07.02.2022

Input VAT in income tax expenses. VAT on the transfer of goods for own needs VAT on non-production expenses

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Does the taxpayer have a choice?

It is important to keep in mind that the norms of the law on tax deductions and the procedure for their application (Articles 171 and 172 Tax Code of the Russian Federation) are worn imperative character, i.e. mandatory. This means that the buyer, to whom VAT has been presented by the supplier, does not have the right to choose whether to include the amount of tax in expenses or declare it deductible.

Thus, if the taxpayer had grounds for deducting VAT, but for some reason he did not use it, then he is not entitled to include the amount of tax in expenses.

Unrealized right to deduct VAT: special cases

A situation where a company has not exercised its right to deduct VAT may arise for various reasons. The most common of them are the following:

lack of invoices issued by the seller;
missing the deadline for claiming the deduction.

The first situation often arises when making a purchase in a retail network. Most often, these are some “little things”, for example, stationery for the needs of the office or refueling a car. In this case, it is unlikely to receive an invoice from the seller, and, according to the tax service, it is illegal to claim a VAT deduction based on a cash receipt. The absence of an invoice will be detected immediately when.

It turns out that it is impossible to deduct the amount of VAT on acquired valuables, but at the same time, as mentioned above, it cannot be attributed to expenses that reduce the income tax base. However, those companies and entrepreneurs who have a desire to fight for the deduction of the amount of tax in this situation in court have every reason to do so.

The decision of the Presidium of the Supreme Arbitration Court No. 17718/07 dated 05/13/2008 determined that under such circumstances it is unlawful to refuse a taxpayer to deduct VAT. This is true provided that there is a cash receipt confirming the purchase, and that the fact that the taxpayer used the purchased goods outside the taxable activity is not proven.

Nonetheless official position of the Federal Tax Service has not changed: VAT can be deducted only on invoice, and the issues of submitting other primary documents as a justification for the deduction are resolved judicially.

Speaking of the second obvious reason why a taxpayer may lose the right to deduct VAT, let us turn to clause 1.1 of Article 172 of the Tax Code of the Russian Federation. Since its entry into force, namely from the beginning of 2015, the procedure applications for VAT deduction within three years from the moment the goods are registered. However, this deadline may also be missed, for example, by mistake or due to lengthy preparation of documents. Be that as it may, it is unlawful to claim a VAT deduction outside this period. That is, in this case, the tax will have to be paid, but it will not be possible to attribute its amount to the income tax expense account.

As an illustration, let's take the situation of a Russian exporting company that took too long to collect a package of documents to confirm the zero VAT rate. As a result, she declared an "input" tax on transactions taxed at a rate of 0% beyond the three-year period, and on this basis she was denied a deduction. The amount of tax that the company had to pay was included in income tax expenses, but the Supreme Arbitration Court did not agree with this position (determination of the Supreme Arbitration Court of the Russian Federation No. 305-KG15-1055 of 03/24/2015).

An example of a situation where VAT can be attributed to expenses

Another special case is also related to the non-confirmation of the zero VAT rate, however, it is not about the tax presented by the taxpayer, but about the cost of his services calculated “from above”. The situation is considered in the letter of the Ministry of Finance No. 03-03-06/1/42961 of 07/27/2015. The department is of the opinion that if the legality of applying a zero VAT rate cannot be confirmed, then the amount of tax calculated at a rate of 18 or 10% on the basis of subparagraph 1 of paragraph 1 of Article 264 of the Tax Code of the Russian Federation should be included in the expenses.

Making such a conclusion, the Ministry of Finance refers to the decision of the Supreme Arbitration Court of the Russian Federation dated April 9, 2013 No. 15047/12, issued in a dispute between a major Russian air carrier and the Federal Tax Service. The company was unable to collect documents to confirm zero VAT, calculated it at a rate of 18%, paid and included this amount in expenses that reduce profits. The tax service saw this as a violation. However, the SAC did not agree with this position and explained that the dispute was about VAT calculated “from above”. In this case, it is necessary to apply the rules of tax legislation on the accounting of these amounts as expenses. The court also indicated that this VAT should be charged to expenses immediately after the expiry of the 180-day period, which is provided for the submission of documents confirming the zero rate.

