Let's remember what VAT is
Many people know that VAT is “value added tax”. But not everyone knows what this “added value” is. From ignorance, as usual, all the questions related to the VAT topic.
Added value is the part of the cost of a good, product or service that is created directly in a given organization. I will not give a formal definition here. In fact, we can say that the term “created,” it seems to me, is not always appropriate. Well, for example, what does a seller “create” by simply purchasing goods from one company and reselling it to another (or individuals)? Yes, it probably doesn’t create anything other than a markup...
In any case, according to the law, when selling goods, products or services, it is necessary to pay a tax, which is called value added tax or otherwise VAT.
Remembering the definition of VAT, we should not forget that it is an indirect tax. If you forget about this important circumstance, you may miss the most important thing. Namely, this kind of taxes is paid, in fact, by the final buyer; the selling company is only a collector of this tax.
Who is the VAT payer?
Ask anyone and you'll get more or less the same answer. Less knowledgeable citizens will say that VAT is paid by companies. Those more knowledgeable about taxation and accounting will tell you that value added tax is paid only by those organizations and individual entrepreneurs that are subject to the general taxation system (+ some other cases, but these are details).
The meaning of such answers is the same - everyone unanimously declares that ordinary people (individuals) do not pay VAT or, to put it smartly, “are not VAT payers.”
By and large, this seems to be the case: after all, you, for example, are like an ordinary physical person. person does not submit a VAT return to the tax office? Of course not, why would that be! But if you look deeper, and also remember the definition of indirect taxes, it may turn out that individuals still pay VAT, even though they do not file declarations and generally do not think about this topic in most cases.
When can inspectors charge additional VAT?
When employees of the Federal Tax Service check VAT returns, the accountant fears that the inspector will deny the company the right to apply deductions.
But you need to remember that tax reduction is only one of the ways of additional charges.
In addition to reducing the amount of deductions, controllers may find hidden implementation or refuse to apply a reduced tax rate or benefit. Such actions of inspectors will lead to an increase in revenue, and, consequently, to additional charges. The accountant needs to remember that auditors look for ways to increase sales only when they have failed to accuse the firm of misusing deductions.
But it is not easy for inspectors to prove that an enterprise has underestimated sales. However, inspectors will try to impose sanctions on the company based on the results of the control event. Therefore, company employees need to know when inspectors can charge additional VAT on sales legally.
Results of inspections
The Tax Code provides for more than 50 transactions for which it is not necessary to pay VAT. However, the application of preferences must be confirmed by documents, and in each case these will be different papers.
In addition, auditors, according to paragraph 6 of Article 88 of the Tax Code, have the right to request confirmation of benefits from companies. Based on the results of the audit, three options for the development of further events are possible. The first, when no violations were found.
Then the company is in no danger.
Sometimes controllers refuse to allow a company to use VAT benefits because the company does not keep separate records of such transactions when their share exceeds 5 percent of total revenue for the quarter.
The second option is that the company has not proven the legality of non-taxable transactions, that is, there are not enough documents, licenses, certificates, and contracts.
In such cases, the transaction, which is exempt from VAT, becomes, based on the results of the audit, a regular supply, on which a tax of 18 percent is charged.
Usually, inspectors, having not received the documents, offer the company to pay the missing VAT and accrued penalties. But if the company provides papers during the consideration of objections, then sanctions from inspectors can be avoided.
The third option is that the transaction itself has not been confirmed, that is, in the declaration submitted by the company, errors were made regarding the stated benefits. Then the inspectors will most likely act as follows: having received explanations from the organization regarding the inaccuracies, they will draw up a report stating that the blots did not lead to a decrease in the tax base, since there was no sale.
But inspectors can make another conclusion, for example, the company has not confirmed the benefit, which means that VAT must be charged at the rate of 18 percent on the amount indicated in the section on preferences. To confirm their thoughts, the inspectors say that since the company indicated the amount of the benefit in the declaration, it means there was a deal.
And if the company cannot confirm the preference, then VAT should be calculated on the amount reflected in the calculation.
However, auditors in this situation are not always right, and in order to convince them, you need to present papers that will prove that the organization did not receive the disputed amount from its clients, for example, you can present a reconciliation of settlements with counterparties. It is also necessary to provide inspectors with statements of accounts payable to customers for review.
