VAT 20% from January 1, 2022 - what, how and why

From January 1, 2022, one of the important amendments to the Tax Code of the Russian Federation regarding VAT comes into force - an increase in tax rates (for changes to VAT effective both from 10/01/2018 and 01/01/2019, read the article “Increasing VAT and other tax innovations").

The basic VAT rate will be 20% instead of the current rate of 18%. However, the norms of the Tax Code do not provide for rules for paying VAT during the so-called transition period. For example, when payment was received before the rate increase (in 2018), and shipment occurred after the increase (in 2022). The Federal Tax Service of Russia issued a letter in which it explained the procedure for applying VAT in the transition period.

According to the Federal Law of 08/03/2018 No. 303-FZ, from 01/01/2019, VAT rates are changing: the main VAT tax rate - from 18 to 20%, and settlement rates - from 18/118 to 20/120 and from 15.25 to 16 .67%.

The Federal Tax Service of Russia, in a letter dated October 23, 2018 No. SD-4-3/ [email protected], explained the procedure for applying VAT in the transition period.

Who will be affected by the new law?

The innovations will affect entrepreneurs who charge their clients and counterparties VAT . Obviously, these are companies subject to the general tax regime - OSN. Payers of UTII, PSN and simplified taxes will not be affected in any way by the innovation. They will not have to change accounting, reconfigure online cash registers or update software.

Also, nothing changes for those who work at a reduced VAT rate - 10% or 0%. These are sellers of medical and children's goods, books (10% rate) and those who issue licenses and collect duties (0% rate).

However, if you do not work with VAT, do not rush to rejoice. Even if technically everything remains in place, there are some things you should prepare for. This is the next point.

Features of transportation by sea vessels for VAT purposes

In accordance with Federal Law No. 265-FZ of July 31, 2022, the list of transactions to which the zero VAT rate will be applied has been expanded. Thus, from October 1, 2022, operations involving the transportation of goods by sea vessels from the point of departure on the territory of the Russian Federation to the point of unloading or transshipment for the purpose of further export from the Russian Federation are subject to zero VAT rates.

This law was adopted in connection with the Resolution of the Constitutional Court of the Russian Federation dated June 30, 2022 No. 31-P, which dealt with a difficult case when an exporter entered into an agreement with a carrier for the export of goods. During the fulfillment of contractual obligations, the vessel broke down on the territory of the Russian Federation, and therefore the exporter was forced to enter into a new contract with another transport company.

In the case under consideration, the tax inspectors considered that the first carrier company did not have the right to apply a VAT rate of 0% and added an additional amount of tax, referring to the fact that international transportation did not take place.

The judge in his decision supported the taxpayer’s side and considered the use of a zero rate in accounting justified .

What all entrepreneurs need to do, regardless of tax regime

What is a VAT increase on the fingers? This is a price increase. From January 1, 2022, everything you buy and order from contractors who charge value added tax will become 2% more expensive . This is on average. Some of the suppliers will quietly raise prices higher, others will sacrifice their profits and raise prices, say, by a percentage. But it is a fact that purchasing prices will generally increase.

Therefore , the first thing you need to do is prepare for additional expenses . It will be the hardest for those who conduct business at the limit, penny to penny. In any case, reserves need to be found. Then this money will come back - after all, you yourself will most likely raise retail prices for your goods or services. But at first you will have to spend a little more.

How to provide for a change in the VAT rate in a contract

After the change in the VAT rate, entrepreneurs will have to resolve issues related to concluded agreements flowing into 2019. In order not to overpay taxes, it is necessary to make adjustments to the wording of VAT in the contract for 2022. Changes in payments to the supplier during the transition period can be avoided in the following ways:

enter into an additional agreement with the partner to increase VAT. In the document, indicate the cost of goods without tax and the new rate value. You can also indicate that the range and cost of goods for each delivery are determined by specifications that are an integral part of this contract.
Postpone the delivery date to December 2022. In this case, the fee will not change.
Raise prices for new buyers to cover costs.

