VAT when writing off accounts payable: problematic situations

Which advances are subject to VAT?

As stated in Article 146 of the Tax Code of the Russian Federation, clause 1, the object of VAT taxation is transactions involving the sale of services, work or goods in Russia. Therefore, an organization that has received an advance payment in any amount to secure future obligations must calculate VAT on the amount received.

It must be remembered that not all advances without exception are subject to VAT.

1. Advances made for transactions for which VAT is not legally provided for are not subject to VAT:

export operations, international transportation and other operations taxed at a zero rate (Article 164 of the Tax Code of the Russian Federation, clause 1, subsection 1);
operations not subject to VAT (Article 149 of the Tax Code of the Russian Federation): insurance, banking, medical, educational services, etc.;
for the sale of services, goods, and performance of work outside Russia (Articles 147 and 148 of the Tax Code of the Russian Federation).

2. It is not obligatory to pay VAT on advances credited towards the subsequent supply of services, goods or production of work, for which the manufacturing production cycle lasts longer than six months (according to the list approved by Decree of the Government of the Russian Federation of July 28, 2006 No. 468) (Article 154, paragraph 1, paragraph 3; article 167, paragraph 13 of the Tax Code of the Russian Federation).

How to account for VAT on advances received?

The seller, having received an advance payment (partially or for the entire amount of the contract), in accordance with Article 168, paragraph 3 of the Tax Code of the Russian Federation, must draw up and issue an invoice to the customer within 5 calendar days after transfer of the advance payment. The letter of the Ministry of Finance of the Russian Federation “On the application of tax deductions for advance payments” No. 03-07-15/39 explains that an invoice may not be sent if the supplier fulfilled its obligations before 5 days have passed since the advance payment was received .

The VAT rate on advances is calculated by dividing the tax rate by the tax base, which is increased by the same percentage of the tax rate. At a VAT rate of 10%, it is equal to 10/110; if a rate of 18% is used, it is 18/118 (Article 164 of the Tax Code of the Russian Federation, clause 4).

The invoice is prepared in 2 copies: the 1st is sent to the buyer, the 2nd is entered by the supplier in his sales book.

VAT on advances received: postings

Example 1. Accounting for the advance received and VAT.

In May, Vesna LLC entered into an agreement with the purchasing company Leto LLC for the supply of sun loungers for a total amount of 94,400 rubles, including VAT.

Also in May, Vesna LLC receives an advance in the amount of 50% of the contract volume, or 47,200 rubles.

VAT, included in the amount of the advance payment that must be paid to the budget, is equal to: 47,200 rubles * 18% / 118% = 7,200 rubles.

These transactions are recorded using the following transactions: During May:

Dt 51 “Current account” - Kt 62, s/ac “Advances received”: 47,200 rubles. – the customer’s advance has been credited;
Dt 76, s/ac “VAT on advances and prepayments” - Kt 68, s/ac “VAT calculations”: 7,200 rub. (RUB 47,200*18% / 118%) – VAT is determined on the cost of the advance received.

When transferring VAT to the budget:

Dt 68, s/ac "Calculations for VAT" - Kt 51 "Current account": 7,200 rub. – payment of VAT to the budget.

When the goods are shipped, a shipment invoice should be issued, which is also noted in the sales ledger. After this, the invoice for the previously issued advance payment can be included in the purchase book.

The amount of VAT sent to the budget from the amount of the advance received can be included in the deduction amount after one of two events:

goods, services or work for which the advance was received have been delivered (performed) in full;
the contract under which the advance was transferred was terminated with the return of the advance to the buyer.

Registration of VAT deduction from the advance received after fulfillment of obligations

After fulfilling the accepted obligations and paying VAT on their amount, the supplier can accept for reimbursement the VAT paid earlier from the advance (Article 171 of the Tax Code of the Russian Federation, clause 8).

Example 2. Registration of VAT deduction from the advance received after fulfillment of obligations

In July, Vesna shipped the sun loungers to the buyer. VAT must be charged on the proceeds received from the sale - 14,400 rubles. (RUB 94,400 * 18% / 118%).

