Where is VAT taken from? What is VAT and who pays it?

The article contains useful information about VAT: what it is in simple words what rates the legislation provides for, when the deduction is applied, as well as formulas and examples of tax calculation.

VAT payers are required to submit a declaration. It is in the BukhSoft program. The report is always on an up-to-date form, taking into account all changes in the law. The program will fill out the form automatically. All you have to do is download it in electronic format. Before sending to the tax office, the declaration is tested by all verification programs of the Federal Tax Service. Try it for free:

VAT declaration online

VAT: what is it?

VAT has a simple decoding: value added tax. It represents a premium to the cost (added value) of a product (work or service), which the state withdraws from the budget at all stages of production of this product as it is sold (or work performed, services provided).

VAT is imposed on transactions involving the sale of goods, works, services and property rights on the territory of the Russian Federation.

This indirect tax is paid by all participants in the sales chain. The amounts go to the federal budget.

Let's look at the example of furniture manufacturing.

Example

To make furniture, the forest is first cut down. The logs are made into boards. Furniture is assembled from boards. After that transport companies transporting furniture to stores. And stores, in turn, sell it to individuals.

Loggers will pay a tax when selling logs to wood processors.

Woodworkers - when selling boards to a furniture manufacturer.

Manufacturer - when selling furniture to a trading company.

Transport company - from the manufacturer's payment for delivery of furniture to the store.

In each case, VAT will represent the product of the tax rate by the difference between the revenue received from the sale of a product (work or service) and the cost of its production (performance or provision).

The seller acts as a liaison between the budget and the buyer. But, as a rule, the seller himself is the buyer. Therefore, he will transfer to the budget the difference between the tax paid to the seller and withdrawn from the buyer.

Who is required to pay VAT?

Firms and individual entrepreneurs that apply the OSNO regime are required to pay tax. By general rule, for “simplers” the legislation does not provide for the need to pay tax. But there are exceptions.

When issuing an invoice to the buyer, in which the tax is highlighted as a separate line. In this case, the “simplifier” received tax from the buyer. Its amount should be transferred to the budget.

An invoice is the main document for VAT. The taxpayer is required to compile it for each sale. It states the amount that the buyer must pay to the seller. The seller accrues this amount for payment to the budget.

The presence of a company or entrepreneur as a tax agent for VAT. Such persons transfer tax to the budget for another payer. The status of a tax agent arises when carrying out operations on leasing state property. In this case, the tax is paid not by the recipient of the money (the lessor), but by the payer (the tenant).
The company is a foreign legal entity that operates in the Russian Federation. If the company is registered with the Russian tax authorities, then it independently transfers the tax to the budget. If the company is not registered in the Russian Federation, then the VAT is paid for it by the tax agent - Russian organization. In this case, the status of a tax agent arises when (Article 161 of the Tax Code of the Russian Federation):

purchasing goods, works or services from a foreign legal entity;
sale of goods of a foreigner on the territory of the Russian Federation and the provision of services under an agency agreement, performance of work, as well as the implementation of property rights under agency agreements, agency or commission agreements.

VAT 0, 10, 18 and 20 percent

In 2018, tax legislation provides for three main tax rates:

10% (10/110);
18% (18/118).

The application of the rate depends on the type of transaction performed. For the list of transactions, rates established for them and conditions of application, see Article 164 of the Tax Code of the Russian Federation.

There is also an estimated rate of 15.25%. The Tax Code provides for two cases for its application:

sale of the enterprise as a whole as a property complex (Article 158 of the Tax Code of the Russian Federation);
sale of electronic services by foreign legal entities (Article 174.2 of the Tax Code of the Russian Federation).

Important!
From 01/01/2019, the VAT rate of 18% was increased to 20% ( the federal law dated August 3, 2018 No. 303-FZ). The calculated rate is 20/120. Rates 0 and 10 (10/110)% remained at the same level.

The BukhSoft program will automatically calculate the tax, carry out accounting operations and prepare all Required documents. Try it for free

Reflect VAT in accounting

The most commonly used rate is 18 percent. Article 164 of the Tax Code provides for the following cases:

sales of goods not taxed at rates of 0%, 10% and not at calculated rates of 10/110 and 18/118;
operations for the performance of work and provision of services (except for operations for leasing with the right to purchase breeding livestock and poultry);
operations for the transfer of goods, performance of work, provision of services for the company’s own needs (if the costs for them are not included in the calculation of the income tax base);
when a company carries out construction and installation work for its own needs;
operations of import of goods that are not taxed at a rate of 10% and are not exempt from taxation.