When completing additional documents, indicate delivery dates and new tax values. Since the buyer actually pays the taxes, it is necessary to agree with him on a possible price increase in the future. The client may not agree with the new terms and refuse to enter into new agreements. There is no judicial practice on this issue yet, so involving partners in payments through can lead to unpredictable results.

An additional agreement should be concluded if the contract does not explicitly indicate the value of the state fee. It is worth setting a new rate so that there are no disagreements and disputes with your clients.

If the contract is concluded during the transition period - November-December 2018, it is better not to indicate a specific VAT rate in the documents. In order not to have to correct the agreement in the new year, it is better to indicate that the cost of the goods is established without VAT, and the rate is calculated in accordance with clause 3 of Art. 164 Tax Code of the Russian Federation.

How to prepare for a VAT increase

Update software. This applies to the 1C Accounting program and similar ones. From January 1, 2022, the system should begin to charge value added tax at a rate of 20%. If you have a licensed version of the program, this will not be difficult - just download and install the appropriate updates. If you encounter any difficulties, please contact technical support.

If you don’t have time and don’t want to upgrade programs, you can turn to specialists. This is especially true for non-standard 1C configurations. There are plenty of offers for this service on the market. An experienced programmer or system administrator will easily solve this problem.

VAT for IT companies

From January 1, 2022, VAT exemption will be provided only for software that will be included in the Unified Register of Russian Computer Programs and Databases.

This norm is provided for by Federal Law No. 265-FZ of July 31, 2020.

There is no VAT exemption for the implementation of rights to use programs if they allow the distribution of any advertising information about the programs. There is still a VAT exemption for exclusive rights to inventions, know-how, etc.

If, starting next year, programs are purchased from a foreign seller, then VAT taxation will not be avoided. To obtain the right to deduction, the company must make sure that the potential foreign counterparty is registered in the Russian Federation and is a tax payer. At the same time, the documents, agreement or payments must contain information about the Taxpayer Identification Number (TIN), KPP and the VAT amount must be highlighted . In this case, invoices are not provided; information must be reflected in the Purchase Book.

If a foreign partner is not registered in the Russian Federation, then the company cannot act as a tax agent, i.e. should not charge tax on this transaction and claim it as a deduction.

The formation of the Unified Register for Russian IT companies is carried out on the basis of Decree of the Government of the Russian Federation of November 16, 2015 No. 1236.

For those who use online accounting

Many online stores use online accounting provided by banks, fiscal data operators and other companies. These are the luckiest of all. Service providers are already working hard on this issue and, for the most part, are ready for the transition. Users of online accounting are beginning to receive notifications with detailed instructions for the transition.

If you use online accounting, contact your online accounting partner and request a plan of action. In most cases this will be free. All systems will automatically switch to a 20% VAT rate from January 1 next year.

VAT rate for book products

Decree of the Government of the Russian Federation of October 9, 2022 No. 1643 expands the list of transactions to which a VAT rate of 10% may be applied:

book products of an educational, scientific or cultural nature, published in electronic format and distributed via the Internet and satellite communication channels
books on disks and other media
e-books

This relaxation does not apply to advertising publications. Advertising information cannot exceed 45% in book products.

What should I do if I do my accounting the old fashioned way - in an Excel spreadsheet?

The program will need to change all formulas and templates. Instead of 18 percent, we set 20 (or 120 instead of 118), after which the system itself will begin to calculate prices in a new way. You can do this yourself or contact a specialist. If you have an accountant or system administrator on staff, entrust this work to them.

The only nuance here is to catch the right moment. We explain: the program should start calculating VAT at 20% from the first of January . If in the case of 1C or online accounting this happens automatically, then with Excel everything will have to be done manually. That is, you will have to change formulas with templates on the night of December 31 to January 1. Or before the first working day after the New Year holidays.

How to calculate VAT 20 percent

There are two ways to calculate 20 percent VAT: separate it from the amount and add it.

Selection. In this case, the price of the product includes VAT, it is calculated from the full cost: VAT value = cost of the product x 20/120
Accrual. This option involves charging VAT “on top”. VAT value = product cost x 20/100

The basic formulas for calculating tax have not changed.

