Letter of the Federal Tax Service dated August 10, 2015 No. ED-4-15/ [email protected] ON THE PRESENTATION OF AN OPINION

Letter of the Federal Tax Service of the Russian Federation dated January 26, 2017 No. ED-4-15/ [email protected]

“On sending clarifications regarding the risk-based approach to conducting desk tax audits of tax returns that reflect transactions that are not subject to VAT in accordance with clauses 2 and 3 of Art.
149 of the Tax Code of the Russian Federation, the Federal Tax Service of Russia, in order to increase the efficiency of VAT administration, while simultaneously reducing the volume of documents required from taxpayers, sends recommendations on conducting desk tax audits of VAT tax returns using a risk-based approach, which reflect transactions that are not subject to (exempt from taxation) VAT taxation in accordance with paragraphs 2 and 3 of Article 149 of the Code and falling under the concept of a tax benefit, taking into account paragraph 1 of Article 56 of the Code and the position of the Plenum of the Supreme Arbitration Court of the Russian Federation “On some issues that arise in arbitration courts when considering cases related to the collection of tax on added value”, set out in paragraph 14 of Resolution No. 33 of May 30, 2014 (hereinafter referred to as the tax benefit).

When conducting desk tax audits, it is advisable to take into account the combination of the following factors:

the level of tax risk assigned by the Risk Management System of JSC NDS-2 (hereinafter referred to as the RMS),

the result of previous desk tax audits of VAT tax returns on the issue of the legality of the use of tax benefits by taxpayers.

In accordance with paragraph 6 of Article 88 of the Code, it is necessary to request from the taxpayer being inspected an explanation of the transactions (for each transaction code) for which tax benefits were applied (hereinafter referred to as the Explanations). The taxpayer has the right to submit Explanations in the form of a register of supporting documents (hereinafter referred to as the Register), as well as a list and forms of standard agreements used by the taxpayer when carrying out transactions under the relevant codes. The recommended form of the Register is given in Appendix No. 1 to this letter.

Based on the information contained in the Register submitted by the taxpayer, the tax authority, in accordance with Article 93 of the Code, should request documents confirming the validity of the application of tax benefits. For the purposes of this letter, documents mean a set of documents confirming the validity of the application of tax benefits for individual transactions (hereinafter referred to as the Documents).

The volume of Documents to be requested is determined for each transaction code in accordance with the algorithm set out in Appendix No. 2 to this letter. At the same time, at least 50% of the volume of Documents subject to request must confirm the largest amounts of transactions for which tax benefits are applied.

If the taxpayer fails to submit the Register or if the Register is not submitted in the recommended form (if it is impossible to identify supporting documents, it is impossible to correlate them with the benefits used, it is impossible to comply with the requirements of this letter, the transaction amount is not indicated in the register), the Documents are requested without using a risk-based approach.

If the tax authority has information indicating the possible unlawful application of benefits for certain transactions, the tax authority must request documents confirming the legality of the application of benefits for these transactions.

The departments of the Federal Tax Service for the constituent entities of the Russian Federation will communicate the above to the territorial tax authorities and ensure its implementation. Acting State Advisor of the Russian Federation, 2nd class D. V. Egorov

Appendix No. 1

Register of documents confirming the validity of the application

tax benefits by transaction codes, to the Value Added Tax Declaration for the ___ quarter of ____ year

Appendix No. 2

The procedure for determining the volume of Documents subject to requisition in the context of transaction codes

* Failure to reflect in VAT tax returns a tax benefit for a specific transaction code for three consecutive tax periods preceding the audited one.
** If within one transaction code the standard form of the agreement is not used by the taxpayer for all transactions, then 10% should be claimed using this code.

*** If the number of Documents confirming transactions for which a tax benefit has been applied for a specific transaction code is less than 30, the Documents are requested in full.

