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The Story of Adjusted VAT Invoices Continues
Taxand Russia takes a look at what the new draft law proposes.
Some major companies, like Volvo cars, Xerox, Jaguar Land Rover, Philips and others, had filed a claim with the Supreme Arbitration Court to invalidate Resolution No. 1137 which concerned the form of an adjusted VAT invoice. This form must be used for every VAT invoice which needs to be adjusted.The claimants had applied for this form to be changed, with a new form created which could be used as a general form to cover a number of transactions, meaning that a single adjusted VAT invoice could be issued for any volume of supplies.
The latest draft law is an attempt at compromise and includes a rule that trade bonuses may or may not change prices of goods. If a taxpayer uses trade bonuses which change goods' prices, adjusted VAT invoices must be completed. Meanwhile, if a seller and a purchaser decide that trade bonuses only change the contract price, but not the price of the goods, the VAT tax base may stand without change. In this case there is no need to complete adjusted VAT invoices.
This will be extremely helpful for taxpayers, especially 'major' (large-scale / multinational) taxpayers, as when there is a correction of the VAT tax base, a seller must prepare an adjusted VAT invoice for every supply it makes. This could involve a huge number of documents. For some major companies it may be simply impossible in practical terms to deduct VAT if they grant bonuses to their purchasers.
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The amendments are in line with the current Court practice regarding trade bonuses which do not reduce the price of goods. However if this rule is enacted by legislation, it will be easier for taxpayers to predict their VAT and therefore may feel more secure. Moreover, this draft law is not contrary to the Supreme Arbitration Court's decision, because the Court did not analyse the situation where trade bonuses only change the contract price but not the price of the goods.