1. Ask our specialist a question at the end of the article. 2. Get detailed advice and a full description of the nuances! 3. Or find a ready-made answer in the comments of our readers.

What to do with the online cash register

The cash register must punch a receipt with a VAT rate of 20% from January 1, 2022. To do this, the device needs to be updated . The change in the VAT rate is also tied to a change in the format of fiscal documents - FFD. For those who are not in the know: a cash receipt is a fiscal document. And from next year it will be different - the composition of the details indicated on the check will change.

Nowadays, most cash registers work with FFD version 1.0. To switch to work at the new rate, they need to be updated to version 1.05. After updating, the receipt will automatically indicate the new VAT rate - 20%.

How can you find out the version of the FFD your cash register uses? There are several ways to do this:

look at the shift opening report. This is a small receipt that the cash register prints out when it starts at the beginning of the working day. The current version of the format of fiscal documents is indicated there;
There is also an indication of the FFD in the online cash register settings. Study the menu and find the item “FFD version number”;
go to your personal account on the website of your fiscal data operator - OFD. There, the FFD version number can be found in any cash receipt;
in the personal account of the cash register, the version of the fiscal data format can also be indicated. Go to the “Terminals” item and see if the FFD number is there.

If the version number of your FFD is 1.0, the cash register needs to be updated to version 1.05 . You can set up the cashier’s workplace yourself or contact the company that sold you the cash register. When working independently, be careful: incorrect actions can block the cash register or lead to the replacement of the fiscal drive.

If you have FFD version 1.05, you don’t need to do anything. Everything will happen automatically and from January 1, VAT rates on cash receipts will change from 18 to 20 percent.

In addition to the format of fiscal receipts, you may have to reflash the cash register itself . Check with the supplier or manufacturer of the cash register device whether the device is ready to work under the new law and changes in the VAT amount. Also carefully monitor notifications from the fiscal data operator and the online cash register manufacturer. Important information regarding the transition may appear there. Information can be sent to your email, to your personal cash register account, or to the cash register itself.

How to prepare cash registers for the application of the new VAT rate from January 1, 2019

The new VAT rate of 20 percent must be indicated on cash receipts starting January 1, 2022. The Federal Tax Service intends to treat violations strictly. Therefore, cash register equipment must be brought into compliance with this requirement as soon as possible. What you need to do - read our article >>

Sources:

Letter of the Federal Tax Service of Russia dated October 23, 2018 No. SD-4-3/ [email protected]
Letter of the Federal Tax Service of Russia dated September 10, 2018 No. SD-4-3/17537
Letters of the Ministry of Finance of Russia dated 08/06/2018 N 03-07-05/55290, dated 08/28/2018 No. 24-03-07/61247, dated 09/18/2018 No. 03-07-11/66752, dated 04/07/2015 No. 03-07 -09/19392
Art. 154, 164, 167, 168, 170, 171, 172 of the Tax Code of the Russian Federation
Art. 452 of the Civil Code of the Russian Federation
Federal Law of August 3, 2018 No. 303-FZ
Resolution of the Plenum of the Supreme Arbitration Court of the Russian Federation dated May 30, 2014 No. 33 (clause 17)

What happens if you don't update your cash register?

Nothing good. Firstly, if you do not change the format of fiscal documents to the current version, the cash register may generally stop sending OFD data to the tax office . In the worst case scenario, this could be classified as operating without an online cash register at all. The fines for such tricks are the highest - from 30 thousand rubles for legal entities. Individual entrepreneurs will pay a little less - from 10 thousand. If the VAT rate is not changed from 18 to 20%, the violation falls under the article on the use of cash register equipment that does not meet the established requirements. For this, an individual entrepreneur will pay from 1.5 to 3 thousand rubles, and an organization will pay from 5 to 10 thousand.

Don’t forget that the cash register is online to keep all entrepreneurs under control. The tax office will see immediately that you have not changed the VAT amount - it only needs to make a request to the fiscal data operator.