VAT included in bad debts

Another case where VAT is included in expenses is if it is included in accounts receivable overdue and subject to write-off. Such a situation may arise as a result of an unpaid delivery or the transfer of an advance payment against which the goods were never shipped.

After three years, the debt becomes uncollectible and is written off as expenses.

In this case, the company has the right to write off the amount of receivables together with VAT. This procedure does not contradict the official point of view of the Ministry of Finance, which is reflected in the letter No. 3-07-05 / 13622 dated 03/13/2015.

It is worth paying attention to one nuance that arises when writing off bad receivables for prepayment. If the VAT presented upon its transfer was previously accepted for deduction, then when writing off receivables, the tax must be restored. This is the position of the Ministry of Finance, but many experts consider it controversial, since paragraph 3 of Article 170 of the Tax Code of the Russian Federation does not say anything about restoring VAT in this case.

On the income tax base, not only written-off receivables, but also written-off accounts payable are reflected. It arises as a result of non-payment for shipped goods or the company's failure to deliver on account of the advance payment received, when the three-year limitation period for these operations has expired. How to deal with VAT as part of such a "creditor" when it is written off? Let's consider this issue in more detail on specific situations.

If the debt of the company was formed due to the fact that the goods received were not paid for, then the amount of the debt is charged to the income tax income account in full, that is, together with VAT. At the same time, tax amounts accepted for deduction upon receipt of goods are not subject to recovery (letter of the Ministry of Finance dated 06.21.13 No. 03-07-11 / 23503).

Another case is when accounts payable were formed due to the fact that goods were not shipped against the received advance, from which VAT was paid. After the expiration of the limitation period, the amount of debt is included in the composition of income forming the base for income tax. How to deal with previously paid VAT on this amount? Logically, it should be excluded from income. However, the Ministry of Finance adheres to the point of view that the Tax Code does not allow reflecting this VAT in expenses (letter of the Ministry of Finance dated 07.12.12 No. 03-03-06 / 1/635).

But according to many experts, there is another way out of this situation. They propose to take into account in income tax income not the full amount of the prepayment received, but the amount minus the VAT paid on it. At the same time, they refer to paragraph 2 of Article 248 of the Tax Code of the Russian Federation, which prescribes to exclude from the composition of income the amounts of taxes presented by the taxpayer to the buyer. However, if the company decides to follow this path, it is very likely that it will have to defend its case in court.

Accounting for "foreign VAT"

For companies operating with partners from neighboring countries, often there are questions about how to deal with VAT, which appears in the primary documents received from them. Here it is important to understand the following: despite the fact that this tax is also called Russian, it has nothing to do with our VAT. It's a tax foreign state; it is calculated and paid in accordance with the legislation of the country where the partner of the company is a resident.

Thus, the tax called VAT, which appears in the invoices of a foreign counterparty, is not deductible under any circumstances.

How should the “foreign VAT” presented to the buyer be reflected in the accounting? The fact is that it does not need to be taken into account separately. It forms the cost of purchased goods (works, services) and is included in income tax expenses.

In other words, for a Russian company it makes no difference which taxes are included in the cost of goods purchased from a foreign supplier, because the full amount of the contract will be taken into account in the costs.

On the other hand, “foreign VAT” appears in a situation where, when paying for services rendered, a foreign partner, who is a tax agent, withholds this tax from the contract amount. For example, a Russian company provided services to a foreign enterprise, the cost of which amounted to 1200 conventional units (c.u.). However, the domestic firm received 1000 c.u. The partner withheld the rest of the amount in accordance with the legislation of his country as a tax agent.

How should this transaction be reported in income? The Ministry of Finance believes that in full, including withheld foreign tax. That is, in our example, the Russian company must record the income from the operation in the amount of 1200 USD. But the amount of withheld tax in the amount of 200 USD. can be attributed to expenses taken into account for income tax purposes. (Letter of the Ministry of Finance of May 18, 2015 No. 03-07-08/28428).

