Can IPs work with VAT? Taxes in Russia

Many newly registered entrepreneurs have a question: "Can IPs work with VAT?". There are many nuances of applying this tax, including individual entrepreneurs. If you try to answer the question briefly, you should definitely say: "Yes, they can." But in what cases - it is worth considering in more detail.

IP on OSNO

According to the law, the FE is subject to VAT, as well as to the organization, in the case when they are used by the OSHO.

Individual entrepreneurs are tax payers in respect of their actions made for profit, that is, as a result of commercial activities. As well as enterprises, the IP, the VAT payer, must register with the tax authority and at that moment has the right to choose as the taxation system of the USOS by submitting a corresponding application. If such an application by an individual entrepreneur is not submitted on time, he automatically becomes obliged to pay the tax and remains on the FUND.

IP on UTII

Avoid payment of an entrepreneur can also, if he becomes a payer of the UTII and ESKH, but only in the amount of employment, which is the basis for applying UTII. If the individual entrepreneur of the Russian Federation conducts several types of activities, he will have to conduct a separate account of each and may be under some VAT payer.

An exception

In this case, even those individual entrepreneurs who pay UTII in the situation of the importation of products and commodity groups to the territory of the Russian Federation from abroad, are obliged to pay tax on such goods.

USN for IP

If the IP is on the simplified tax system, but for 3 calendar months its profit exceeded 2 million rubles, it automatically loses the opportunity to use the simplified tax system and becomes a payer of the value-added tax.

Thus, to use the exemption from the need to pay an individual entrepreneur can, having a minor turnaround. As soon as its revenue exceeds the statutory limit of two million, the IP is automatically transferred to the OCHO and becomes a VAT payer.

Such rules provide for CSS for IP and organizations. To return the possibility of applying exemption from tax, he will be able only in the next calendar year, if he sends an appropriate statement to the inspection and will attach papers that can confirm his ability to apply the simplified tax system. Such documents are:

• Book of sales;
• A copy of the book of accounting for income and expenses;
• A copy of the invoice journal.

If, according to these documents, revenue for any three cumulative months of the reporting period did not exceed two million rubles, the question of whether the IP can work with VAT will be resolved negatively. IP returns to itself the possibility of using USNO for the next 12 months and, consequently, ceases to be a VAT payer. The application and the required papers must be submitted to the inspection no later than October 20 of the given year to provide an opportunity for the UPDF for the next year.

The implementation of excisable products

When selling excisable goods, the IP pays the value added tax to the Russian Federation, regardless of the taxation regime in which it is located. In following tax legislation such products for IP are:

• tobacco products;
• Passenger cars and motorcycles with an engine capacity of more than 150 liters. from.;
• Gasoline, diesel. Fuel, engine oils;
• Aviation kerosene, natural gas.

Despite the fact that alcohol is also included in the list of excisable products, mention of it when talking about PI does not make sense, since since 2014 IP is forbidden to sell alcohol, regardless of the type of taxation they are. This norm is fixed by law.

Value added tax, benefits

Legislatively there are a number of business options that are not subject to VAT taxation. Accordingly, if the IP conducts any of these activities, it is not necessary to pay the tax. Privileges for VAT are divided into mandatory, which can not be applied. In the case of such types of activity, the question of whether the IP can work with VAT will be resolved negatively. But there are also so-called tax preferences, namely, voluntary benefits, whether or not to apply which can be decided by the taxpayer.

Mandatory benefits

The following options for entrepreneurship are mandatory for non-application of VAT:

• Temporary use of buildings for foreign states or their residents.
• Trade, production of vital medical products, components, according to the list approved by law.
• Provision of services for medical diagnosis, prevention, treatment and rehabilitation, this list does not include veterinary clinics and cosmetology clinics.
• Providing services for caring for those in need of care, pregnant, disabled, elderly and children.
• Passenger transportation by urban, suburban and intercity automobile, railway, river and sea transport, except for taxis and shuttles.
• Provision of services and production of works provided by ritual agencies.

Preferences in the payment of VAT

Voluntary benefits can use IP or not at its discretion. It is not always possible to use the opportunity to not use VAT for an entrepreneur, some taxes in Russia give their pluses.

Often, large counterparties, levied on the basis of FASP, do not enter into contracts with enterprises and entrepreneurs exempted from VAT. Because such cooperation will deprive them of the opportunity to exercise their right to apply the deduction for purchased products. Sometimes, to attract beneficial counterparties, the entrepreneur consciously goes to the refusal of VAT exemption. In the areas of entrepreneurship given below, such a situation can take place. VAT preferences apply to:

• Production and trade of religious products. This, for example, religious literature, objects of worship.
• Provision of services and production of goods produced and sold by an individual entrepreneur with a disability, or in situations where the number of employees with disabilities, workers at the employer, in total exceeds 80 percent.
• Manufacture and trade of folk art goods, consisting of special lists of local authorities.
• Insurance of various types.
• Lawyers' offices.
• Trade tickets for film shows, concerts, mass-entertainment events.
• Work of developers, trade in living quarters or shares in them.