At a rate of 10%:

transactions involving the sale of food products from the legally established list on the territory of the Russian Federation are taxed;
import and sale on the territory of the Russian Federation of children's goods from the legally established list;
import and sale of scientific, educational and cultural periodicals and books on the territory of the Russian Federation;
air transportation across the territory of the Russian Federation of passengers and baggage (with the exception of the Kaliningrad region, Crimea and Sevastopol);
import and sale on the territory of the Russian Federation of medical goods from the legally established list.

The 0% rate is used:

in relation to operations for the export of goods according to the customs procedure for export and re-export within the framework of the conditions established by law;
when providing services for the export from the territory of the Russian Federation and the import into the territory of the Russian Federation of goods;
for transit air transportation of goods over the territory of the Russian Federation;
for the transportation of passengers and baggage to points of departure and arrival located outside of Russia.

A company or individual entrepreneur has the right to refuse to apply a 0% rate on transactions for the sale of goods for export outside the EAEU and switch to rates of 10% or 18%. This is also possible with regard to individual works and services for the transportation of such goods. To refuse the application, submit an application to the Federal Tax Service no later than the 1st day of the quarter in which the refusal to apply is expected to begin.

What does estimated VAT rate mean?

The estimated rate is used to separate the amount of tax from the total cost of a product, work or service. In 2018, two settlement rates are used:

18/118 (when calculating tax on value at a rate of 18%);
10/110 (when calculated from the cost at a rate of 18%).

From 2019, instead of 18/118, you will need to use a calculated rate of 20/120.

How to calculate VAT

To calculate VAT, perform the following steps (Article 173 of the Tax Code of the Russian Federation):

Calculate the amount of tax due.
Determine tax deduction.
Find the amount of tax to be restored.

What does VAT mean for calculation?

It is determined for each taxable transaction using the formula:

Calculation of VAT payable to the budget

The amount to be paid is determined based on the results of the tax period (quarter) according to the formula (Article 163 of the Tax Code of the Russian Federation):

What is VAT deduction in simple words

VAT deduction in simple words is the difference paid to the budget between the tax that was paid to the seller and withdrawn from the buyer.

Only companies and individual entrepreneurs on OSNO, which are not exempt from the duties of a VAT payer, have the right to deduction. If these requirements are not met, then the tax amounts are either included in the cost of purchased goods, works or services or reflected separately in expenses.

In addition, the simultaneous fulfillment of four conditions established in the Tax Code is required:

the supplier submitted the tax, that is, the amount is reflected in the contract, invoice and primary report for the transaction being implemented;
the buyer purchases goods, works or services to carry out transactions subject to VAT;
the buyer accepted goods, works or services for accounting after their acquisition;
the buyer received a correctly executed invoice or a universal transfer document.

What does VAT reinstated in the tax period mean?

The Tax Code provides for buyers the obligation to restore previously accepted tax deductions in the following cases (Article 170 of the Tax Code of the Russian Federation):

When previously acquired property, intangible assets, property rights were transferred as a contribution to the authorized (share) capital.
A company or individual entrepreneur begins to use the right to tax exemption.
When goods, works or services originally purchased for taxable transactions will be used:

in transactions exempt from taxation (Article 149 of the Tax Code of the Russian Federation);
for which the territory of the Russian Federation is not the place of sale;
not recognized as implementation (Article 146 of the Tax Code of the Russian Federation).

When a company or individual entrepreneur switches to the simplified tax system, “imputation” or PSN. In this case, the deduction is not restored if the transition is made to the unified agricultural tax regime.
If a company or individual entrepreneur received a subsidy or budget investments from the budget of any level to cover the costs of paying for goods, work or services, for paying VAT when importing goods into the territory of the Russian Federation.
When an advance was paid for the supply of goods, performance of work or provision of services and when the seller returned the advance.
When the cost or quantity of goods, works, services or property rights received has decreased, including due to a price reduction by the seller.

