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Procedure for Raising Electronic VAT Invoices Approved
Taxand Russia advises that on 25 May 2011, the Russian Ministry of Justice registered the Ministry of Finance's Order that approves the Procedure for raising and receiving VAT invoices electronically using telecommunications channels and applying digital electronic signatures (the "Procedure"). The Procedure came into force on 3 June 2011.
The Procedure describes the electronic document flow procedure, the requirements which are placed on the main parties involved and the actions to be taken by such parties. This includes the procedure for adjusting or amending VAT invoices.
Electronic document flow for VAT invoices is implemented through an operator, which is a specialist electronic document management company (an "Operator"), or through several Operators.
The following are the main conditions for VAT invoices to be raised electronically:
1) the parties to a transaction must both agree. The Procedure does not stipulate a particular form for such agreement, but in all probability it should be stated in a contract or agreed in correspondence
2) the seller and buyer must have compatible technology and be able to receive and process electronic VAT invoices
3) a VAT invoice must be signed using the electronic digital signature ("EDS") of a person authorised by the seller
4) the VAT invoice must be transmitted via an Operator using telecommunications channels.
The introduction of the Procedure is a significant step on the path towards creating an automated document flow process in Russia. Obviously, the Procedure will allow organisations which do business with a large number of other companies to optimise and speed up the process of raising and receiving VAT invoices.
Adjustment of the laws and regulations is required before the Procedure is actually operational in practice: the technical formats used in the electronic flow of documents have to be approved, and amendments also need to be made to the Russian Government's Resolution on registering VAT invoices and keeping sales and purchase ledgers. Publicly available sources indicate that these amendments are currently being discussed internally within the Ministry of Finance.
Both from a technical and a legal standpoint, those who may be affected by electronic document management also need to prepare, among other things, to determine:
- the extent to which an Operator will be liable for VAT invoices being raised and received correctly and on a timely basis, bearing in mind that the Operator is the key link in the electronic document flow process
- whether the Operator will be a party, and if so in what capacity, should there be a court dispute in terms of confirming that a VAT invoice has actually been raised and received.
For now, it is too early to talk about the new Procedure becoming universally accepted practice. It is the experience of the 'pioneers' that will reveal how viable and convenient for business the electronic exchange of documents will prove.
Your Taxand contacts for further queries are:
T. +7 495 967 00 07
T. +7 495 967 00 07