But there is also good news. According to a letter from the Federal Tax Service dated December 13, 2022, no one will be fined during the first quarter . This time is given to those who did not have time to update their cash registers to work with the new VAT rate. According to some data, there are about 40% of the total number of registered online cash registers.

In this case, the VAT rate of 18 percent will be indicated on the cash receipt, but in all reporting documents the tax must be 20%. Selling goods and providing services also requires VAT of 20%.

In what cases is tax charged?

For companies and individual entrepreneurs who are VAT payers in accordance with the chosen taxation system, the need to pay added value arises in the following cases:

Manufactured products have been sold, paid services have been provided or work has been carried out;
Property or assets transferred free of charge
Construction, installation and other works related to modernization were completed for the company’s own needs;
Import has been completed.

Sale or transfer, provision of services, assets, etc. on a paid or free basis, in any case accompanied by a change in the volume of financial resources in the organization’s accounts. If such a change occurs, the tax office will be able to track the transaction, and if it is not properly included in the reporting and is not accompanied by contributions, then claims will arise regarding the organization’s activities.

Other cases when payment of tax costs is not required are given in Article 149 of the Tax Code of the Russian Federation. Also, for organizations operating under the simplified tax system and other taxation schemes that do not involve VAT deductions, they are given the opportunity to submit zero reporting in the declaration. Zero reporting is submitted by companies whose activities are related to seasonal work and have significant downtime in their work. More detailed information can be found in the Tax Code of the Russian Federation.

How is payment made in 2022?

Tax reporting is prepared quarterly, which is then submitted to the Federal Tax Service office with regional reference to the place of registration of the company. Payment is made after reporting, within the next month no later than the 25th. If the declaration was submitted with an incorrect amount and this was discovered by the payer himself, he can provide a corrected version. If an error is discovered during an inspection by Federal Tax Service employees, you should expect an inspection. Since such errors are equated to forgery, which will be accompanied by proceedings and appropriate sanctions.

Companies engaged in exporting and operating at a zero rate also provide reports indicating the necessary data. Organizations whose activities during the reporting period did not involve carrying out commercial and business operations provide zero reporting data. In any case, if the company has not been declared bankrupt and is registered with the Federal Tax Service, it must provide the necessary reporting information. More information can be obtained on the Federal Tax Service website or by contacting the service branch in the city or region of residence.

Help in calculating VAT can be obtained on our website using a special calculator.

How to switch to payments to suppliers? What to do with contracts?

Everything would be fine, if not for one “but”. Mutual settlements with suppliers, contracts and balance sheets are not reset to zero at the click of a finger from December 31 to January 1. There are a million options related to deferred payments, advances and prepayments. What to do if the goods were shipped in 2022 at a tax rate of 18%, and you will only pay for it next year, when VAT of 20% will apply to everything? And vice versa, did you pay in advance for products that will only be delivered to you next year? At what rate is it calculated?

The tax office itself answered these and many other questions in its explanatory letter dated October 23. The document explains the specifics of applying tax rates during the transition from 18% to 20. We will provide several examples from this letter.

Example 1 - the supplier delivers goods, fully paid for in 2022, only at the beginning of 2022. In this case, the tax on advance payment is calculated at the old rate of 18%, and the tax on shipment is calculated at 20%. In this case, the advance tax should be reduced.

Example 2 - the goods were delivered in 2018, but in 2019 the price for the already delivered products changes. In this case, as before, the seller makes changes to the adjustment form, and the tax is calculated based on the rate of 18 percent.

Example 3 - the buyer refuses the goods paid for in 2022 at the beginning of 2022. An adjustment form is also needed here. The seller issues an invoice for the refund amount using the old VAT rate of 18%.

Prepayment was received in 2022, delivery in 2022

Upon receipt of an advance payment in 2022 for the supply of goods that will be shipped in 2022, the taxpayer must calculate VAT at the calculated rate of 18/118% (clause 4 of Article 164 of the Tax Code of the Russian Federation).
In 2022, at the time of shipment of goods, VAT will need to be charged at a rate of 20%. The tax previously calculated from the advance payment is reflected as part of tax deductions for VAT in the amount in which it was previously paid to the budget at a rate of 18/118% in the manner prescribed by clause 6 of Article 172 of the Tax Code of the Russian Federation.