Appendix No. 3

An example of filling out the register of documents confirming the validity of the application of tax benefits (sent only to the tax authority)

Register of documents confirming the validity of the application of tax benefits of Barbaris LLC in the context of transaction codes to the Declaration for the ___ quarter of ____ year											An example of calculating the volume of documents subject to requisition by transaction codes
											Using the example of the presented Register
Operation code	including:	Amount of non-taxable transactions by types (groups, areas) of non-taxable transactions reflected in the tax return, rub.	Contractor's name	TIN	checkpoint	Documents confirming the validity of the application of tax benefits					Serial number of the document “for the operation” (by types (groups, directions) of non-taxable operation)	A standard contract is presented (1 – yes; 2 – no)	Level of tax risk according to RMS ASK "NDS-2" (high, medium, low)	Operation code applied for the first time Operation code status (1 – used for the first time, 2 – used previously)	Presence of violations by operation code in previous tax returns (1 – yes, 2 – no)	Determination of the volume of documents subject to request in the context of transaction codes (according to Appendix No. 2 to the letter)	Document request status (yes/no)
	type (group, direction) of non-taxable transaction					Type of document (agreement, payment order, etc.)	№	date	Transaction amount, rub.
1	2	3	4	5	6	7	8	9	10		1	2	3	4	5	6	7
Option 1											Option 1
1010245 (Sales of services in the field of education)	Basic education	106 672 500	Dahlia1	7709255073	770901001	Agreement	402	25.07.2016	100 000 000		1	1	average	1	2	18 x 40% = 7	Yes
						P/n	125	26.07.2016			2						Yes
			Dahlia2	7709255074	770901001	Agreement	747	06.09.2016	5 000 000		3						Yes
						Document1	126	10.09.2016			4						Yes
			Dahlia3	7709255070	770901001	Agreement	211	08.08.2016	1 000 000		5						No
						Document1	127	08.08.2016			6
			Dahlia4	7709255071	770901001	Agreement	413	10.09.2016	500 000		7						No
						Document1	152	10.09.2016			8
			Dahlia5	7709255072	770901001	Agreement	182	10.07.2016	120 000		9						No
						Document1	96	10.07.2016			10
			Dahlia6	7709255075	770901001	Agreement	667	10.09.2016	45 000		11						Yes
						Document1	852	11.09.2016			12						Yes
			Dahlia7	7709255073	770901001	Agreement	55a	11.08.2016	2 500		13						No
						Document1	369	11.08.2016			14
			Dahlia8	7709256073	770901001	Agreement	55b	10.09.2016	2 500		15						No
						Document1	569	10.09.2016			16
			Dahlia9	7709255075	770901001	Agreement	55v	10.07.2016	2 500		17						Yes
						Document1	56	10.07.2016			18
	Additional education	35 558 333	___	___	___	___	___	___	___		1___15	___	___	___	___	15 x 40% = 6	___
	Training	26 666 250	___	___	___	___	___	___	___		1___20	___	___	___	___	20 x 40% = 8	___
Total by code:	x	168 897 083	x	x	x	x	x	x	168 897 083		53	x	x	x	x	53 x 40% = 21 (7 + 6 +	x
Option 2											Option 2
1010245 (Sales of services in the field of education)	Basic education	106 667 500	Chamomile4	7709255073	770901001	Document1	400	25.07.2016	100 000 000		1	1	average	2	2	28 x 10% = 2.8 ≈ 3	Yes
			Chamomile5	7709255074	770901001	Document2	500	06.09.2016	5 000 000		2	1					Yes
			Chamomile1	7709255070	770901001	Document3	100	08.08.2016	1 000 000		3	1					No
			_________	_________	_________	Document4	_________	_________	_________		_________	_________					_________
			Chamomile2	7709255071	770901001	Document5	200	10.09.2016	500 000		25	2					Yes
			Chamomile3	7709255072	770901001	Document6	300	10.07.2016	120 000		26	1					No
			Chamomile6	7709255075	770901001	Document7	600	10.09.2016	45 000		27	2					No
			Chamomile7	7709255073	770901001	Document8	25a	11.08.2016	2 500		28	2					No
	Additional education	29 555 833	___	___	___	___	___	___	___		1___20	___	___	___	___	20 x 10% = 2	___
	Training	24 789 213	___	___	___	___	___	___	___		1___30	___	___	___	___	27 x 10% = 2.7 ≈ 3	___
Total by code:	161 012 546	x	x	x	x	x	x	161 012 546	78		x	x	x	x	78 x 10% ≈ 8 (3 + 2 + 3)	x
Option 3											Option 3
1010245 (Sales of services in the field of education)	Basic education	26 845 000	Dandelion1	7716024323	770901001	Document1	200	10.07.2016	23 000 000		1	1	short	1	2	10 x 10% = 1	Yes
			Buttercup0	7716024322	770901001	Document2	100	10.09.2016	3 000 000		2	1					No
			Buttercup2	7716024324	770901001	Document3	300	10.09.2016	745 000		3	1					No
			Buttercup4	7716024325	770901001	Document4	400	11.08.2016	15 000		4	1					No
			Buttercup5	7716024326	770901001	Document5	407	10.09.2016	15 000		5	1					No
			Dandelion6	7716024327	770901001	Document6	414	10.07.2016	15 000		6	1					No
			Buttercup7	7716024328	770901001	Document7	421	10.09.2016	15 000		7	1					No
			Buttercup8	7716025325	770901001	Document8	428	24.07.2016	15 000		8	1					No
			Dandelion9	7716028324	770901001	Document9	435	11.08.2016	15 000		9	1					No
			Buttercup3	7716024325	770901001	Document10	300a	24.07.2016	10 000		10	1					No
	Additional education	15 386 974	___	___	___	___	___	___	___		1___10	___	___	___	___	10 x 10% = 1	___
	Training	8 523 732	___	___	___	___	___	___	___		1___20	___	___	___	___	20 x 10% = 2	___
Total by code:	50 755 706	x	x	x	x	x	x	50 755 706	40		x	x	x	x	40 x 10% = 4 (1 + 2 + 1)	x
Option 4											Option 4
1010211 (medicine)	—	4 447 499	Hydrangea1	7716066255	771601001	Document1	100	10.07.2016	2 000 000		1	2	average	2	2	x8 10% = 0.8 ≈ 1	Yes
			Hydrangea2	7716067244	771601001	Document2	200	10.09.2016	100 000		2	2					No
			Hydrangea3	7716022594	771601001	Document3	300	06.09.2016	900 000		3	2					No
			Hydrangea4	7716023597	771601001	Document4	400	08.08.2016	333 444		4	2					No
			Hydrangea5	7718026654	771801001	Document5	401	08.08.2016	327 500		5	2					No
			Hydrangea6	7710022544	771001010	Document6	4021	08.08.2016	286 555		6	2					No
			Hydrangea7	7734058111	773401001	Document7	43	23.07.2016	250 000		7	2					No
			Hydrangea8	7716022111	771601001	Document8	600	24.07.2016	250 000		8	2					No
Total by code:	4 447 499	x	x	x	x	x	x	4 447 499	8		x	x	x	x	x	x

