The right to deduct VAT will reduce the tax calculated for the quarter. However, you can use it subject to a number of conditions. Let's consider them in detail.
Features of VAT
Outwardly, this tax resembles a deduction from sales or turnover. The seller adds a certain amount to the cost of products, works, services. However, there is one important difference. It consists in the following.
If the buyer also pays VAT, the seller, calculating the amount of obligations to the budget, can deduct from the tax received from the buyer the amount paid by him to his supplier. As a result, the burden of allocating VAT to the budget rests with consumers.
Why do you need VAT?
The introduction of value added tax provides a solution to several problems.
Firstly, the distribution of VAT deductions to the budget between several stages of the production cycle helps to prevent a cascade effect, i.e. multiple tax levies on a single cost.
Secondly, the distribution of the burden of VAT between different entities can reduce the risk of tax evasion.
Thirdly, such a system of taxation allows you to remove the "national" taxes.
Taxable Objects
The following are recognized as them:
- The implementation of services, works, goods in Russia. Among other things, it recognizes the sale of “pledged items”, the transfer of goods under an agreement on compensation or novation, the transfer of property rights, property rights to objects, the results of work or the provision of services free of charge.
- Transfer of objects on the territory of the Russian Federation for the company's own needs, the costs of which are not deductible (including in the calculation of depreciation) when calculating profit tax.
- Construction and installation work for their own needs.
- Importation of products into Russia and other territories under the jurisdiction of the Russian Federation.
General conditions for deducting VAT
They are enshrined in Art. 171 Tax Code. According to the norm, there are three conditions for accepting VAT deductible:
- Submission of tax by the supplier.
- Acquisition of services, works, goods for operations subject to VAT (also for resale), and their registration.
- Getting the right invoice.
Acceptance of objects for accounting
Posting of goods, work, property rights and services must be confirmed by documents. To accept VAT deductible, the actual cost of, for example, materials is reflected in the account. 10, goods - on the account. 41, services / work - on accounts 20, 26, 44, 25.
All completed operations should be confirmed by the primary documentation.
Balance sheet
When registering objects off-balance sheet that the enterprise cannot use under the terms of the contract, VAT is not deductible. This is due to the fact that the company cannot use the relevant assets in taxable operations. The relevant provision follows from paragraph 2 of Art. 171 and paragraph 1 of article 172 Tax Code.
If the contract does not provide a ban on the use of objects, then the legislation allows the acceptance of the amount of VAT for deduction. The Ministry of Finance explains this by the fact that in this case, the transfer of ownership of the object does not matter. In ch. 21 of the Tax Code, there are no provisions on where exactly the asset should be accounted for - on the balance sheet or outside it. Such clarifications were given by the Ministry of Finance and the Federal Tax Service in letters No. 03-07-11 / 68585 and No. GD-4-3 / 911, respectively. This position is confirmed by judicial practice.
Items are on their way
If the objects have not yet been delivered to the enterprise, respectively, they are not yet capitalized by the accountant. Even if one of the other conditions for accepting VAT for deduction is fulfilled, this cannot be done. That is, an enterprise can have both a properly executed invoice and primary documentation, but there is virtually no asset.
Deduction transfer
Is it possible? Yes it is possible. Consider an example. Suppose an enterprise has met all the conditions for accepting VAT deductible in the current period. It has the right to transfer deductions, but for those facilities that are provided for in paragraph 2 of Art. 171 Tax Code. It is, in particular, about goods, work, services purchased for the export of non-oil products. In all other cases, deductions for assets used in transactions subject to VAT are not carried forward.
For a better understanding of the situation, we present the list enshrined in Clause 2, Article 171 Tax Code. You can transfer VAT:
- Presented by contractors when purchasing materials for construction and installation works and during capital construction.
- Paid upon import into the territory of Russia. You can transfer including deductions for costs associated with the export of non-oil products. This provision follows from paragraph 3 of Art. 171 Tax Code. In such cases, the general procedure for accepting VAT for deduction is applied, independent of export confirmation.
- Paid upon import of products from the EAEU countries.
In all these cases, the period for accepting VAT for deduction is 3 years. The calculation of the term starts from the date of registration of objects.
Nuances
The three-year period must be counted down to the end of the quarter. It should not be extended for the period allotted for the submission of the declaration. This position is held by the COP.
Simply put, an accountant needs to do the following. It is necessary to count 3 years from the date of registration of objects according to primary documents. The last number in the quarter this term fell on will be the last day. The accountant will show the moment of acceptance of VAT for deduction in the declaration (or revision) for the previous quarter or for the current one (if the company does not plan to carry out any business operations).
Consider an example. Suppose an LLC acquired goods at a cost of 118 thousand rubles. (including VAT 18 thousand rubles). Registration of objects was carried out on June 23, 2016. The accountant decided to transfer the deduction. The three-year period for submitting the declaration will expire on June 30, 2019. The accountant will deliver an updated report for the first quarter of 2019 and declare a deduction in it in the amount of 18 thousand rubles. But he will submit a declaration for the second quarter without the specified amount.
Important point
The basis for accepting VAT deductible for 3 years is the import of products from the EAEU countries. However, there is one limitation. In addition to the day of capitalization of the objects, the accountant must take into account the date of statement in the application for the importation of the tax mark. If it is not, then a deduction cannot be applied. This is stated in the letter of the Ministry of Finance No. 03-07-13 / 1/38180.