Example of calculation and reflection of VAT in accounting

The publishing house publishes a quarterly scientific journal. A certificate from Rospechat confirms that it belongs to preferential types of printed products, taxed at a rate of 10%.
Expenses for printing services for printing the first issue with a circulation of 1000 copies. in the first quarter amounted to 236,000 rubles (including VAT - 36,000 rubles).
Salary expenses for own personnel (including mandatory insurance contributions) - 98,000 ₽
Second order subaccounts have been opened to account 90.1:
“Transactions taxed at a rate of 10%”;
“Transactions taxed at the rate of 18%.”
The price of one copy of the magazine without VAT is 250 ₽
Subscriber tax amount:
250 ₽ × 10% = 25 ₽/copy.
Price with VAT:
250 ₽/copy. + 25 ₽/copy. = 275 ₽/copy.
The entire circulation was sold by direct subscription. The money has arrived in the bank account.
Postings in the first quarter:
– 200,000 ₽ (236,000 ₽ – 36,000 ₽) – printing costs;
– 36,000 ₽ – input VAT for printing;
Dt 68 subaccount “VAT calculations” Kt 19
– 36,000 ₽ – input VAT is accepted for deduction;
– 236,000 ₽ – payment for printing services;
Dt 20 Kt 70, 69
– 98,000 ₽ – expenses for staff salaries;
– 298,000 ₽ (200,000 ₽ + 98,000 ₽) – the publishing house received the circulation received from the printing house in its warehouse;
Dt 62 Kt 90.1 subaccount “Operations taxed at a rate of 10%”
– 275,000 ₽ (275 ₽/copy × 1000 copies) – sales revenue;
Dt 90.3 Kt 68 subaccount “VAT calculations”
– 25,000 ₽ (25 ₽/copy × 1000 copies) – tax on sales proceeds;
Dt 90.2 Kt 43
– 298,000 ₽ – write-off of the cost of the sold circulation.
The publishing house had no other operations. Based on the results of the first quarter of VAT:
accrued for payment to the budget in the amount of 25,000 ₽;

accepted for deduction in the amount of 36,000 ₽

There is a difference:
36,000 – 25,000 = 11,000 ₽ (can be reimbursed from the budget in accordance with Article 176 of the Tax Code of the Russian Federation).

This tax is paid by all legal entities and individual entrepreneurs who apply the basic tax system.

The essence of the tax

The tax payer is the final consumer of the purchased product or service received.

It is he who pays this tax to the seller, since the latter is included in the price of the goods. And the seller, in turn, pays this tax to the state.

Story

In Russia, such a tax as VAT appeared in 1992. It was put into effect.

This law lost its force in 2000, when this tax “passed over” to Chapter 21 of the Tax Code of the Russian Federation. The introduction of this tax came to Russia from abroad, and more specifically, from the USA.

Today, the practice of applying VAT in all countries is the same, only the rates and benefits differ.

The VAT rate in Russia has changed several times:

This tax first appeared in France in 1942. It was formed from a sales tax, which did not take root in France, as it had many shortcomings.

In 1948, a French economist came up with a system for paying and refunding taxes - the prototype of today's VAT. In this form, the tax has taken root not only in France, but throughout the world.

As already mentioned, Russia adopted the experience of using VAT from the United States. It is in the form in which the VAT is now used that it was “modified” by American economists.

Since 1990, Russia has had a sales tax, which did not bring the desired effect. In 1992, when the country's economy was on the verge of collapse, it was necessary to rebuild the tax system.

Then the proposal to introduce VAT arose. This was done by the government of Yegor Gaidar, who developed the above-mentioned law.

Definition

Value added tax is an indirect tax that is payable to the budget at the time of sale of goods, or provision of services, or performance of work.

It is formed at all stages of production, and represents a fee for the formation of the final cost of a product, work or service.

Elements of taxation

Like any other tax, VAT has its own elements. This:

subjects, that is, taxpayers. This tax is paid by legal entities and individual entrepreneurs applying the basic taxation regime. Special regimes also pay VAT in some cases. Subjects for this tax are listed in;
objects of taxation. Based . The objects of this tax are:

Sale of goods and property rights, as well as performance of work and provision of services, confirmed.
Import of goods into the territory of our country.
Transfer on the territory of our country of goods that are needed for the taxpayer’s own needs, and the maintenance costs of which are not taken into account when taxing profits.
Construction and installation work for own consumption.

the place of implementation may or may not be the territory of our country. To determine it, you must be guided by the provisions and;
The tax base is the basis from which the tax is calculated. It is determined in accordance with;
tax period – for VAT this is a month;
tax rates - they can be equal to 18%, 10% and 0% of the tax base;
procedure for calculating VAT tax;
tax deductions;
tax payment and reporting;
its compensation by .