Now there is a reason to accept for reimbursement the amount of VAT transferred to the budget from the advance received from the customer (RUB 7,200). In the declaration for the third quarter: “Spring” will show the remaining 7,200 rubles payable to the budget. (14,400 – 7,200). The indicated operations are recorded by postings: In the month of July:

Dt 62 - Kt 90, s/ac "Revenue": 94,400 rub. – revenue from the sales of sun loungers;
Dt 90, sub-account “VAT” - Kt 68, s/ac “Calculations for VAT”: 14,400 rubles. – accrual of VAT on total revenue from the sale of sun loungers;
Dt 68, s/account “Calculations for VAT” - Kt 76, s/ac “VAT on advances and prepayments”: 200 rubles. – VAT, which was accrued on the advance payment earlier, is accepted for reimbursement;
Dt 62, s/ac "Advances received" - Kt 62 s/ac "Settlements with buyers and customers": 47,200 rubles. – the advance received in May from the buyer is counted.

When transferring VAT to the budget: Dt 68, s/ac “Calculations for VAT” - Kt 51 “Current account”: 7,200 rubles. – transfer of VAT to the budget.

LLC "Vesna" must issue an invoice to the buyer - LLC "Leto" for 94,400 rubles. and be sure to note it in the sales book.

The accountant notes the invoice issued for the amount of the advance (RUB 47,200) in the purchase book.

Registration of VAT deduction from the amount of advance received after its return

If the seller received an advance, but the contract with the buyer was subsequently terminated, the amount of the advance should be returned.

Example 3. Registration of VAT deduction after termination of a contract with an advance payment previously received by the supplier

Let’s assume that in the situation discussed above, the contract for the supply of sun loungers by Vesna LLC with Leto LLC was terminated in July, but before that, Vesna LLC had already received an advance in May and transferred VAT on it. The VAT then paid to the budget is accepted for reimbursement.

This will require postings: In the month of May:

Dt 51 - Kt 62 s/sch “Advances received”: 47,200 rubles. – advance payment is transferred from the buyer;
Dt 76, s/account “VAT on advances and prepayments” - Kt 68, s/account “Calculations for VAT”: 7,200 (RUB 47,200 * 18% / 118%) – VAT is charged on the amount of the advance received;
Dt 68, s/ac "Calculations for VAT" - Kt 51 "Current account": 7,200 rub. – transfer of VAT to the budget based on the results of the second quarter.

In the month of July:

Dt 62 subaccount “Advances received” - Kt 51: 47,200 rubles. – on the basis of termination of the contract, the advance payment was returned;
Dt 68, s/account “Calculations for VAT” - Kt 76, s/ac “VAT on advances and prepayments”: 7,200 rub. – VAT is accepted for reimbursement.

The amount of VAT, which is accrued and payable to the budget based on the results of the third quarter, will be reduced by the amount of VAT accepted for reimbursement on the basis of the return of an advance received earlier.

Advances received on balance sheet

“Glavbukh”, N 18, 2003

ADVANCES RECEIVED: ACCOUNTING PROBLEMS

The manager prefers that his company receive advances: with these funds it is possible to pay salaries, pay for materials, and pay off rent arrears. But for an accountant, an advance is an additional problem. First: you need to figure out whether the money received from the counterparty is really an advance. Perhaps the company received deferred income? This is not an idle question. You need to answer it in order to correctly fill out the balance sheet. The second problem with advances is that the Russian Ministry of Taxes requires VAT to be paid on them. But recently, an arbitration court supported an organization that refused to charge tax on prepayment. The third question: should the advance be included in income if the company determines taxable profit using the cash method or operates using a “simplified” method? And finally, many accountants are not clear whether it is necessary to punch out a cash receipt if the advance payment was received in cash?

Our article will help you deal with all of these problems.

Advance or deferred income?

So, money has been received into your company’s current account or cash desk from another organization or from a citizen. And you need to decide how to reflect these funds in accounting. If this is an advance, the following posting is made:

Debit 51 (50) Credit 62 subaccount “Advances received”

- an advance has been received.

In the balance sheet, the amounts collected in the subaccount “Advances received” to account 62 “Settlements with buyers and customers” are indicated on line 627. Note that here we are talking about the form of the balance sheet, which was approved by Order of the Ministry of Finance of Russia dated January 13, 2000 N 4n . However, when reporting for 9 months of 2003, many enterprises will already be drawing up a balance sheet according to the new form approved by Order of the Ministry of Finance of Russia dated July 22, 2003 N 67n. It does not provide a special line for advances received. Therefore, you can add such a line yourself or enter the amount of advances in the line “Suppliers and contractors”.

In the event that a company receives income related to future periods, the accountant makes the following entry:

Debit 51 (50) Credit 98 subaccount “Income received for future periods”

— future income has been received.

The amounts of such income are reflected on line 640 in both the old and new balance sheets.