Let us consider in more detail the procedure for calculating VAT in various situations, depending on the terms of the main agreement and additional agreements to it.

If, in accordance with the terms of the contract, the cost of goods (work, services) is indicated with the allocation of VAT at a rate of 18%, then the procedure for calculating the tax by the seller depends on the terms of additional agreements that will be concluded between the seller and the buyer.

If the total value of the contract remains unchanged

When shipping goods from January 1, 2022, the seller is obliged to calculate VAT at a rate of 20% , even if, under the terms of the contract, the total cost of the goods (work, services) supplied does not change (clause 4 of article 5 of Law No. 303-FZ).

However, due to an increase in the VAT rate, the cost of goods will decrease. In other words, in the situation under consideration, the difference in the VAT rate will be attributed to the reduction of the markup.

Example: in 2022, a 100% prepayment was received in the amount of 118,000 rubles, including VAT (18/118%) of 18,000 rubles. In 2022, goods were shipped in the amount of 180,000 rubles, including VAT (20%) of 19,666.67 rubles.

The parties agreed on an increase in the total cost of the contract due to a change in the VAT rate to 20%

The procedure for calculating VAT in the situation under consideration was commented on by specialists of the Federal Tax Service of Russia in a letter dated October 23, 2018 No. SD-4-3/ [email protected]

If the parties sign an additional agreement to the contract, according to which the total cost of shipped goods (work, services) increases, then VAT will be calculated by the seller in the following order:

at a VAT rate of 18/118% upon receipt of an advance payment in 2022 (clause 4 of Article 164 of the Tax Code of the Russian Federation);
at a VAT rate of 20% for shipment of goods in 2022. VAT previously calculated upon receipt of an advance is accepted for deduction (clause 6 of Article 172 of the Tax Code of the Russian Federation);
the difference subject to additional payment by the buyer (in the amount of 2 percentage points due to a change in the VAT rate from 18% to 20%) - depending on the moment at which the specified additional payment will be made by the buyer (letter of the Federal Tax Service of Russia dated October 23, 2018 No. SD-4 -3/ [email protected] ):
if an additional payment of tax in the amount of 2% is made by the buyer from 01/01/2019, then such an additional payment should be considered as an additional payment of the tax amount.

Upon receipt of the additional tax payment, the seller issues an adjustment invoice for the difference between the tax amount indicated on the invoice drawn up previously using a VAT rate of 18/118%, and the tax amount calculated taking into account the amount of the additional tax payment.
Example: in 2022, the buyer made an advance payment in the amount of 118,000 rubles, including VAT of 18,000 rubles. Upon receipt of an advance, VAT is calculated by the seller at a VAT rate of 18/118%.

The parties agreed to increase the cost of goods. In 2022, before the goods were shipped, the buyer paid the difference.

Having received the additional payment, the seller needs to issue an adjustment invoice for the advance payment, which will indicate the new data: VAT rate - 20/120, the amount of tax at this rate and the new cost including VAT.

If an additional tax of 2% is paid by the buyer until December 31, 2018 inclusive, then this amount is considered as an additional payment for the cost of goods (work, services). VAT on the specified additional payment amount is subject to calculation at a rate of 18/118%.

Upon receipt of additional tax payment, the seller can issue an invoice for the advance payment and charge VAT on it at a rate of 18/118%, or issue an adjustment invoice for the advance payment and indicate in it the increased cost including VAT, the VAT rate - 18/118 and a new VAT amount.
Example: in 2022, the seller received an advance in the amount of 118,000 rubles, including VAT of 18,000 rubles. (at a rate of 18/118%). Upon receipt of the advance, the seller issued an invoice for the advance with these indicators.