When clarification is required from the Federal Tax Service on a VAT return

The inspection will require clarification (clause 3 of Article 88 of the Tax Code of the Russian Federation) if:

• errors were found within the declaration (they are grouped according to nine criteria) or contradictions between the information of the taxpayer and his partners;
• an updated declaration has been sent to the Federal Tax Service, in which the amount of tax payable is lower than that originally calculated;
• the report contains data on preferential transactions.

It is necessary to clarify only the information that tax authorities are interested in; there is no need to provide other data. Different types of discrepancies require different formats of explanation - for some it is defined by the Tax Code of the Russian Federation, others are submitted in any form. Supporting documents may be attached to them.

The company must notify the Federal Tax Service Inspectorate of receipt of the request within 6 days and confirm its receipt electronically by sending a receipt to the Federal Tax Service Inspectorate.

The taxpayer must provide explanations within 5 days. But due to non-working days declared by Presidential Decrees in March-May 2021, the deadline for providing explanations on the requirements of the Federal Tax Service received during the period from March 1 to May 31, 2021 has been extended by 20 working days (Resolution of the Government of the Russian Federation dated 02.04. 2020 No. 409).

Explanations on zero VAT return

Inspectors of the Federal Tax Service may also be interested in the submitted zero VAT return. In this case, you may have to provide an explanation for why data is missing from the report. The explanation must list the reasons for the lack of indicators, for example, indicating that during the reporting period the enterprise stopped or suspended its operations.

Let us remind you that explanations on the VAT return are sent exclusively in electronic form. Submitting paper versions of explanations is tantamount to failure to provide explanations, which can result in a fine of 5,000 rubles for the taxpayer, and if the violation is repeated within one year - 20,000 rubles (clauses 1, 2 of Article 129.1 of the Tax Code of the Russian Federation).