the necessary documents within 180 days are considered legal entities that have caused damage to the budget and for them, on the basis of Art. 75 of the Tax Code do not accrue penalties, since there are no grounds in this case, since the obligation to pay tax begins on the 181st day.

You must pay penalties, in accordance with the requirements of the Supreme Arbitration Court of the Russian Federation, if VAT has not been paid after 181 days, guided by regulation No. 15326/05, adopted in May 2006. Despite the fact that lower courts take the side of taxpayers, as follows from Resolution No. A65-20208/2010, issued for the FAS in the Volga region in July 2011. Despite this, if confirmation of the 0 VAT rate for export is not completed within the established time frame, the FAS insists that penalties must be calculated from the moment of shipment, which is communicated to the territorial inspectorates in letters from the Ministry of Finance.

Interesting fact! This point is practically not regulated by precise legislative norms, so if the taxpayer does not want to sort things out with the territorial tax inspectorate in court, then it is better to calculate penalties from the date of shipment.

If there is a delay, then confirmation of the zero VAT rate is carried out according to the following algorithm:

• submission of an updated declaration taking into account the shipment period;
• be sure to fill out section No. 6 in the declaration;
• transfer penalties and tax to the budget at the VAT rate determined by the inspection;
• submit an updated declaration for the first quarter, entering the necessary information in section IV;
• reflect VAT on line 040 of section IV, indicating the amount contributed in connection with unconfirmed exports.

The specified amount will reduce the tax fee that must be paid in accordance with the submitted declaration.

How the zero VAT rate is applied when selling transport services

In accordance with subclause 2.1 of clause 1 of Article 164 of the Tax Code of the Russian Federation, a zero VAT rate is applied for servicing international transportation of products, as well as for the provision of freight forwarding services provided by virtue of contractual obligations. It is worth noting that transportation is international in nature when the place of loading or unloading of goods is outside the borders of the Russian Federation.

Sometimes transportation of products involves the use of several types of delivery (water, land, air). This means that the process of transporting goods is undertaken by more than one contractor. If transportation is carried out, for example, to an airport located within the Russian Federation, does the carrier have the right to use a zero VAT rate?

Until recently, economists and Federal Tax Service specialists argued that when transporting products exported to other countries by two or more methods by carriers independent of each other, their services provided within our country are not subject to a zero VAT rate. In addition, this opinion was confirmed by letter of the Ministry of Finance dated August 2, 2011 No. 03-07-15/72, which informed tax structures in a letter from the Federal Tax Service of the Russian Federation in the provision “Explanations of the Federal Tax Service, mandatory for application by tax authorities.”

Later, this position on the zero VAT rate was commented on by the Plenum of the Supreme Arbitration Court of the Russian Federation: clause 18 of the regulation No. 33 dated May 30, 2014 contains an order that the provision of services for the international transportation of products by two or more contractors does not mean the exclusion of the zero VAT rate for everyone carriers. Based on this resolution, this rate is used by contractors engaged in international transportation of products at all stages, as well as by companies hired by the freight forwarder to provide additional freight forwarding services. In addition, the Plenum of the Supreme Arbitration Court of the Russian Federation clarified that, according to subclause 2.1 of clause 1 of Article 164 of the Tax Code, a zero VAT rate can be used for the above service, regardless of the fact who initiates the transportation (the customer of the relevant service, the forwarder directly, or other legal entity or individual entrepreneur).

Letter No. 03-07-08/65899 of the Ministry of Finance of the Russian Federation dated December 19, 2014 confirms the position of the Plenum of the Supreme Arbitration Court, and therefore companies engaged in “pre-export” transportation in our country have the right to apply a zero VAT rate. This means that economists and tax specialists do not oppose the use of 0% value added tax. In addition, the Ministry of Finance of the Russian Federation has established a list of documents to confirm the zero VAT rate for such carrier companies:

• Contract ( copy of the contract) of the carrier (forwarder) for the provision of services for the transportation of goods with a legal entity or individual entrepreneur concluding an international agreement on transported products;
• Copies of transport, shipping and ( or) other documents confirming the export of goods outside the territory of the Russian Federation, taking into account the provisions specified in subparagraph 3 of paragraph 3.1 of Article 165 of the Tax Code of the Russian Federation. It is worth considering that in the process of exporting products with a zero VAT rate by water transport, this documentation is;
• A copy of the order for the shipment of goods indicating the port of unloading , as well as the entry “Loading is permitted” from the Federal Customs Service at the point of dispatch of the products;
• A copy of the bill of lading, sea waybill or any other document confirming the fact of acceptance of the goods for transportation , where the line “Port of unloading” contains a record of the destination of the products.