This means that you need to know exactly what is an advance and what is future income. Otherwise, the reporting will be compiled incorrectly. For this, accountants can be fined 20 - 30 minimum wages (Article 15.11 of the Code of the Russian Federation on Administrative Offenses). In addition, it is possible that the organization will also have to pay a fine: according to Article 120 of the Tax Code of the Russian Federation, it will be charged from 5,000 to 15,000 rubles.

So what is the difference between deferred income and advances?

In search of an answer, let us turn to the Accounting Regulations “Income of the Organization” (PBU 9/99). Clause 2 of this regulatory act states that income is when an organization receives economic benefits. In other words, income arises only if the accountant believes that it is likely that the money received from clients will not have to be returned. Otherwise, there will be no benefit.

Some types of deferred income are given in the Instructions for using the Chart of Accounts. This includes rent, money received from the sale of travel tickets, subscription fees, etc. We will tell you in more detail about two cases when funds received into a current account or cash register must be included in “future” income. Firstly, this is the money received by sports clubs, swimming pools or cinemas for subscriptions, which can be used to visit these establishments for several months. Secondly, deferred income should include the payment that your company received for transferring for temporary use its exclusive rights to a computer program, trademark or some other intangible asset (this is the so-called commercial concession or franchising agreement) .

Agree, in all these cases, your organization will no longer have to return the money to the client (unless, of course, there are some unforeseen circumstances). After all, you are already fulfilling your obligations to the one who paid you money by allowing him to use your premises, swimming pool or trademark.

Example 1. CJSC Kredo owns the exclusive right to a computer program for automating warehouse accounting. In September 2003, the company entered into a commercial concession agreement with Concept CJSC. Under this agreement, JSC Concept has the right to modify the program within a year based on the requirements of its clients. The fee under the concession agreement is RUB 2,400,000. The money was transferred to the bank account of CJSC Credo in October 2003. The accountant included this amount in deferred income. In accounting he made the following entry:

Debit 51 Credit 98 subaccount “Income received for deferred periods”

— 2,400,000 rub. — payment received under a commercial concession agreement.

So, we figured out what deferred income represents. Let's move on to advances. Their main difference is that they do not bring any economic benefit to the organization. After all, the company that has received an advance payment still has to fulfill its obligations - to ship goods, perform work or provide a service. And only after this can we say that income has been received. If your company refuses its obligations, the advance will have to be returned.

What, in particular, is considered an advance?

Of course, this is an advance payment against future delivery of goods: as a rule, the selling company has the opportunity to change its mind and, keeping the goods for itself, return the money to the failed buyer. Advances should also include amounts received for work that your company has not yet completed.

Example 2. Prima CJSC (seller) in September 2003 entered into a supply agreement with Sekunda LLC (buyer). Under the contract, the seller undertakes to ship 1000 cubic meters to the buyer. m of parquet boards for 840,000 rubles. (including VAT - 140,000 rubles). Secunda LLC transferred 840,000 rubles to the settlement account of Prima CJSC. even before the goods are shipped. This money is an advance towards the future supply of parquet boards. After all, in principle, the seller has the opportunity to refuse delivery and return the money to the buyer. And he, in turn, can also reject the purchase and demand the advance payment back.

The accountant of JSC Prima made the following entry in the accounting:

Debit 51 Credit 62 subaccount “Advances received”

— 840,000 rub. — an advance payment has been received for the upcoming delivery of parquet boards.

Summarize. If you are inclined to believe that the funds received from the customer will bring economic benefits to your company and the money will not have to be returned, feel free to classify it as future income. If in doubt, consider the amounts received as advances.

By the way, we note that in the Tax Code there is no concept of “deferred income” at all. Therefore, all receipts that are classified as such income in accounting are considered advances for tax purposes.

Do I need to pay VAT on advances?

Most accountants, consultants and tax specialists believe that value added tax should be calculated on prepayments. After all, paragraph 1 of clause 1 of Article 162 of the Tax Code of the Russian Federation says: the base subject to this tax must be increased by the amount of advances received.

However, not everyone agrees with this position. Thus, recently the Federal Antimonopoly Service of the Ural District (Resolution dated March 3, 2003 N F09-472/03-AK) supported an organization that refused to pay VAT on an advance payment. This decision was based on the following arguments. The tax base is the “cost” of the object of taxation (clause 1 of Article 53 of the Tax Code of the Russian Federation). This means that while there is no such object, there is no tax base. According to Article 146 of the Tax Code of the Russian Federation, the object of VAT taxation is the sale of goods, work, services or property rights. According to Article 39 of the Tax Code of the Russian Federation, goods are considered sold at the moment when ownership of them passes to the buyer, and works and services - only after they are accepted by the customer (the corresponding act is signed).

