On 19 July 2011 Federal Law # 245-FZ was adopted. The law significantly changes the VAT rules and will have a substantial impact on companies’ VAT liabilities. We have already analyzed the changes and are happy to present to you a short summary of the core changes and main issues that may impact your business. The majority of new provisions will go into force on 1 October 2011.

 

Correcting VAT invoices

 

When the price/volume of prior supplies change, corrected VAT invoices need to be issued:

• Is your IT system up to date?
• How should contracts with suppliers and purchasers be changed?
• Should you alter your internal document flow?

 

Input VAT allocation on zero rated and exempt supplies

 

The methodology used to calculate VAT requires modification:

• How should tax policy be changed?
• How to deal with the issues that arise when transitioning to the new methodology?
• Is your IT system ready?

 

Place of supply rules for businesses operating on the Russian continental shelf

 

New rules affect the supply of goods, drilling, well servicing, subsea works, pipeline installation, exploration of hydrocarbons, construction, geological surveying, transportation, etc. These activities may become subject to Russian VAT.

 

Some other changes which may also be relevant

 

• Payment of export revenues is no longer needed to confirm a zero VAT rate
• Transit through the territory of the Customs Union is zero rated
• VAT on the sale of A/R is due on the difference between the sale price and the cost
• FOREX – no more impact on VAT