Partial deduction
Over the course of 3 years, the same invoice can be deducted in parts VAT, i.e. in different quarters. This order is valid for:
- Continuous capital construction. In accordance with one invoice of the contractor, the customer may accept parts of VAT deductible in various tax periods within a three-year period. Corresponding explanations are presented in the letter of the Ministry of Finance No. 03-07-10 / 73279 of 2016.
- Import to the Russian Federation of imported products. Exceptions are fixed assets and equipment intended for installation. The functions of the invoice in these cases are performed by the customs declaration, as well as receipts on the deduction of VAT.
Please note that subject to the conditions, the deduction of VAT paid in accordance with the customs declaration can also be carried out in parts.
However, this rule may not apply in all cases. In particular, it applies to deductions enshrined in paragraph 2 of Art. 171 Tax Code. Secondly, the rules do not apply in case of acquisition:
- Equipment for installation.
- Fixed assets.
- NMA.
When purchasing these assets, a deduction is not permitted. Input tax should be taken at a time. However, an accountant can also do this within a three-year period from the moment the deduction right arises.
Additional restrictions
Tax deductions provided for in paragraphs 3-14 of Art. 171 of the Tax Code should be declared in the period in which the customer (purchaser) has met special conditions.
Please note that you cannot transfer the acceptance of VAT to deduction:
- from advances;
- in case of payment of VAT by the acquirer - tax agent;
- if the seller accrued tax on the advance payment received;
- if the property was received as a contribution to capital and provided that the transferring business entity has restored the tax on these objects.
Such restrictions arise from the provisions of paragraph 1.1 of Art. 172 Tax Code. They are supported by the Ministry of Finance.
Zero rate
In practice, with a VAT operation at a rate of 0%, deductions cannot be carried forward. This means that if the right to a benefit is confirmed by documents within the time period established by law, the tax on services, products, works used in these production processes is presented at a time. The moment of adoption is the day the tax base is determined.
As an exception to this rule, operations related to the export of non-primary products are made. The deduction of input tax on objects acquired for their implementation can also be carried forward to future periods within a three-year period.
Reporting Error
It recognizes the incorrect reflection in the accounting documents of the facts of the financial and economic activities of the enterprise. If some information about the transactions was not indicated at all in the statements, then this is also considered a mistake. In other words, if an accountant, due to oversight, negligence or other subjective reasons, made incorrect entries, did not reflect the facts of activity, incorrectly filled out the accounting statements, he made a mistake. The relevant provisions are enshrined in paragraph 2 of PBU 22/2010.
In the same paragraph of PBU, however, there is one significant reservation. In particular, omissions and inaccuracies in reflecting information on business transactions discovered upon receipt of new data are not considered an accounting error. What is it about? If, for example, the counterparty notifies the company that the primary documents previously transmitted to it contain incorrect data, then the reflection of the corresponding operation in accounting will not be considered an accountant's mistake. Indeed, in this case there is no guilt. If the fact of economic activity appears upon receipt of new information, it should be reflected as a new operation, but not as an error.
Difficulties with dating
What to do if the primary document was drawn up in 2017, and arrived a year later? This issue can be resolved as follows.
If the initial documentation arrived at the enterprise before the day of approval of the reporting for the past period, the costs are recorded in 2017. Accordingly, the accountant makes the following entry:
Dt. 20 (44, 91.2, etc.) 60 (76, etc.) - reflects the amount of expenses of the current period.
If the documentation arrived at the enterprise after the day of approval of the reporting, the operation is reflected in the next, 2018, year. A later reflection of costs due to the delay by the counterparty of the necessary documentation will not be considered a mistake.
If expenses affect the financial performance, they must be included in other costs. In accounting, a record is made:
Dt. 91.2 Ct 60 (76, etc.) - reflection of the amount of losses of previous periods.
If the costs of the financial results do not affect, they are reflected in the accounting as if the primary documentation arrived at the enterprise on time:
Dt. 20 (08 etc.) Ct. 60 (76, etc.) - reflection of the amount of costs of previous periods.
Refund Specifics
If at the end of the tax period it turns out that the amount of the deduction is greater than the amount of tax calculated on the transactions recognized as objects of taxation, the difference is subject to compensation (return, offset) to the payer.
After the entity provides a declaration, the IFTS specialists will assess the validity of the amount presented for reimbursement. For this, a desk check is carried out. At the end of the week, the supervisory authority must decide on compensation for the relevant amounts, if no violations have been identified.
If errors are found, facts of non-compliance with tax law, an act is drawn up. Together with other audit materials, this document is transferred to the head of the tax inspectorate that conducted the audit. Based on the results of their consideration, the head of the Inspectorate of the Federal Tax Service resolves the issue of attracting (not bringing) the payer to liability for violations. Together with this, one of the following decisions should be made:
- Refund the full amount of tax.
- Deny compensation.
- Partially refund the declared amount.
If arrears of tax or other obligatory payments to the budget, arrears of fines (penalties) payable or collected are revealed, the Federal Tax Service Inspectorate shall independently calculate the amounts to be reimbursed to repay these debts.