But an advance is money received for products that are yet to be sold. Until this is done, there is no object of taxation. Consequently, there is no tax base. And what is not there cannot be increased. It turns out that the requirement of Article 162 of the Tax Code - to increase the VAT tax base by the amount of advances - is simply impossible to fulfill.

But this is so far only a decision of the arbitration court of one of the districts. Unfortunately, this does not mean that all tax authorities will immediately reconsider their point of view and allow enterprises not to pay VAT on advances. Therefore, if you decide not to charge tax on prepayment, be prepared to defend your position in court.

But suppose your company does not want to get involved in a dispute with the tax authorities and calculates tax on advances. Let us remind you how this is done. The advance amount is multiplied by 20 and then divided by 120 percent.

What if the advance payment was made for goods taxed at a rate of 10 percent? Then they multiply the advance by 10 and divide by 110 percent. Of course, when your organization ships the goods (performs work, provides services) for which an advance payment has been received, you will again have to charge VAT. And at the same time, you will deduct the tax that you paid on the advance payment. This is stated in paragraph 8 of Article 171 of the Tax Code of the Russian Federation. Paragraph 5 of this article states that the enterprise has the right to offset VAT on the advance payment, which was returned to the buyer.

By the way, an enterprise should not pay VAT to the budget on an advance payment if the goods were shipped in the same tax period. In this case, when drawing up a declaration, you will indicate VAT on the advance payment twice: on line 270 (if the tax is calculated at a rate of 20%/120%) or 280 (at a rate of 10%/110%), as well as on line 400.

Example 3. Let us use the conditions of example 2. Let us recall: Prima CJSC in September 2003 received an advance payment from Sekunda LLC for a batch of parquet boards. VAT was calculated on this amount. In the same month, Prima CJSC shipped parquet boards worth RUB 840,000 to Secunda LLC. (including VAT - 140,000 rubles). The accountant of JSC Prima made the following entries in the accounting:

Debit 62 subaccount “Advances received” Credit 68 subaccount “VAT calculations”

— 140,000 rub. (RUB 840,000 x 20%: 120%) - VAT is charged on the advance;

Debit 62 subaccount “Settlements for shipped goods” Credit 90 subaccount “Revenue”

— 840,000 rub. — a batch of parquet boards was sold;

Debit 90 subaccount “Value added tax” Credit 68 subaccount “VAT calculations”

— 140,000 rub. — VAT is charged on the shipped goods;

Debit 62 subaccount “Advances received” Credit 68 subaccount “VAT calculations”

—————————————¬ — |140,000 rub.| — VAT accrued on the advance payment is accepted for deduction; L————————————— Debit 62 subaccount “Advances received” Credit 62 subaccount “Settlements for shipped goods”

— 840,000 rub. — advance payment credited.

In the VAT return for September 2003, the accountant of Prima CJSC indicated the VAT calculated on the advance payment on lines 270 and 400.

Should advances be included in taxable income?

Subclause 1 of clause 1 of Article 251 of the Tax Code states that only firms that recognize such income on an accrual basis have the right not to count advances among taxable income.

Does the above mean that for someone who calculates taxable profit using the cash method or has switched to the “simplified” method, the advance is income? Let's figure it out.

Tax authorities answer this question this way: yes, organizations using the cash method are required to include advances in taxable income. This point of view is expressed in paragraph 4.1 of the Methodological Recommendations for the application of Chapter 25 of the Tax Code of the Russian Federation, which were approved by Order of the Ministry of Taxes of Russia of December 20, 2002 No. BG-3-02/729. What if you had to return the advance? Then its amount should be excluded from the taxable income of the current period. This is the explanation given in the Letter of the Tax Policy Department of the Ministry of Finance of Russia dated April 28, 2003 N 04-02-05/3/39.

Example 4. We again use the conditions of example 2.

Let us remind you that Prima CJSC received an advance of 840,000 rubles. VAT was calculated on the advance payment, amounting to 140,000 rubles. CJSC Prima, when calculating taxable profit, recognizes income on a cash basis.

Therefore, the accountant included the advance amount without VAT - 700,000 rubles. (840,000 - 140,000) - included in taxable income.