True, in 21 The chapter of the Tax Code does not indicate on the basis of which document the withheld tax can be accepted as expenses. Therefore, in this matter, one should be guided by the norms of the chapter 25 , and specifically articles 313 Code. It defines the documents on the basis of which the income tax withheld by the tax agent can be offset against the tax payable by the taxpayer. Thus, if a foreign partner has withheld "its own VAT" from the company as a tax agent, a document confirming this process should be required from him. If the latter is compiled on foreign language, it will need to be translated into Russian.

Where to attribute VAT on re-import?

Under the customs procedure for re-import, goods are placed that the exporter, for some reason, is forced to import back into the country. In practice, customs authorities usually levy VAT on the value of such goods. The legality of this can be argued, but taxpayers usually prefer to pay the tax in order to get their own product back as soon as possible. And then the question arises: how to proceed with the amount of this tax?

We note right away that it is impossible to deduct the VAT paid upon re-import. Clause 2 of Article 171 of the Tax Code of the Russian Federation lists all cases when customs VAT can be deducted, and operations for the re-import of goods do not appear there. Based on Article 170 of the Tax Code of the Russian Federation, the amount of tax cannot be included in the cost of imported goods either. After all, most likely, they will be further implemented, that is, used in activities subject to VAT.

According to experts, it is advisable to attribute the VAT withheld on the re-import of goods to the account of other expenses that reduce taxable income, as a tax paid in accordance with the law.

And although paragraph 19 of Article 270 directly prohibits the inclusion of VAT in expenses, it refers to the tax presented by the taxpayer. When re-importing, the owner of the goods does not show the withheld VAT to anyone, therefore, the specified legal norm is not applicable to this situation. This is also confirmed by judicial practice. Thus, the customs VAT withheld upon re-import can be included in other expenses taken into account when calculating the income tax base.

If the organization can prove that it purchased drinking water to provide employees with normal conditions labor, that is, it confirms the use of drinking water for the implementation of transactions subject to VAT, it has the right to accept the tax presented by the supplier for deduction. In the same way, it has the right to deduct VAT on audio and video equipment if it justifies the need to use this equipment in its current activities.

Of course, in order to apply the VAT tax deduction for purchases for non-production purposes, the remaining conditions established in Articles 171 and 172 of the Tax Code of the Russian Federation must be met - drinking water or household appliances are taken into account, which is confirmed by primary documents, and the organization has a properly executed account supplier invoice.

Assume that the specified property is not used by the organization in VATable activities. This means that the condition that the VAT deduction is possible only on assets acquired for the implementation of operations recognized as an object of taxation is not met. Therefore, it is impossible to accept VAT for deduction in such a situation.

In order to accept VAT deductible on acquired assets, the buyer must fulfill three mandatory conditions established in paragraph 2 of Article 171 and paragraph 1 of Article 172 of the Tax Code of the Russian Federation. That is, these assets have been delivered (shipped) and taken into account, are used to carry out VAT-taxable transactions, and the buyer has correctly executed invoices from suppliers. However, in some situations, the fulfillment of only these conditions is not enough. So, in the case of the purchase of drinking water or non-industrial household appliances and electronics, one more requirement must be met - the value of these assets must be taken into account when calculating income tax. We are talking about the relationship between the right to deduct VAT and the provisions of paragraph 1 of Article 252 of the Tax Code of the Russian Federation in terms of the economic feasibility of expenses. If the expenses do not meet the criteria specified in paragraph 1 of Article 252 of the Tax Code of the Russian Federation, they cannot be recognized for profit tax purposes. Consequently, VAT on purchases for non-production purposes, presented as part of such expenses, cannot be deducted (clause 49, article 270 of the Tax Code of the Russian Federation).

I note that the indicated additional requirement not contained in tax code. In accordance with Chapter 21 of the Tax Code of the Russian Federation, the right to deduct VAT is not made dependent on the inclusion of the cost of purchased goods in the composition of expenses taken into account when calculating income tax. In other words, for the application of the "input" VAT deduction, the source at the expense of which the expenses were made does not matter. The only important fact is that the acquired assets (drinking water, household appliances) are used to carry out activities subject to this tax.