As a rule, when confirming the zero VAT rate for the export of goods outside the Russian Federation, the document containing information about the goods transported across the state border contains the entry “Release permitted” from the Federal Customs Service, which allows export, as well as the entry “Goods exported” at the point of departure of the product to foreign countries. This requirement is specified in subparagraph 3 of paragraph 1 of Article 165 of the Tax Code of the Russian Federation, in the Instructions on the procedure for filling out a declaration for goods, as well as in paragraph 15 of the Procedure for the actions of customs officials when confirming the actual export of goods from the customs territory of the Russian Federation.

However, in cases where products are exported abroad through a CU member country, this document will no longer contain the entry “Goods exported,” since an agreement was concluded between these states and Russia on the abolition of border control (in accordance with the Decree of the President of the Russian Federation dated 01 July 2011 No. 880). In this situation, is it necessary to submit documentation to the Federal Tax Service about the fact of export of products through the territory of these countries in order to apply the zero VAT rate?

Letter No. 03-07-08/4343 of the Ministry of Finance of the Russian Federation dated February 4, 2015 contains an indication that there is no such need, because the conditions for the transfer of such documentation are not defined by the Tax Code. In accordance with paragraph 1 of Article 165 of this code, to confirm the zero VAT rate, you only need a record from the border authority that allowed the transportation of products outside our country. The Federal Tax Service of the Russian Federation agrees with this provision (based on letter No. ED-4-3/10481 dated June 10, 2013).

In addition, the zero VAT rate in such cases must be determined on the last day of the period during which the documentation specified in Article 165 of the Tax Code of the Russian Federation was completed (regardless of the moment of export of products outside the CU member country).

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What goods and services are subject to 0% VAT

It remains to determine which goods are subject to VAT at a rate of 0% in accordance with Art. 164 NK. This benefit applies to the following categories of services and goods:

1. Transportation by domestic carriers of export products outside the country.
2. Construction of ships registered in the domestic international register.
3. A 0% VAT rate applies to supplies exported from the Russian Federation under customs regime.
4. Goods used by diplomatic foreign missions and organizations equivalent to them.
5. Precious metals.

Also, a zero VAT rate is used in the following cases:

1. Space objects and technology.
2. Transportation of goods and passengers outside Russia.
3. Customs transit.
4. Support and organization of export transportation.
5. Export customs regime.

A 0 VAT rate is established for exports in cases strictly defined by law, provided that taxpayers comply with the requirements specified in the relevant articles of the Tax Code. Knowing how to confirm a 0% VAT rate for exports, you can avoid unnecessary expenses by submitting a declaration in a timely manner in the prescribed form.

How to confirm the zero rate for an export transaction

The list of customs documentation attached to the VAT return and justifying the lawful application of the zero tax rate depends on the direction of export operations:

• export of goods to the countries of the Eurasian Economic Union (former republics of the USSR);
• shipment to other countries outside the EAEU.

Export to EAEU countries

When moving goods to the Eurasian Economic Union (EAEU) - Belarus, Armenia, Kazakhstan or Kyrgyzstan - simplified customs regulations are applied, so the list of documents required to justify the application of a 0% rate is quite limited. The seller must present the following documents to the tax service:

• transport and shipping documents for export cargo;
• application documents for the import of goods and confirmation of payment of indirect tax payments by the buyer;
• a contract between a Russian seller and a buyer from the EAEU countries.

Since two-way electronic exchange of data on the import/export of goods has been established between the customs and tax services, the presentation of paper documents is not necessary. It is enough for an exporting company to create a register of necessary documentation in electronic form and submit it to the tax office.