VAT for dummies

If we talk in simple language, then VAT is a payment to the state for allowing entrepreneurs and legal entities to sell goods, works or services, while “increasing” their price on them.

This is an indirect tax, that is, it is paid by the seller of the product, work or service, but it is levied by the final buyer of the product.

Example: when buying bread from IP Ivanov, the buyer pays the cost of the loaf in the amount of 36 rubles, of which VAT = 5.5 rubles. At the same time, the buyer paid it by purchasing a loaf of bread, and individual entrepreneur Ivanov will pay the tax to the budget.

Every taxpayer must register "incoming" and "outgoing" invoices using .

It is in these documents that the amount of tax is reflected. The difference between the “input” and “output” taxes is subject to payment to the budget.

Beginning entrepreneurs and accountants do not know which taxes VAT applies to - federal or regional? And what budget should it be paid for? VAT is a federal tax and must be paid to the federal budget.

Tax characteristics

The characteristics of VAT are:

taxpayers – who pays this tax. This element is described in detail in Article 143 of the Tax Code of the Russian Federation. According to this article, tax is paid by organizations and individual entrepreneurs that apply the general taxation system;
the object of taxation is what is subject to this tax. These objects are listed in Article 146 of the Tax Code of the Russian Federation. These include proceeds from the sale of works, goods or services, as well as property rights on the territory of our country, as well as proceeds from the sale of imported goods;
interest rate. There are 3 VAT rates in Russia – 18%, 10% and 0%. Interest rates are shown in ;
place of sale is the place where goods, services and work are sold, and where tax should be paid;
The tax base is the basis for calculating tax. In simple terms, this is sales revenue. How to correctly calculate the tax base is indicated in Article 153 of the Tax Code of the Russian Federation. The formula for calculating VAT is as follows:

tax period is the period for which VAT must be calculated and paid. According to, the tax period for VAT is a month. That is, the amount of tax that the taxpayer calculated for the quarter is subject to payment to the budget;
tax deductions. Every taxpayer has the right to apply tax deductions. You can deduct from the amount of VAT calculated for the quarter the amount of tax that was generated when purchasing goods, providing services or performing work by third-party organizations. Such VAT can be deducted if the counterparty also uses the OSN and has issued an invoice with the specified amount. It is worth remembering that only the presence of an invoice gives the right to apply a deduction according to.
tax payment procedure and deadlines. Tax reporting must be done by the 25th of the next month following the quarter. That is:

You must report using . Tax must be paid by the 20th day of each subsequent month following the reporting quarter.

Taxable period

As already mentioned, the tax period for VAT is a month. This is stated in Article 163 of the Tax Code of the Russian Federation.

For taxpayers whose sales revenue for the previous quarter, excluding VAT, amounted to less than 2 million rubles, then for such organizations and individual entrepreneurs the tax period will be a quarter.

However, for all organizations the billing period is a quarter. The tax amount due must be calculated every month. And pay based on the results of the quarter.

Scheme: calculation of the amount of VAT payable to the budget

The tax is paid every month, during the quarter following the billing quarter, in equal installments. For example, the amount of tax calculated for the 2nd quarter is 210 thousand rubles.

Consequently, the taxpayer must pay 70 thousand rubles by the 20th of each next month - 70 thousand by July 20, 70 thousand by August 20 and 71 thousand by September 20.

If the amount of tax to be paid is not divided into equal parts, then the first 2 times you need to pay the tax, rounding it up to zero, and the third time - rounding it down.

For example, the amount of tax payable for the 2nd quarter is 167 thousand rubles. In this case, the taxpayer must pay 55,667 thousand rubles each by July 20 and August 20, and 55,666 rubles by September 20.

They say that it will not be a violation of tax legislation to pay VAT in the entire amount for the quarter, that is, the taxpayer will not “split” the amount of tax payable, but will pay it all at once in a one-time payment.

What is it needed for

Why is VAT needed? Why did he change the sales tax in “his post” in 1992? Indirect taxes actively play a leading role in the formation of the federal budget.

And VAT is no exception. This tax makes up the majority of our country's budget revenue. VAT alone accounts for 40% of budget revenue.

From year to year, VAT revenues are only increasing. This suggests that many large taxpayers have appeared in Russia who do not have the tax right to apply preferential regimes.

