Regulatory updates - Russia

On 30 September 2021, the Russian Ministry of Finance (MinFin) published General Guidelines for Budgetary, Tax and Customs and Tariff Policies for 2022 and the planning period of 2023 and 2024.

These guidelines list one of the structural changes in the tax policy of Russia – the launch of the new simplified tax regime STS.online (rus.: УСН.онлайн). Under this regime, small businesses will no longer have to file tax declarations themselves; the Federal Tax Service will calculate the due tax based on the data provided in the cash register and bank accounts.

At the beginning, only the micro businesses with a headcount of not more than 5 persons and annual revenue of max. RUB 60 million (ca. EUR 732000,00) will be able to join this regime. Moreover, the regime adoption will be voluntary.

As of 1 July 2022, four regions of the Russian Federation will participate in the pilot test of STS.online. These are Moscow and Moscow Oblast, Kaluga Oblast and the Republic of Tatarstan. In case of positive results, the countrywide regime implementation for all small taxpayers will start from 1 January 2024.

The change is expected to reduce the administrative burden for the business operators, combat tax evasion, and increase economic transparency.

According to Federal Law No. 371-FZ, taxpayers selling certain traceable goods imported to Russia and the EAEU (Eurasian Economic Union) are obligated to issue e-invoices. An RNPT batch registration number (РНПТ - регистрационный номер партии товара) will also have to be added to the invoices as of 1 July 2021.

This mechanism is created and implemented by the Russian tax authority FTS (the Federal Taxation Service) in order to control the information about the goods at all transaction stages, from importers to the end consumers, in the territory of the EAEU.

How does the traceability system work?

All goods imported to the Russian Federation and subject to traceability shall be assigned the RNPT number which assists in the track of goods until they are delivered to the end consumers. This number must be stated in the e-invoices or electronic shipping documents with every transaction of the goods.

The RNPT registration number is generated in two ways:

• For goods imported from the EAEU, the FTS assigns the number;
• In case of goods being imported from non-EAEU countries, the taxpayers form the number based on the registration number and the goods' serial numbers from the customs declaration.

Who is in scope?

In Russian Federation, e-invoicing for the B2B sector is voluntary. However, organisations such as legal entities and individual entrepreneurs, selling traceable goods are in the scope to follow the ordinance after July.

Issuing paper invoices will remain possible only in the following cases:

• The buyer is self-employed;
• The buyer is an individual purchasing goods for personal needs;

   

• The goods are sold for export (re-export) from the territory of the Russian Federation;
• The goods are sold from the territory of the Russian Federation to another EAEU member state.

Which goods are classified as traceable?

According to the Government Resolution № 807 of 25 June 2019, the list of traceable goods includes:

• Refrigeration and freezing equipment;
• Washing and drying machines;
• Industrial trucks;
• Construction equipment;
• Integrated electronic circuits and elements;
• Monitors and projectors;
• Baby strollers and child safety seats.

New requirements for the e-invoices

It will be required for the electronic invoices to contain the following information when selling traceable goods:

• RNPT registration number;
• Quantitative measurement unit of goods used for traceability purposes;
• Amount of the traceable goods.

In addition, it is possible for an invoice to contain information about both traceable and non-traceable goods.

The procedure of the new e-invoice reporting, as well as the required document format for the import of traceable goods, will be defined by the Government. Furthermore, the liability measures are expected to take effect as of 1 July 2022.

The main updates in the new tax code

• The standard VAT rate will increase from 18 to 20 %.
• The reduced rate of 10 % for certain food products, medical appliances, pharmaceuticals, educational, cultural and scientific materials and children’s products will be spared from the VAT tax hike.
• However, enterprise sales and foreign service providers of e-services will now have a VAT rate of 16.67 % raised from the previous 15.25 %.

What taxpayers should ask their local tax professional

1. For guidance on issues arising in connection with the VAT rate increase.
2. How the change in the tax rate will affect existing contracts; if this will eat into profit margins due to the addition of additional inputs.
3. How to offset the temporary increase in cash outflow.
4. How to modify the company’s internal systems to ensure that all transactions under the new rate are adjusted accordingly.

Practical issues accompanying changes to the VAT rate

• How will the VAT be calculated in relation to goods, work and services supplied after 1 January 2019 when advance payments have been made before that date?
• For goods returned after 1 January but purchased before, how will the seller reclaim the VAT based on an invoice presented by the purchaser with the new VAT rate applied?

Want to find out more?

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