Sometimes controllers refuse to allow a company to use VAT benefits because the company does not keep separate records of such transactions when their share exceeds 5 percent of total revenue for the quarter. But in this case, auditors do not have the right to make such a decision, because according to the Tax Code, controllers can refuse to apply deductions or expenses for profit, but they cannot change the benefit to a rate of 18 percent.
Even homeless people pay VAT
By the way, this is not a joke at all.
Just look at any receipt from the store and you will see the amount of tax you paid there. This is the amount of VAT that you, as an individual, paid in this case. The peculiarity is that this amount is already included in the price of the goods and cannot be separated in any way (it goes “into the load”).
In general, no one wants to notice any particular trouble here, because you are offered to pay the VAT amount as part of the product, and not separately. And in general, VAT on checks is allocated somewhere at the very bottom - who looks there? So in any case, you pay VAT every time you buy something in a store (if it is something subject to VAT, of course).
Pay attention to the trick:
Since you still RECEIVE THE GOODS for your own money, do you really care what taxes are ALREADY included in its price? That's why no one notices them.
Now let's imagine another situation when the VAT paid by you (as an individual) will be very noticeable. I will give one example, and then you can expand it to similar situations.
The figure below shows a screenshot of the payment form of the Yandex.Direct advertising system. For those who don’t know, I’ll explain the point: you transfer a certain amount to the account of the advertising campaign, and then you can spend this money on displaying your advertising on the Yandex network and on the search engine page.
In any case, the meaning is the same - you transfer a certain amount of money not for a product, but for a service, and the transferred amount is reflected in your personal account.
So, in the example given, the amount of 3,000 rubles will be credited to the account, and not 3,540, as some might think. And this is where it becomes very unfortunate that as much as 18% of the amount you transferred will be lost. There are many such cases, but one is enough. By the way, we were talking specifically about a payment from an individual , and not from an organization (namely, a simple individual, not even an individual entrepreneur).
Important: which citizens will be charged additional personal income tax and VAT for card transfers in 2021?
Summary:
Letter of the Federal Tax Service of Russia dated May 7, 2021 No. SA-4-7/8614
What is the essence of this letter from the Federal Tax Service.
Let's look at some signs of entrepreneurial activity.
Signs that do not allow qualifying the activity of an individual as entrepreneurial.
Making a profit does not affect qualifications at all.
The section about VAT is interesting.
Discussion
We all understand perfectly well that the state is in dire need of money. The war in Syria, forgiveness of debts to Africa, re-repair of new roads and much more. All this requires investment, and no small one.
The Sabantuy with the presidents of African countries alone cost Russia more than four and a half billion rubles. A legitimate question arises: where to get money, if taxes have already been imposed on everything that is possible and impossible.
The tax office found a way.
Letter of the Federal Tax Service of Russia dated May 7, 2021 No. SA-4-7/8614
On May 7, 2021, the Federal Tax Service issued letter No. SA-4-7/8614. A letter that directly affects everyone involved in business activities, accountants, parents in family committees and in general all citizens who, in one way or another, receive money transfers to their card.
What is the essence of this letter from the Federal Tax Service.
To make everything easy to understand, I’ll try to start with examples.
Example 1.
You have opened an online store and sell children's things (cosmetics, handbags, jewelry, etc.). You receive the payment on your bank card, and it doesn’t matter which one, everything is still controlled.
At the same time, it so happened that you are not an individual entrepreneur on the simplified tax system of 6% or even an individual entrepreneur, but the bank card was not “shown” at the tax office as being used to receive payment. In this case, you will be charged additional VAT of around 20%.
You can try to solve the problem under Article 145 of the Tax Code of the Russian Federation, but it would be better to solve it right away.
Example 2.
You have cargo vehicles that do not belong to the category of personal and other non-commercial transport, and you rent them out, and you are not an individual entrepreneur. In this case, you expect VAT and personal income tax of 13 percent.
Example 3.
The owner leased real estate to his company. The accountant withheld personal income tax, but forgot about VAT. The tax authorities came and calculated how much income he had received over the past 3 years. As a result, you need to pay in full VAT, penalties, and a 20% fine.
Example 4.
A girl (woman, guy, man...) provided cosmetic or hairdressing services to the population with payment by card. You will have to pay VAT and may be able to collect personal income tax.
Example 5.