As VAT revenues increase, the number of evaders does not decrease. Over the past 5 years, their number has decreased by only 2% - this is a “drop in the bucket” compared to their total number.

The annual damage from the activities of such companies and individual entrepreneurs annually amounts to 30 billion rubles.

Is it profitable to work with VAT?

When opening your own business, you should think about choosing a taxation system - the main regime or one of the preferential ones. Of course, there are types of activities for which preferential treatment cannot be applied.

But, for the most part, aspiring entrepreneurs wonder – what are the benefits of working on VAT and is it worth using this regime?

Of course, the point is to reimburse the tax; by working with the same partners, the taxpayer “compensates” for the tax.

Video: VAT from 2015 - shocking news for accountants and businessmen

It is worth recalling that the difference between the “issued” and “received” invoices is subject to payment. In practice, this is not such a large amount.

That is why enterprises using SST do not want to work with beneficiaries. The latter do not pay VAT and, therefore, cannot reimburse it.

Work without value added tax

However, there are more and more VAT beneficiaries every year. Some large enterprises open small companies to carry out only one type of activity, which is preferential.

It's more profitable to work this way. Why is a corporate tax needed and what are the pros and cons of using it?

pros

The main advantage of working without VAT is that the amount of reporting is reduced significantly. VAT is the most controversial tax in Russia, and sometimes even experienced accountants get confused with the calculation.

What can we say about young entrepreneurs who are just learning the basics of business and accounting. VAT calculations and reporting on this tax take up the lion's share of an accountant's working time during the reporting period.

Some large companies have an accountant who deals only with the calculation of VAT payable and the preparation of reports on it.

Minuses

However, there are also disadvantages to working on preferential terms. The main one is the inability to work with large buyers and customers.

The fact is that if an organization operates without VAT, then it does not reimburse it. Large customers and buyers “lose” those amounts of tax that are not reimbursed by the benefit recipient.

For example, Beta LLC applies OSN, and Alpha LLC is a beneficiary. Beta LLC also bought Alpha LLC goods in the amount of 1,180 rubles (VAT - 180 rubles).

Since Alpha LLC is a benefit recipient and does not pay VAT, they cannot issue an invoice with the tax amount. Consequently, Beta LLC “lost” 180 rubles - they will have to pay it themselves.

You can voluntarily “leave” the preferential regime, having calculated all the pros and cons of working on it. People think about this when “a lucrative contract looms on the horizon.”

Large amounts of income “cover” all the disadvantages of working on VAT – quarterly reporting and keeping journals for recording invoices.

Actual problems

The main problem of VAT is the correct calculation of its tax base for calculation. There are such “ambiguous” operations for which the tax base can be calculated in several ways.

For example, a company was presented with a claim in the amount of 100 thousand rubles for low-quality goods. Is the claim subject to VAT? The Tax Code of the Russian Federation does not say anything about this in detail.

However, there is one that says that there is no need to calculate VAT on the claim amount.

Incorrect calculation of the tax base will lead to incorrect calculation of the tax amount, and, as a result, to incorrect payment. Paying an incomplete amount of tax is a tax offense and carries with it liability.

In 2015 they planned to return the sales tax. This has not yet been done, but legislators have not “abandoned” this idea. Sales tax is the main “competitor” of VAT.

In essence, this results in double taxation on sales – both VAT and sales tax. The burden of paying these taxes falls on the end consumer.

Since 2015, the VAT declaration has become significantly fatter. Now it includes logs of “incoming” and “outgoing” invoices.

This did not cause much joy among accountants. But it added more work to the tax authorities. This was done in order to track VAT evaders.

And although VAT has been in effect for many years, there are some shortcomings in calculating the tax base and the tax itself.

Video: important topic. VAT on reimbursement of transportation costs

VAT is the most complex and controversial indirect tax in Russia. Tax authorities monitor its calculation and payment more than other taxes.

This indirect tax is the basis for the formation of the revenue side of the budget of our country.

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The term VAT appears everywhere. The fact is that value added tax (abbreviated as VAT) is a form of indirect tax. VAT can also be called one of the forms of withdrawal to the state treasury of a certain part of the entire cost of a product, service or any work.

This form of withdrawal to the budget is created literally at all stages of the production of a particular product, work or service, after which it is entered into the state budget as the goods are sold.