At the same time, it should be recognized that there is a certain relationship between the procedure for reflecting expenses incurred in tax accounting and the possibility of applying a VAT deduction. It is believed that if drinking water, household appliances and non-industrial electronics are not used either in the production of products or for the management needs of the organization, then their acquisition is not economically justified. This means that the value of these assets cannot be deducted from taxable income. This simultaneously means that these assets are not used in transactions that are recognized as subject to VAT, therefore, the VAT deduction on them is illegal.

For example, the organization was able to substantiate and document the need to purchase drinking water and household appliances. In tax accounting, she included the costs of their acquisition in the costs of creating normal working conditions for her employees on the basis of subparagraph 7 of paragraph 1 of Article 264 of the Tax Code of the Russian Federation. The organization should not have problems with the deduction of VAT on such expenses. After all, she confirmed that the acquired assets are used for production or management purposes and therefore participate in transactions subject to VAT. Similarly, there are no doubts about the legitimacy of deducting "input" VAT when buying electronics for a rest room and psychological relief, a meeting room, a meeting room or a security service room and documenting these costs.

If, however, it does not follow from the documents available in the organization that drinking water or household appliances are necessary for production or management needs, then the costs of acquiring it are not taken into account for profit tax purposes. From this we can conclude that drinking water or household appliances are not used in transactions subject to VAT. That is, the organization does not have the right to deduct "input" VAT.

So, organizations that did not take into account the costs of purchasing drinking water, household appliances and electronics for non-industrial purposes when calculating income tax, the right to deduct VAT from these costs will most likely have to be defended in court.

Question

Good afternoon!
The organization intentionally does not accept VAT for deduction, because. does not want to reimburse him from the budget. And according to the results of the 1st half of the year, a large income tax is obtained.
Can VAT not accepted for deduction be taken into account in income tax expenses?
All invoices are available.

Answer

VAT amounts that you receive from buyers of goods (works, services, property rights) and transfer to the budget, they are not included in income tax expenses (clause 19, article 270 of the Tax Code of the Russian Federation).

When calculating income tax, you can only take into account the VAT that you paid to the seller when purchasing goods, works, services or property rights from him (including as part of customs payments), - “input” VAT. And only in some cases. By general rule such VAT is presented for deduction in accordance with Art. Art. 171 - 172 of the Tax Code of the Russian Federation and is not included in the expenses (clause 1 of article 170, clause 2 of article 254, clause 1 of article 257 of the Tax Code of the Russian Federation).

So, here are those special situations in which VAT is attributed to income tax expenses (clause 2, article 170 of the Tax Code of the Russian Federation):

1) you have purchased (imported) goods (works, services, property rights) that you will use for transactions not subject to VAT.

2) you have purchased (imported) goods (works, services, property rights) and use them for transactions where the territory of the Russian Federation is not recognized as the place of sale.

3) you use the purchased (imported) goods (works, services, property rights) for operations that are not subject to VAT in accordance with paragraph 2 of Art. 146 of the Tax Code of the Russian Federation;

4) you are not a VAT payer or are exempted from fulfilling the obligations of a taxpayer in accordance with Art. 145 of the Tax Code of the Russian Federation.

In such cases, the amounts of "input" VAT reduce the taxable profit as part of the cost of purchased goods (works, services, property rights). In the future, this cost is included in the costs according to the rules of Ch. 25 of the Tax Code of the Russian Federation (for example, through the depreciation mechanism or into material costs).

Also, in some cases, “input” VAT is included in other expenses related to production and sales. They are situations when you restore the VAT previously accepted for deduction on the grounds specified in paragraphs. 2 p. 3 art. 170 of the Tax Code of the Russian Federation.

Thus, it is possible to take into account VAT in income tax expenses only in the cases listed above, in all other situations, take into account VAT when calculating tax

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Leading Lawyer
Dorofeev S.B.

In the practice of Russian tax authorities there is a long-established idea of the order (methodology) of actions upon detection within the framework of tax audits facts testifying to the non-productive nature of the taxpayer's expenses.

Recognizing the corresponding expenses of the taxpayer as economically unjustified (Article 262 of the Tax Code of the Russian Federation), and, as a result, not taken into account when determining tax base on income tax, the tax authorities almost always recognize VAT deductions as illegal and vice versa.

