Module I·Article III·~1 min read
VAT: Mechanism, Refund, Chains, and Risks
Fundamentals of Taxation
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How VAT Works
Value Added Tax (VAT) is an indirect tax levied at each stage of the creation and sale of goods/services. The key principle: each participant in the chain pays VAT only on their own value added.
Example: The manufacturer sells a product for 120 rubles (including VAT of 20 rubles). The VAT payable by the manufacturer: 20 rubles. The distributor buys at 120, sells at 180 rubles (including VAT of 30 rubles). The VAT payable by the distributor: 30 - 20 = 10 rubles (credit for input VAT). The retailer buys at 180, sells at 240 rubles. VAT payable: 40 - 30 = 10 rubles. Total VAT remitted to the budget: 20 + 10 + 10 = 40 rubles = rate × final price excluding VAT (200 × 20%).
VAT Rates in Russia
20% — standard rate.
10% — preferential: foodstuffs (basic), children's goods, medical goods, books, periodicals.
0% — export (+ right to refund input VAT); international transportation.
Exemption from VAT: financial services (banks, insurers), medical services, education.
VAT Refund on Export
When exporting goods, a 0% rate applies. The company is entitled to refund "input" VAT (paid to suppliers). This stimulates exports. Mechanism: confirm the export (customs declaration), file the return, the Federal Tax Service verifies (desk audit — 3 months), refund.
The problem of VAT fraud (carousel fraud): creating chains of fictitious companies for illegal VAT refunds. Annual losses in the EU: €50+ billion.
Practical Assignment
A company sells software to Russian and foreign (EU) clients. (1) Is Russian B2B SaaS subject to VAT? (2) Under what rules is SaaS sold to a client from Germany taxed? (3) Can the company apply the zero rate? (4) What should be known about the "Google tax" (VAT on foreign digital services in Russia)?
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