Benefit from VAT

This allows the final buyer of a product or service to pay tax to the seller on the entire price of the product he purchased, but the entire amount is sent to the state budget even before the purchase of the product occurs.

The whole point is that a tax on the entire price of a product, the so-called “added” to the price of the purchased product, work or service necessary for production, is paid to the treasury by everyone who takes part in the production of raw materials, goods, services or any work at various stages of the commercial cycle.

VAT rate in Russia

The VAT tax rate in Russia is 18 percent.

This tax rate is used by default, but if the transaction being performed is taxable at a rate of 10 percent or at a rate of 0 percent, then everything is different.

History of VAT

The value added tax was invented back in 1954 by the French scientist Maurice Loret. At one time, he was the head of the Tax Directorate in the French Ministry of Economy, Finance and Industry.

In order to confirm the need and benefits obtained from VAT, Maurice Loret conducted an experiment on one of the French colonies - Côte d'Ivoire.

Successful experiment

This experiment was carried out in 1954. After the experiment with VAT was considered successful in this African country, value added tax was introduced in France.

Already in 1958, France became the first country to introduce VAT on its territory. After this, all other states of Western Europe followed the example of France, and the EEC Council ordered its members to introduce a value added tax for all entities economic activity on the territory of countries before December 1972.

Features of VAT

For the average buyer of a product, VAT is very similar to a tax levied on turnover or sales. That is, the seller adds VAT to the price of goods, services or any work purchased by buyers. However, things are a little different because turnover taxes or sales taxes work completely differently.

The fact is that if the buyer of a product also pays VAT (purchases a taxable product), then when calculating the entire amount of his obligations to the state treasury, he can deduct from the total amount the entire tax that was received from the buyer, as well as the amount of tax , which was paid to the supplier for goods also subject to tax.

This entire complex process makes the tax indirect, and the burden of paying VAT lies not with the trader, but with the final consumer of the product or service. In special payment receipts, VAT is highlighted as a separate line.

A similar taxation system is used to implement a number of tasks.

The main task of VAT is to distribute the payment of tax to the treasury between different stages of the commercial cycle. This eliminates the so-called “cascade effect”. The “cascading effect” is when taxes are levied on the same product multiple times. In modern conditions economic development There is a lot of waste involved in producing a product. As a result, the “cascading effect” can cause a significant increase in the entire amount of tax paid.
The fact is that by distributing the responsibilities for paying taxes to the treasury among different taxpayers, it is possible to minimize all risks of tax evasion. With a sales tax system, evasion of payment leads to the loss of the entire tax, and with VAT, non-payment of taxes by one of the participants in the commercial cycle will allow the same amount to be received into the treasury, but at different stages.

Of course, in modern world There are many ways to evade taxes, but VAT significantly complicates illegal business activities.

VAT in a modern economy makes it possible to “clean” exported goods from local (national taxes) and allows the collection of this indirect tax within the framework of the “country of destination” principle. The ability to recover VAT that was paid by the exporter of a product to the supplier can ensure that all goods that were sold to a country that also has a VAT system are fully exempt from local indirect taxes. As a result, this will lead to the fact that local indirect taxes will not have any impact on the competitiveness of local production.

For the end consumer, VAT is the same as regular sales tax, because such a consumer has no way to deduct the tax. This means that the amount of tax paid for the consumer is a nominal tax burden.

Interesting fact: VAT is completely absent in the USA. This country imposes a special sales tax instead of VAT. The rate of this tax can range from 0% to 15%.

VAT in Russia

VAT was introduced in Russia back in 1992. It was then that the procedure for calculating this tax (as well as the procedure for its payment) was determined by the special law “On Value Added Tax”. This tax is regulated by the Tax Code of Russia in Chapter. 21 since 2001.

It is worth adding that some taxpayers and activities are completely exempt from VAT. In the Tax Code of the Russian Federation you can find more than 100 cases of VAT benefits.

Who are VAT payers?

Industrial, financial, state and municipal companies of any form of ownership that have the status of a legal entity and are engaged in any commercial or production activities.

Banks and insurance companies are required to pay VAT.
Companies that have any foreign investments and also carry out any commercial activities.
Family-owned private enterprises that engage in commercial or industrial activities.
Branches and branches of enterprises that have current accounts and sell goods.
Individual entrepreneurs.
Some persons who are involved in the movement of goods across the state border Customs Union(which includes the Russian Federation).

What transactions are subject to mandatory taxation?