The most important condition for accepting VAT claimed by suppliers of goods (works, services) for deduction, as you know, is the taxpayer's intention to use the acquired resources in transactions subject to VAT (clause 2, article 171 of the Tax Code of the Russian Federation). At the same time, according to the tax authorities, the economic unreasonableness of expenses automatically means that the purchased goods (works, services) will not be used in activities subject to VAT.

This position was repeatedly confirmed by the Ministry of Finance of the Russian Federation (see, for example, letters of the Ministry of Finance of Russia of October 18, 2011 N 03-07-11/278 and of March 29, 2012 N 03-03-06/1/163).

It seems that this practice is fundamentally vicious and does not comply with the norms of Ch. 21, 25 of the Tax Code of the Russian Federation.

As everyone is well aware, tax law is an industry with mandatory legal regulation and is strictly formalized. The norms of imperative law in general, and tax law in particular, are characterized by a strict hierarchy of norms, in detail, one might say, a casuistically prescribed procedure and conditions for their operation, limited application and / or prohibition of the analogy of law and law, in addition, the principle of implementation is applied in the activities of the tax authorities themselves. its competence in accordance with the established powers (and not everything that is not prohibited is allowed). In this regard, of particular importance, in our opinion, in tax legal relations is strict adherence to the letter of the law, the exact implementation of all its prescriptions, in which the mixing of heterogeneous concepts in determining the tax consequences of the taxpayer's activities is absolutely unacceptable.

So, as already noted, Art. 252 of the Tax Code of the Russian Federation, the condition for accounting for expenses for the purposes of taxation of profits establishes their economic feasibility, and Art. 171 of the Tax Code of the Russian Federation, the condition for the application of VAT deductions is the intention to use the acquired resources in transactions subject to VAT. It is easy to see that the content of these norms is not identical, and the concepts used in them are not synonymous.

However, the tax authorities believe that if the expenses have a non-productive orientation, then the taxpayer will not be able to use the corresponding goods (works, services) in VAT taxable transactions, since otherwise the presence of the main object of VAT taxation is the sale of goods (works, services) assumes that as a result of such operations the taxpayer will receive income, therefore, the costs will be economically justified.

Needless to say, this approach of the tax authorities is based on a simplified understanding of taxation in general, and the rules for applying VAT deductions and accounting for income tax expenses, in particular.

This approach gives rise to tax disputes, including VAT refunds.

To begin with, it is worth noting that VAT deductions and income tax expenses are different elements of taxation: expenses are a mandatory element when calculating the tax base for profits, and a VAT deduction is an optional element that is taken into account when calculating the tax itself, i.e. after determining the tax base for it.

Secondly, the business purpose of spending and the intention to use the acquired resources in VATable transactions (sales), no matter how similar they seem, are different concepts. For example, a taxpayer may use acquired property for subsequent gratuitous transfer to someone. In this case, the object of VAT taxation in accordance with Art. 146 of the Tax Code of the Russian Federation will be present and the deduction of VAT on such property will be absolutely legal, at the same time, these expenses in accordance with Art. 252, 270 of the Tax Code of the Russian Federation cannot be taken into account for profit tax purposes.

This position is also confirmed by the Russian Supreme Arbitration Court of the Russian Federation. Thus, in Ruling N 1238/07 dated 26.07.2007 in case N A55-19265/2004-31, the Supreme Arbitration Court of the Russian Federation indicated that “the Tax Code of the Russian Federation does not make the taxpayer’s right to receive a tax deduction dependent on the validity of attributing the costs associated with the implementation of activities to costs in the sense of Chapter 25 of the Code (“Income Tax”)”.

For our part, we also add that, in our opinion, if the Russian legislator, for any reason, wanted to identify the conditions for applying VAT deductions and accounting for income tax expenses, he could definitely establish this in regulatory regulation. The absence of such provisions, moreover, even a hint of any connection between VAT deductions and income tax expenses in the Tax Code of the Russian Federation (as it was, for example, in relation to the obligation to pay UST from the amount of remuneration paid to employees accounted for tax on profit, and the absence of such an obligation otherwise) allows us to conclude that all encroachments of the tax authorities in this direction are contrary to the norms of the Tax Code of the Russian Federation.

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