You are selling things, vegetables, fruits, and other goods at the market and the payment was transferred to your card, either because you did not have change, or because the buyer had cash. In this case, you will have to pay VAT, fines and penalties.
And there can be many examples. And all this is discussed in this ill-fated Letter of the Federal Tax Service of Russia dated May 7, 2021 No. SA-4-7/8614, signed by the Deputy Head of the Federal Tax Service of Russia Arakelov.
This letter summarizes the signs by which it is possible to identify individuals engaged in entrepreneurial activities. For example, the purchase of property or assets that can be used for systematically generating profit and their subsequent sale, and all this as an individual, systematically generating income, i.e. regular transfers to the card and much more.
Let's look at some signs of entrepreneurial activity:
• Production or acquisition of property for the purpose of subsequent profit from its use or sale;
• Economic accounting of operations related to transactions;
• The interconnectedness of all transactions made by a citizen in a certain period of time;
• stable relationships with sellers, buyers, and other counterparties.
All the examples I gave fall under these signs. Purchase of property through loan agreements, or payment from the current account of an individual entrepreneur, too. Or, for example, one more sign: if you bought this property and then sold it, or this property was previously used for business purposes, this will also be considered entrepreneurship.
Signs that do not allow qualifying the activity of an individual as entrepreneurial.
But among the barrel of ointment there is also a fly in the ointment, namely paragraph 3 of this letter: “Signs that do not allow qualifying the activity of an individual as entrepreneurial.” I quote: “ The activity of an individual does not fall under the definition of entrepreneurial if there are no key features named in Article 2 of the Civil Code of the Russian Federation
»
In this case, we mean income received not in connection with entrepreneurial activity. For example, interest on a deposit. The main feature of entrepreneurial activity is the systematic receipt of profit.
The letter from the Federal Tax Service says: “
It is unacceptable to recognize entrepreneurial activity on the basis of isolated cases of civil transactions.
”
It would seem clear, but there are factors that will allow even single transfers to be classified as entrepreneurial activity, namely:
- Testimony of the persons who transferred the money to you. If they are asked why they transferred money to you and they answer that it was for goods or services, then you are in trouble.
- Bank statements showing, for example, recurring amounts
- Advertising on the Internet
- Displaying samples of goods at points of sale;
- Purchasing goods or materials on a systematic basis;
- Concluding premises rental agreements.
- And others
In this case, even for single transactions, additional VAT and personal income tax will be charged
Making a profit does not affect qualifications at all.
The rest is also interesting. You can claim at the tax office that you did not receive any profit from these transactions and they will object to you: “ At the same time, the lack of profit in itself does not affect the qualification of this offense, since making a profit is the goal of entrepreneurial activity, and not its obligatory result.
»
Those. making a profit does not affect qualifications at all.
The section about VAT is interesting.
It says: “If the tax authority has proven that entrepreneurial activity is carried out by an individual who is not registered as an individual entrepreneur and who has entered into relevant agreements as an individual, then in relation to income from this activity this person is, in particular, a VAT payer.”
Well, paragraph 4 says what can be done in this case. As an option, you can try not to pay VAT in accordance with Article No. 145 of the Tax Code of the Russian Federation, which can be used if your income is less than 2 million rubles per quarter. We'll talk about how to do this in the next newsletter.
That's all for now.
If you accept transfers to your card, please do not write any comments! It is important. In the next newsletter I will tell you in more detail how to protect yourself from the problems that threaten everyone with checking translations.
And please give this article maximum repost and maximum number of likes
. This way you will help your friends and acquaintances. Because ordinary individuals can get into this situation at every turn.
And I will know by your likes whether it is worth writing more about the problem and ways to solve it or not.
I would like to add to the article, but I will do it next time, information about how the tax office can check an individual’s bank card without his knowledge.
All good luck and no tax authorities!
Source: https://zen.yandex.ru/media/id/5d2023c007f8ec00ae8a46d9/5db8a316e6cb9b00ad9f1eed
VAT is a tax for the poor
But this is half a joke. I just wanted to note the fact that in the end it is individuals who are the true source of income under the VAT item in the state. budget. Companies, in fact, only “toss” these amounts between each other. Perhaps I'm exaggerating a little, but let's estimate on our fingers.