1. Sale of any goods or services in Russia. Companies that provide services free of charge are also subject to taxation.

2. Performing any services and work on the territory of Russia for one’s own needs.

3. All types of construction and installation work (including for own consumption).

4. Import of any goods into the territory of Russia or territories that are under its jurisdiction.

5. Objects of taxation are not:

6. Operations that are not recognized as sales of goods, services or work.

7. Transfer of some objects completely free of charge. This also applies to the transfer of roads, electrical networks, substations and other facilities in favor of the state.

8. Transfer of any property of state enterprises, which is purchased according to the rules of “privatization”.

9. All operations for the sale of land plots.

10. Performance of any work by public authorities.

11. Transfer of objects and provision of works or services free of charge for the needs of public authorities.

12. Transfer of property rights.

13. Transfer of money or real estate to form or replenish the target capital of an NPO.

14. Provision of services to NPOs

15. Carrying out work to reduce tension in the labor market of the Russian Federation.

16. Some operations for the transfer of state property on the territory of the Russian Federation.

The abbreviation VAT is very often used both in everyday life and when conducting business, but the essence of value added tax is quite difficult to define in a nutshell. Even experienced accountants and managers cannot always explain what VAT is in simple words and why it is needed. However, in order to understand the functions of VAT in the tax system, there is no need to delve into the nuances of calculations and legislative norms.

We’ll tell you what VAT is in simple words – an explanation of the definition, the mechanics of calculation and collection, recent changes in tax legislation.

VAT - what is it?

Value added tax (VAT) is a fee paid to the state on the cost of goods, work, services at each new stage of production upon sale. The legislative concept itself in Chapter 21 of the Tax Code of the Russian Federation demonstrates the essence of the tax quite accurately. From the perspective of the average consumer, it is similar to a sales or turnover tax. The difference is that if the seller also pays VAT, the buyer, when calculating the total amount of his tax liability to the state, has the right to deduct from tax the amount he paid to his supplier for goods, works or services subject to VAT.

The following main distinctive features of value added tax can be distinguished:

This is an indirect tax, it is already included in the price of the product;
As a result, VAT is paid by the consumer, since when determining the cost of products, the seller adds it to the cost of goods, works or services;
the consumer pays the entire amount of VAT when purchasing a product, but the state begins to receive it before this moment, since the tax on their part of the added value to the cost of purchased materials, raw materials, works or services is paid by everyone who participates in the production process at the stage of selling the product they produce .

In this way, several goals are achieved: the tax is evenly distributed among all producers and sellers, the risks of non-payment of the duty are reduced, export goods are exempt from all national indirect taxes, which helps to increase their competitiveness, since exporters are exempt from paying VAT and can return the tax paid to their suppliers .

Definition and calculation

In accordance with the norms of the Tax Code of the Russian Federation, VAT is also calculated; the formula looks quite simple:

VAT on sales = tax base (cost of goods) x VAT rate.

However, we must not forget about the deduction of “input” VAT, which has already been paid to suppliers. Thus, the following formula is obtained:

VAT payable = VAT determined upon sale - VAT deductible.

Simple example: The organization sews and sells blankets, for which it purchases fabric and threads. To sew blankets, you need fabric worth 90 rubles and threads worth 10 rubles. When they are purchased, the company already pays VAT, it is included by suppliers in the cost of the goods, this is input VAT. Thus, previous manufacturers are paid 100 rubles for materials, which already includes VAT - 18 rubles.

Next, the company produces a new product, while attracting workers who are paid wage in the amount of 20 rubles (with all deductions), other expenses are incurred in the amount of 10 rubles. Of course, the company, as a result of selling products, intends not only to cover them, but also to make a profit. Therefore, the price for blankets is set at 150 rubles. Thus, the company becomes a VAT payer, as it accrues added value. The tax calculation base is 150 rubles. VAT charged to buyers will be 150x18% = 27 rubles. As a result, it turns out that the organization will sell blankets at a price of 150 + 27 = 177 rubles.

When proceeds from the sale are received, the organization will have to pay VAT. But you need to pay not 27, since input VAT was already paid when purchasing raw materials, but 27-18 = 9 rubles.

The taxpayer independently calculates VAT in the declaration - the reporting document on which taxes are paid. A calculator for calculations can be found online on specialized websites, but only official resources, for example, the website of the Federal Tax Service of the Russian Federation, are trustworthy.

