Russia: New VAT rules for e-services, effective 2019 | KPMG | GLOBAL

Russia: New VAT rules for e-services, effective 2019

Russia: New VAT rules for e-services, effective 2019

New value added tax (VAT) rules with respect to business-to-business (B2B) supplies of e-services provided to Russian customers will be effective under new legislation beginning 1 January 2019.

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Under the new VAT rules, there will be new registration and reporting requirements. 

  • VAT registration with the Russian tax authorities will be required of foreign B2B e-service providers. The threshold for registration will be sales of e-services having a value of 1 RUB to Russian customers. Foreign suppliers, therefore, will need to register if they make sales of e-services or charge Russian customers with an e-services fee.
  • There will also be VAT reporting and remittance requirements as well as the requirement to maintain an e-services sales ledger.
  • The amount of VAT will need to be listed separately on the invoice.
  • Legal entities, individual entrepreneurs, branches or offices of foreign companies registered in Russia will be subject to the new VAT measures. Whether an entity is located in Russia will be determined based on the registration of the company, brand or entrepreneur with the Russian tax authorities.
  • Russian business customers will need to prepare documents with respect to offsets of the VAT on e-services received from foreign suppliers.

The supplier (or the electronic platform) will be solely liable for the VAT, and the corresponding VAT returns will have to be filed quarterly.  

There are exemptions from the VAT liability for e-services. For instance, the provision of rights to use software (including electronic games) and databases based on a licensing agreement or on tangible media will be exempt from VAT under this new measure.

 

For more information, contact a tax professional with the KPMG member firm in Russia:

Anton Kuzminykh | akuzminykh@kpmg.ru

Anton Grebenchuk | agrebenchuk@kpmg.ru

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