The parties agreed that the price of the goods excluding VAT remains the same, but due to the change in the VAT rate, the total cost of the contract increases to 120,000 rubles. (including VAT 20%).

Upon receipt of an additional payment in 2022 before shipment, the seller issues an adjustment invoice and indicates in it the increased cost including VAT, the VAT rate - 18/118 and the new VAT amount.

The requirement to issue adjustment invoices when the cost of goods (work, services) changes is provided for in clause 3 of Article 168 of the Tax Code of the Russian Federation.

During the transition period, the Federal Tax Service allowed the issuance of adjustment invoices, including for advances (clause 1.1 of the Federal Tax Service letter No. SD-4-3/20667 dated October 23, 2018).

Some tips on how to act during the transition period

Tip 1 - close all transactions as much as possible before the end of the year. Pay suppliers for shipped goods before the end of the year. If possible, do not make advance payments so as not to get confused later.

Tip 2 - ask suppliers to deliver all orders by the end of the year. From the letter from the Federal Tax Service it is clear that goods delivered in 2022 are subject to 20% VAT, even if they were paid for in 2018. To avoid these difficulties, agree with your counterparties on shipment before the end of the current year.

Tip 3 - hire an accountant for the transition period. You can easily get confused yourself. If there are many suppliers and lots of goods, there is a risk of confusion with VAT rates during the transition period. An experienced specialist will take into account all the nuances and calculate taxes correctly. A very good option is to connect online accounting. Check with your bank to see if they provide this service.

Let us remind you: if you open an online store on the InSales platform, you don’t have to worry about accounting . Your website will have hundreds of ready-made integrations, including with online accounting. If you do this before the new year, then there will be no problems with the transition to new VAT rates. You can also transfer an already operating online store to the InSales platform, and then connect online accounting.

If the shipment was in 2022, and payment will be in 2022

This is a completely common situation that will not cause any difficulties. The tax base is determined in 2022. The seller pays the tax, and the buyer takes it as a deduction at a rate of 18 percent. After the transition to 20% VAT in 2022, there will be no problems under such supply contracts: at the time of payment, the tax base will not need to be recalculated, and the increase in the rate will not change the tax obligations of the seller and buyer.

Difficulty can only arise if in 2022 you do not ship all the goods under the contract. Then VAT will need to be charged separately for each shipment on the cost of the goods actually shipped. For those goods shipped after January 1, 2022, a VAT rate of 20 percent will apply.

It is more profitable for the seller to ship the goods before the new year. Whether the buyer pays this year or next, the seller will benefit from the lower tax rate.

How will the VAT increase affect prices?

Experts believe that raising the VAT rate to 20% will restrain the growth of the Russian economy in 2022. First Deputy Prime Minister and Head of the Ministry of Finance Anton Siluanov said that the VAT increase could accelerate inflation in 2022 from the expected 3% to 4-4.5%.

According to Anton Tabach, managing director for macroeconomic analysis and forecasting at the Expert RA rating agency, an increase in the VAT rate could accelerate inflation in 2022 and thereby stimulate the Central Bank to increase the key rate. Alexey Kudrin stated that the tax increase will accelerate inflation in 2022 by 0.4 percentage points, inflation will remain at 4% for the year.

Russian President Vladimir Putin said during his annual big press conference that a slight increase in prices due to the VAT increase in Russia should be limited to the beginning of 2022. The President also drew attention to the fact that the Central Bank is taking certain actions, including increasing the key rate from 7.5% to 7.75% in mid-December last year.

Putin drew attention to the fact that in many countries VAT is 20% or higher, while in Russia, even after increasing this tax, the so-called effective VAT rate for the economy as a whole will be less than 20%, since almost all benefits have been preserved - for medicines, children's goods, for IT companies and so on.

As for the impact of this step on the growth of housing and communal services tariffs, as the president emphasized, in recent years this figure has increased by about 4%, and in 2022 it will increase by a total of 4.1%. At the same time, tariff indexation will be carried out in two stages, because due to the increase in VAT, a certain increase in the cost of services and goods associated with the need for the normal functioning of the housing and communal services system is expected.