Firstly, a VAT payer company, unlike an individual, can make such a trick as “accepting VAT for deduction”. Every time a company buys something from its suppliers, it can reduce the tax it pays to the budget by the amount of VAT added to the product. This number will not work for an individual.
Secondly, imagine a company that sells goods to individuals. VAT is added to the amount of the goods on top (read about VAT “above” and “including” here). As you saw above, the buyer (individual) pays the amount of VAT along with the goods, and then the company transfers the amount of this tax to the budget (minus what is accepted for deduction on their own purchases). Well, WHERE did the company ultimately get the money to remit the tax? That's it!
Let's go a little further. Companies make a profit from sales. Of course, this is after all taxes have been deducted, but nevertheless, I will repeat once again: PROFIT. What do you get when you purchase a product? But the tax has already been paid!
Of course, I’m not saying that let’s not pay taxes at all. But think about this thing: you pay VAT when purchasing a product and pay with money on which you have also already paid income tax. The VAT rate is usually 20% (most often) or 10%; income tax (personal income tax) is in most cases 13%. For example, let's add 20+13 and find that you give away 33% of your income!
But won't it be too much? Especially if we compare the income of individuals and companies in absolute terms? This is where the name of the subtitle comes from - as you can see, it’s not such a joke.
For those in the tank:
The store bought the goods from the supplier for 120 rubles, including VAT of 20 rubles. The company can take these 20 rubles as a deduction, that is, pay less tax to the budget by the specified amount. Then the goods were sold to an individual Vasya for 240 rubles (+100 rubles markup and another 40 rubles (20%) VAT on top).
The total profit (simplified) was 100 rubles. Those additional 40 rubles, which the store will then transfer to the budget, were essentially paid by the buyer and this amount is not an expense for the company.
Of course, out of 100 rubles. profits need to be paid income tax, but this is not what we are talking about now.
Why can you be charged additional personal income tax?
For now, the tax office identifies underpayments manually, but approaches are being standardized
Last year, a number of publications appeared in the media about how the income of individuals is controlled in Russia. We discussed it for a long time and even adopted a law on the self-employed. In general, society was scared. But is everything so scary?
Today, Russians’ incomes are monitored by tax inspectors through desk and field inspections, and inspections are also carried out by banks and Rosfinmonitoring. But they are all fragmentary. In addition, individuals do not keep any records, so it is very difficult to identify, let alone prove, the presence of undeclared income.
In this regard, one of the biggest risks of additional charges from the Federal Tax Service is now associated with the acquisition of assets below market value and the reclassification of transactions (for example, loans) as donations.
What can additional taxes be charged for?
Thus, the Supreme Court of the Russian Federation reached case No. 53-KG16-27, in which the tax authority assessed additional personal income tax at a rate of 13% on the amount of the difference between the market price of an apartment purchased by a person and the purchase price. The court upheld this decision, concluding that the individual received income in kind.
Why is it important?
Many people still arrange the purchase of real estate, including elite ones, “through a cell”, lowering the transaction price. Sellers do not want to pay taxes, although according to the law, the cadastral value must be taken to calculate them, and buyers, for example, officials, cannot confirm the source of income. Both of them are potential “clients” of the tax service. The only question is the efficiency of administration.
As for the reclassification of transactions as a gift, a person who has received an interest-free loan from an affiliated organization or another individual can receive an additional charge of 13% of its amount. The Federal Tax Service and the courts consider such transactions as sham, made without the purpose of repaying the loan.
Here, entrepreneurs who use loans for reinvestment or withdrawal of dividends are mainly at risk, but individuals also very often provide loan agreements to the bank to justify the source of funds in the current account.
The risk is high, since there is no fact of repayment of loans.
Another category of additional charges is related to the identification of undeclared income, including using the VKontakte, Instagram, etc. networks.
For example, the tax authority monitored the “Goods to Order” group on the VKontakte network and identified those who published advertisements with offers to sell goods. After placing an order in the group, participants paid for the goods within 1-2 days by transferring money to individuals’ cards.
The inspectorate, through the group, interviewed a number of buyers, and they confirmed that they transferred funds to bank cards specifically for the goods.
All this proved the conduct of business activities, receipt of income and, accordingly, non-payment of taxes, which served as the basis for additional assessment of taxes (resolution of the Thirteenth Arbitration Court of Appeal dated March 14, 2021 No. 13AP-464/2021 in case No. A26-7023/2021).