Export to other foreign countries

When exporting goods to countries outside the EAEU, you can confirm the application of a 0% VAT rate with the appropriate documents:

• a copy of the foreign trade contract or, in its absence, an acceptance or offer;
• agreement for the provision of intermediary services - if the export is carried out through a third party (attorney, agent, intermediary);
• customs declaration (copy or register in electronic form);
• commodity and transport documents (bill of lading, CMR waybill, air or combined waybills).

All documents presented must have official marks from customs services, indicating the actual export of goods from the territory of Russia.

During a desk audit, tax authorities may request bank statements or invoices for an export transaction, so it is advisable for the seller to prepare copies of documents to be attached to the VAT return.

What is the difference between the rate without VAT and VAT 0%

What is the difference between the VAT rate 0% and without VAT

Let's figure out what the difference is between the 0% rate, without VAT and with VAT. In the first two cases, ultimately there is no budget revenue from the company, but in the third, the organization will have to pay tax. In addition, a 0% rate is used for transactions that are subject to taxation. But those who are exempt from tax apply without VAT. For example, simplified companies.

When does the 0% VAT rate apply?

The VAT rate of 0% is applied when selling goods for export (subclause 1, clause 1, article 164 of the Tax Code of the Russian Federation). At the same time, the zero VAT rate requires documentary confirmation: the company needs contracts with foreign counterparties, customs declarations, documents for the transportation of goods abroad. These papers are sent to the tax authorities within 180 calendar days from the moment the goods are placed under the customs export procedure (clause 9 of Article 165 of the Tax Code of the Russian Federation). The 0% VAT rate applies to only confirmed transactions, otherwise you will have to use the usual rates - 18% and 10%.

• A 0% VAT rate is established for the sale of services related to the international transportation of goods (subclause 2.1, clause 1, article 164 of the Tax Code of the Russian Federation).
• There is a special list of goods subject to 0 percent VAT. These are rare goods. For example, products from the field of space activities, precious metals, goods for the 2021 FIFA World Cup. But, for example, jewelry with a 0% VAT rate does not exist: a general rate of 18% is applied to their sales.
• The zero VAT rate is used in the following cases: transit transportation of goods through Russia by air and transportation of passengers and luggage from Russia or to Russia (subclause 2.10 and subclause 4, clause 1, article 164 of the Tax Code of the Russian Federation).

This is a list of basic transactions in which cases a 0% VAT rate is applied. The general conclusion is this: to get a zero rate, you need to engage in specific activities. There are many more companies that operate without VAT than those that apply a zero rate.

Without VAT and 0% VAT - what's the difference?

Payment without VAT means that there is no added value in the amount for which the company sells the product. Can an LLC operate without VAT? Yes, but this is possible in two cases:

First case. An organization operates without VAT if it applies special tax regimes - simplified tax system, UTII or unified agricultural tax.

Second case. Sales without VAT are carried out by companies that comply with the revenue limit and have received tax exemption. Article 145 of the Tax Code explains how to operate an LLC without VAT under the general regime. It is necessary that the company’s revenue for the three previous consecutive calendar months does not exceed a total of two million rubles. VAT is not taken into account when calculating revenue. But care must be taken to ensure that revenue for three months does not exceed this limit, otherwise the company will lose the right to exemption. If the amount of revenue falls under the limit, then the organization submits to the tax authorities a notification to receive an exemption and supporting documents (clause 3 of Article 145 of the Tax Code of the Russian Federation).

What does this mean in documents, the rate “Excluding VAT”

In practice, working without VAT is not always profitable. After all, the difference between an agreement with VAT and without VAT is that in the latter option, buyers do not have the right to apply deductions for goods purchased from non-payers. Therefore, not everyone agrees to purchases for which deductions are not possible.

How to find out if an organization is a VAT payer

It is important to know about your counterparties whether they pay VAT. That is, are deductions possible for purchases from such partners? The answer to the question of how to find out whether an organization works with VAT or not is in the agreement with the counterparty itself. Therefore, there will be no difficulties here. But it is important that the counterparty is conscientious. If he is a VAT payer, but does not actually pay the tax, claiming deductions for such purchases is risky. Tax authorities can remove them and recalculate the tax, add additional penalties and fines. You can check whether your counterparty has tax debts on the Federal Tax Service website.