But is the tax authorities’ requirement to include advances in taxable income so indisputable if the company recognizes it using the cash method? One can object, although such judicial practice has not yet developed. But if you are faced with the need to protect the interests of your enterprise, then use the following arguments.

The first argument is this: clause 2 of Article 273 of the Tax Code of the Russian Federation states that income is recognized on the day when the company receives money from its debtor. It is clear that such a situation can only arise if the goods were first shipped and then payment for it was received. But the company receives an advance even before it sells its products. This means that the advance payer does not owe anything to the seller. On the contrary, the debt arises from the enterprise that received the advance payment. It turns out that the advance has nothing to do with the money received to repay any debt, therefore, it cannot be income.

Now let’s give a second argument in favor of the fact that the advance payment does not need to be included in taxable income. Articles 273 and 346.17 of the Tax Code of the Russian Federation do not explain what exactly is included in taxable income. It only indicates the moment when these income should be recognized. And to find out what amounts received should be included in income, you need to refer to Articles 249 and 250 of the Tax Code of the Russian Federation.

Article 249 states that income is proceeds from goods, works, services or property rights sold. But the company receives an advance even before the sale! This means that it cannot be recognized as income. But what about non-operating income listed in Article 250? Is it possible that since they are not connected with sales (as evidenced by their name), advances on rent and under the franchise agreement will have to be included in taxable profit? Not at all. After all, by transferring to you an advance payment for rent or for the use of any exclusive rights, the partner does not pay off his debt. Consequently, such amounts also cannot be considered taxable income (Article 273 of the Tax Code of the Russian Federation).

Should I punch a cashier's check for the advance amount?

Of course, the question of a cash receipt arises from the accountant only when the advance payment is received in cash. Moreover, disputes on this topic began at a time when the use of cash registers was regulated by the Law of the Russian Federation of June 18, 1993 N 5215-1. They did not subside even after this Law was replaced on June 27, 2003 by Federal Law No. 54-FZ of May 25, 2003 (hereinafter referred to as the CCP Law).

Let us recall that the old Law required that a cash register receipt be punched at the moment when the buyer, an individual, gave money for the goods received or for the service provided. Therefore, previously the seller did not have to issue a check to the buyer until two conditions were met: the goods were shipped and money was received for it (the service was provided and paid for). It would seem that everything is clear - when receiving an advance, there is no need to issue a cash receipt. Nevertheless, tax authorities often tried to fine those enterprises that did not punch receipts for prepayments for not using cash registers. But many organizations did not agree with this and sought the truth in court. As a rule, the court supported the point of view of the organizations, confirming that an advance is not a reason for a check. An example here is the Resolution of the Federal Antimonopoly Service of the North-Western District dated July 25, 2001 N A56-7838/2001.

Well, what does the CCP Law say about advances? Straight up - nothing. Article 5 of this document states that organizations and entrepreneurs are required to use cash registers “when making cash payments.” This wording gives some officials reason to argue that now, having received an advance, it is necessary to issue a cash receipt. However, supporters of this interpretation of the CCP Law, apparently, do not attach importance to what “cash payments” are. But Article 2 of the Law on CCP says that this is nothing more than the transfer of cash for goods purchased, work performed, services rendered. It turns out that the new Law on Cash Registers, like its predecessor, says: before giving the buyer a check, give him the goods, do work for him or provide a service.

Thus, firms still have the right not to issue cashier's checks when accepting cash advances. In this case, instead of a check, you need to issue a cash receipt order.

D.A. Voloshin

Signed for seal

10.09.2003

—————————————————————————————————————————————————————————————————— ———————————————————— ——

VAT on advances issued

For the customer-taxpayer who transferred the advance payment, the VAT amounts presented by the seller are subject to deduction (Article 171, paragraph 12 of the Tax Code of the Russian Federation). The buyer can refund VAT on advances issued without waiting for the goods to be dispatched. The basis for the deduction are the documents contained in the Tax Code of the Russian Federation, in Article 172, paragraph 9:

invoices issued by the seller upon receiving the advance;
documents confirming the fact of transfer of the advance;
an agreement in which the transfer of an advance payment must be specified.

The buyer notes the invoice in the purchase book. The seller, after releasing the goods/products (fulfillment of obligations), issues an invoice in full for the entire amount of the contract to the customer. The customer takes this document into account in the purchase book. The invoice for the advance payment previously received must be simultaneously recorded in the sales book.

The buyer accepts the entire amount of tax for reimbursement, but the VAT that he accepted for deduction from the advance payment must be restored to him in the same quarter (Article 170 of the Tax Code of the Russian Federation, clause 3, subclause 3).