Changes and latest news

In the summer of 2018, the State Duma of the Russian Federation adopted in the third reading a bill to increase the VAT rate to 20%. Accordingly, Chapter 21 of the Tax Code of the Russian Federation “Value Added Tax” will undergo changes. VAT in 2018 is still 18%, but after the law comes into force (the document requires the signature of the President of the Russian Federation), in 2019 the tax will increase by 2%.

In this case, the value added tax rate in Russia will catch up with or even exceed those in many developed countries. For example, in the UK and France the VAT rate is 20%, and in Germany 19. In countries such as the USA, Canada and Japan, VAT is not applied at all; sales tax is used instead.

What is VAT

VAT ( Value added tax) - This a type of tax on the consumption of goods and services, in which at each stage of production a mark-up is added in the amount of the VAT rate established in the state.

What is VAT in simple words (explained).

In simple words, VAT is a special form of indirect tax, in which at each stage of production of a product, at the time of its sale, a tax margin is added to its cost until sale to the final consumer. Despite the ornateness of this definition, the essence of VAT is a tax on the direct consumption of goods or services. In turn, this means that no matter how complex and confusing such a tax system may be at first glance, in the end this tax will be paid mainly by the end consumer. In other words, we can say that VAT is the markup that the state receives on almost every item or service sold to the end consumer.

In fact, what an ordinary person (individual, consumer) needs to know about VAT:

Despite the fact that the definition indicates the addition of a markup at each stage of sales, this does not mean that the final cost of the product will increase depending on the number of such markups. As a result, the price, without taking into account the cost of the product and the manufacturer’s income, will increase only by the amount of the VAT interest rate established by the state. This is due to the VAT compensation system for all taxpayers with the exception of the end consumer.
The VAT rate is directly relevant to ordinary consumers, since they are the ones who will ultimately pay this tax at the time of purchasing a product or service.
VAT rates vary depending on the group of goods or services. For example, the rate for medical drugs may be lower than for luxury products. On products that the country exports, as a rule, the VAT rate is 0%.

Why is VAT needed and who pays it?

If you understand why VAT is needed in general, then you should note the important fact that this particular tax plays a very important role in filling the budget of a particular country. And this is very logical, since every day millions of sales or resale transactions are carried out, from which the state receives taxes. In addition, such a tax system allows you to receive taxes from the manufacturer without waiting for the actual sale of the finished product to the end consumer.

Regarding who directly pays VAT ( physically transfers money to the state treasury) and deals with all accounting operations, then this is mainly: Legal entities and Private ( individual) entrepreneurs. The end consumer does not need to pay these fees on their own, since they are already included in the final price of the product. Nevertheless, the check indicates in a separate column the amount of maximum allowance that will be paid to the budget for this purchase.

How VAT works

The best option for a general understanding of how VAT works is a simple example:

Let's say we have a factory for sewing jeans, and our VAT rate is 20%;
In order to sew a pair of jeans, we need to buy material from the manufacturer;
Manufacturer of fabric, sells it for 100 USD. but, when selling, in accordance with tax legislation, he must add 20% VAT, in the end we actually buy it for 120 USD;
Having purchased fabric including VAT and following all formalities, we have the right to compensation for this tax from the budget. IN ideal, the state returns this money to us ( compensation schemes may be different, depending on the legislation of a particular country);
We then make jeans from this fabric. Taking into account the cost and our earnings, we form an acceptable price for us at 200 USD. But now we, as entrepreneurs, are subject to the tax law and are forced to include a 20% MDV in the price when selling our jeans. As a result, we sell them for 240 USD. We keep 200 for ourselves, and send 40 to the country’s budget;
The buyer who purchased jeans for 240 USD is a private individual and will use them for their intended purpose without reselling them. Thus, he does not need to deduct anything to the tax office, since we did it instead, including the maximum permissible value in the final price of the product.
As a result, the consumer paid the tax, and the producers received a VAT refund. Such a production chain may be much longer, but the essence of the scheme will remain the same.

Value added tax in reality.

It should be noted that everything described above quite often works well only on paper. In reality, the operation of this scheme and price formation may differ depending on legislation or other factors. So, for example, the simplest error in an invoice can lead to the fact that the manufacturer is not compensated for VAT. In turn, this trouble can lead to the fact that the manufacturer simply includes its losses in the cost of production. As a result, the final cost of the product will increase.