VAT rates

If the PI is a VAT payer, he will have to pay a tax to the budget on one of the three approved rates. There are taxes in Russia that have several variants of rates, VAT is one of them. In most cases, the VAT rate is 18%. It operates in all situations, unless otherwise stipulated by law.

Rate 0%

0% is used for exporting products for the territory of the country in the export regime, as well as for a number of activities:

• Transportation of oil and gas to the Russian Federation by pipelines;
• Transportation of passengers by suburban railway or air transport, when one of the destinations is located in the Republic of Crimea;
• Services of customs transportation of goods;
• Products imported to the territory of the Russian Federation by representations of foreign states duly accredited in Russia, subject to their use in the interests of diplomatic missions and families of diplomats for personal needs.

The rate of 10%

The 10% rate applies to an exhaustive list of goods, which include:

• Essential food products;
• Products made for children;
• All printed periodicals, besides containing erotic or advertising aspects;
• Medicines and products of medical value, except for vital, completely exempt from VAT;
• Breeding stock.

All other products and services not included in the above groups are subject to VAT at a rate of 18%.

Pros and cons of applying VAT

For IP, the application of VAT has much more disadvantages than pluses. Among them it is worth noting such weighty negative aspects as:

- Difference in the methods for recognizing income and expenditure on personal income tax and VAT. If an organization can pay a profit tax, choose a method of recognizing income and expenses, and thus bring together the accounting for two taxes, the IP does not have such an opportunity. In the tax legislation it is clearly indicated that incomes and expenses for the purposes of taxation of personal income tax must be applied for payment, and for VAT - on shipment. That is, in fact there will be a situation when in different accounting registers the IP will have various data at the end of the reporting quarter. This greatly complicates and complicates the work of the accounting department.

- Compulsory electronic VAT reporting, introduced since 2014 for enterprises of all forms of ownership, will also complicate the work of the accounting service and the IP itself. If the tax declarations for USOs and other special. Modes can still be handed in on paper, then the use of VAT automatically entails additional costs of money and time. It will be necessary to conclude an agreement for the transfer of data via telecommunication channels from the special. Operator, make digital signature of an entrepreneur, install additional software, ensure the availability of an Internet network at the workplace of an accountant or an entrepreneur, which, most likely, will require the conclusion of an agreement with the provider of communication services and additional costs.

- The complexity and bulkiness of the declaration on taxes also does not facilitate work. The VAT declaration will have to be paid quarterly, at the same time and pay a tax. In addition, the inspection more closely monitors the reporting of enterprises and IP paying VAT. This is due to a large number of violations in the field of VAT taxation.

Pros of VAT

The advantages of using VAT by an individual entrepreneur can be attributed to the more willing cooperation of large customers with VAT payers because of the possibility of applying deductions. Especially it concerns state contracts, major contracts in strategic areas of the economy.

If the IP plans to participate in such activities, the amounts of contracts can cover all the above-mentioned disadvantages. In addition, the fact of VAT application allows an entrepreneur to take into account the incoming VAT himself as a tax deduction, interacting with VAT payers not only in sales transactions, but also in purchasing transactions.

VAT return declaration

The VAT declaration for IP exists in several variants. It:

• Declaration on VAT for IP on OCHO.
• Declaration for IP on VAT on special. Regimes of taxation.
• Declaration on VAT on indirect taxes.

In the first situation, a standard VAT declaration is submitted. Since 2014, it must be submitted only in the electronic version. In the situation when errors are detected after the declaration is submitted, the inspectors should be sent to the inspectors immediately when these errors are detected. The declaration is submitted quarterly until the 20th day, with the option that the amount of revenue due to VAT for the last quarter was not more than one million. In other cases, the declaration is sent to the tax authority on a monthly basis also before the 20th day.

Declaration on VAT when on a special. Taxation regimes are sent to tax specialists in the implementation of excisable products or in the option of conducting several types of activities. One of which is levied on specials. Mode, and the other (others) do not. Such a declaration is also submitted electronically before the 20th day.

The declaration on indirect taxes is submitted for trade in products in the zone of the customs union. That is, when exporting products to the territory of Belarus. Such a declaration is submitted to the inspection after importation of products together with the import statement. In the variant, when the IP works with the organizations of Belarus, the question of whether the IP can work with VAT is decided unambiguously positively. A declaration is submitted until the 20th day after posting the goods to the accounting records. This type of declaration can not be adjusted. In the event of errors and omissions, another declaration of import is submitted.