VAT on advances issued - postings

Example 4. Registration of VAT from the buyer in the cost of the advance payment

In the same situation described in examples 1, 2, the buyer - Leto LLC - makes the following entries:

Dt 60, s/ac “Advances issued” - Kt 51: 47,200 rub. – transfer of prepayment to the supplier;
Dt 68, s/ac "Calculations for VAT" - Kt 76, s/ac "VAT on advances issued": 7,200 rubles. – VAT was accepted for reimbursement from the amount of the advance issued, based on the invoice of Vesna LLC.

After receiving the sun loungers:

Dt 10 - Kt 60, s/c “Calculations based on received materials”: 80,000 rubles. – receipt and posting of materials (sun loungers) excluding VAT;
Dt 19 s/ac "VAT on acquired values" - Kt 60 s/ac "Settlements on advances received": 14,400 rubles. – input VAT is taken into account in the price of the sun loungers received;
Dt 60, s/ac "Calculations for materials received" - Kt 60, s/ac "Advances issued": 47,200 rubles. – repayment of a previously issued advance;
Dt 76, s/ac “VAT on advances issued” - Kt 68, s/ac “Calculations for VAT”: 7,200 rub. – the amount of VAT previously accepted for deduction from the advance payment has been repaid;
Dt 68, s/ac: “Calculations for VAT” - Kt 19: “VAT on purchased values”: 7,200 rubles. – VAT has been accepted on the invoice from Vesna LLC on received materials – for reimbursement.

The buyer can restore VAT even if the contract is terminated if the supplier returns the advance payment, in the amount of which VAT was previously accepted for deduction.

Write-off of overdue accounts payable including VAT from the seller from the advance payment

In a situation where the supplier received an advance payment, charged “advance” VAT, paid tax to the budget, but never made the shipment, he forms accounts payable in the form of an overdue prepayment with VAT.

When carrying out an operation to write off unclaimed accounts payable, the supplier must resolve the following problematic issues:

can he deduct VAT from an overdue advance;
Is it necessary to include the amount of VAT from the advance payment in non-operating income in tax accounting;
Is it possible to include the amount of “advance” VAT in non-operating expenses in tax accounting?

1. Acceptance of “advance” VAT for deduction

Upon receipt of an advance payment, the supplier is obliged to calculate and pay VAT (Clause 1 of Article 154 of the Tax Code of the Russian Federation). In this case, “advance” VAT can be deducted:

when making shipment (clause 8 of article 171, clause 6 of article 172 of the Tax Code of the Russian Federation),
when the value of the contract changes or is terminated and the amounts of the prepayment received are returned (clause 5 of Article 171 of the Tax Code of the Russian Federation).

Due to the fact that when writing off overdue accounts payable resulting from advance payments, the seller does not return the advance to the buyer, there is no right to deduct “advance” VAT. Officials speak about this in letters from the Ministry of Finance of Russia dated December 7, 2012 No. 03-03-06/1/635, dated February 10, 2010 No. 03-03-06/1/58.

2. Inclusion of “advance” VAT in non-operating income

Overdue accounts payable, including VAT, are included in non-operating income (clause 18, part 2, article 250 of the Tax Code of the Russian Federation). Thus, the VAT amount must be included in income for income tax.

3. Inclusion of “advance” VAT in non-operating expenses

Officials explain that Ch. 25 of the Tax Code of the Russian Federation does not provide for the possibility of including in non-operating expenses VAT on advances received, written off due to the expiration of the statute of limitations (Letters of the Ministry of Finance of Russia dated December 7, 2012 No. 03-03-06/1/635, dated February 10, 2010 No. 03-03 -06/1/58).

However, there is an alternative point of view, according to which “advance” VAT can be taken into account in non-operating expenses. Thus, the arbitrators in the Resolution of the FAS Moscow District dated March 19, 2012 No. F05-12939/11 noted the following:

The tax legislation of the Russian Federation does not provide for a prohibition on including VAT paid to the budget when receiving advances as expenses when writing off this advance as accounts payable after the expiration of the statute of limitations;
taking into account the provisions of paragraph 7 of Art. 3 of the Tax Code of the Russian Federation, the taxpayer has the right to take into account “advance” VAT in terms of accounts payable as part of non-operating expenses in accordance with paragraphs. 20 clause 1 art. 265 Tax Code of the Russian Federation.

However, this position will have to be defended in court.