Russia

Russia - New VAT Rules for Foreign Suppliers and Digital Marketplaces

July 10, 2024
Russia - New VAT Rules for Foreign Suppliers and Digital Marketplaces

The Federation Council of Russia approved the amendments to the Tax Code on May 22, 2024, which partially modify the taxability rules concerning the supply of goods through digital platforms.  

The Federal Tax Service of Russia published a statement on July 1, 2024, that the new provisions came into effect. 

New Regulatory Framework for B2C Supply via Platforms

As of July 1, 2024,  foreign taxable persons that have their place of business within the EAEU region that sell goods to Russian consumers through the EAEU digital marketplace should register with the Russian Tax Authority and calculate VAT on such sales in Russia if the goods are located in Russia at the point when the customers receive them.

Foreign sellers also include intermediaries such as commission agents, agents, and representatives, who should register for VAT purposes if they are registered in the EAEU countries and sell goods to Russian consumers.

Sales of goods through electronic platforms to consumers are rated at the VAT rate of 16.67%, or 9.09%, depending on the type of goods sold.

The corresponding tax return is submitted quarterly by the 25th day, and the tax is also paid quarterly by the 28th day of the month following the expired quarter.

The registration can be completed remotely through the electronic service "VAT office of a foreign Internet company." Once registered, foreign sellers can use this online taxpayer account to file tax returns, pay taxes, and communicate with the Tax Authority.

Under new rules, the first VAT tax period for foreign sellers of goods through electronic trading platforms is from the date of commencement of the sale of the goods but not earlier than July 1, 2024, until the end of the relevant quarter.

In addition to this, new amendments provide additional definitions of what is considered an electronic trading platform, stating that it is an online information system on which simultaneously:

  • services are available that allow customers to order goods;

  • the terms of payment and/or organization of payment for goods by the buyer are posted;

  • the terms of delivery and/or organization of delivery of goods to the buyer are posted.

Conclusion

These new regulations apply only to B2C transactions and are a significant development for foreign sellers registered in one of the EAEU countries. Foreign sellers should adapt their approach to VAT compliance in Russia and address various procedural issues associated with VAT on goods sold through electronic platforms. 


Source: Federal Tax Service


Best Regards, Vatabout team