How do banks get involved in this?
In addition, banks are required by law 115-FZ (anti-money laundering) to find out the source of funds in accounts. A high-profile case was when a client’s deposit was not returned because he did not confirm the origin of the money on the date of deposit.
Moreover, many banks have now introduced protective tariffs on payments from legal entities and individual entrepreneurs to the accounts of individuals. The goal, of course, was good - the fight against cashing out, but in practice even the payment of dividends is subject to prohibitive tariffs.
There are already precedents when an individual collected a debt from a legal entity through the court, applied to the debtor’s bank with a writ of execution, but his bank imposed a tariff of 20% on the funds received into the account.
Tax officials also contact banks with requests to obtain information about transactions on individual accounts. This can now be done in accordance with the 2021 release.
letter from the Federal Tax Service “On the provision by the bank of certificates (statements) on the accounts of clients (individuals, individual entrepreneurs) at the request of the tax authorities.” This form of control makes it possible to identify the receipt of funds into a person’s account, the receipt of income and, accordingly, non-payment of taxes.
However, this practice has not yet found systematic application - there is no unified monitoring system.
Also, the receipt of undeclared income is discovered by chance when checking contractors, legal entities or when complaining from employees.
There are cases when tax authorities, in the fight against gray salary schemes, analyze the movement on employee cards; If they establish the fact of a systematic and one-time deposit of cash onto cards, then they conclude that salaries are paid “in an envelope.”
Next comes an audit of the organization. The organization is a tax agent, but no one relieves individuals of the obligation to pay taxes.
All these are examples of the informal approach of tax authorities, which have long been focused on the essence of transactions and the economic meaning of interrelated transactions, and not on the form. Yes, a good methodological base is being created, but in fact, control is carried out manually.
In addition, there are huge resources for collecting information about expenses - banks, traffic police, Rosreestr, auto exchange, social networks, notaries, etc.
Therefore, it is natural that in the near future the Federal Tax Service will be able to introduce an automated personal income tax control system, and then the likelihood of evading taxes for individuals will be reduced to almost zero.
Taken from source: Vedomosti
Source: https://kskgroup.ru/press-center/news/za-chto-vam-mogut-donachislit-nalog-na-dokhody-fizicheskikh-lits/
Lyrical digression - read by EVERYONE!
And one more thing.
We ALL give almost a THIRD of our income to the state. Just imagine that EVERY person in the country does this!
Let's imagine that we would not pay this money as taxes, but simply each person MONTHLY used a THIRD of his income not for himself personally, but for the common good, and not some abstract one, as they say on TV, but for very specific ones things. For example, make repairs in the common corridor of the house, lay out a lawn at the entrance, install normal lighting on the street, and so on.
Don’t you think that in this case we would all simply live in a fairy tale?
But we give all this HUGE pile of money to the budget. Therefore, a question arises that EVERYONE should think about:
WHERE IS ALL THIS? WHAT DOES OUR MONEY GO FOR?
Another example on the essence of VAT for individuals
Well, let's continue the conversation, otherwise I got a little distracted.
Once, a couple of years ago, out of curiosity, I wrote myself a 1C configuration for accounting for household income and expenses. Like 1C:Money, only simpler and tailored to your needs. So, during development it was necessary to draw up your own chart of accounts. I’ll say right away that accountants don’t have to worry, since usually the phrase “chart of accounts” means a document from the Ministry of Finance. Here we are talking about an object in 1C and nothing more.
It is necessary to come up with a chart of accounts, since the standard one is not suitable here. But the plan itself is absolutely necessary, since when accounting in 1C, it is on it that various amounts “hang” (I won’t go into details here, so as not to confuse non-programmers). So, when drawing up this chart of accounts, I wanted to take into account the amount of VAT that I pay in stores when purchasing something (well, it’s just interesting). If so, then you need a VAT account.
Now comes the most interesting part. As any accountant knows, to account for VAT on purchases, there is an active account 19. It is active because this VAT can then be deducted. But from the point of view of an individual, the situation turned out to be exactly the opposite: the account for the same VAT in the sense of the word turned out to be passive, and even off-balance sheet. However, the latter does not matter. But the fact that from the point of view of individuals, VAT is a pure expense , this is 100% correct.
