Who can refund VAT
All taxpayers have the right to reduce the tax payable through input VAT.
Input tax is the tax that companies pay on their purchases: goods, materials, work, services, etc. If at the end of the quarter the input tax turns out to be more than the one calculated for payment, the company will be able to return the difference between them - refund VAT. This often happens to those who during the quarter sold less than they bought, or are engaged in exporting.
You can claim a refund up to three years after the end of the quarter in which the deductions exceeded the tax due. You can go beyond this period only if you have good reasons. For example, the Federal Tax Service did not fulfill its duties correctly, although you submitted a refund on time.
Act
After checking in accordance with paragraph 1 of Art. 176 of the Tax Code of the Russian Federation, if violations of legal requirements are detected, the authorized person leaves the corresponding document. The act is drawn up in accordance with the rules of norm 100 of the Code. It and other materials of the desk audit, during which violations were discovered, as well as objections submitted by the payer (his representative), are considered by the head (deputy) of the control body that performed the audit. The decision on the documentation must be made according to the rules of Art. 101 of the Code.
How to recover VAT from the budget
There are two options for tax refund: refund before or after the end of the chamber. Each method has differences and nuances, so we will consider both orders.
General VAT refund
The rules are established by Article 176 of the Tax Code of the Russian Federation. They apply to all taxpayers: those selling goods both in Russia and abroad.
To receive a tax refund in the general manner, three conditions must be met:
1. Submit a VAT return to the Federal Tax Service
The total amount of VAT to be refunded is reflected in line 050 of section 1 of the declaration. To receive the tax amount, you must first fill out sections 3–6.
2. Submit an application for VAT refund/credit
You can return the tax to your checking account or offset it against future payments. Submit an application for a refund using the KND form 1150058, and for a credit – using the KND form 1150057.
It is better to submit the application simultaneously with the declaration - this will help to reimburse the tax in an accelerated manner, provided for in paragraphs 7–11 of Art. 176 of the Tax Code of the Russian Federation. If the tax office decides on a refund, but does not receive the application, it will act in the general manner provided for in Art. 78 Tax Code of the Russian Federation.
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3. Pass a desk audit of the declaration
According to standard rules, the camera room lasts two months. But it can be either shortened or extended. Extension of a cell to three months is usually associated with found violations of the law. A reduction of the audit to a month can only be obtained by some bona fide taxpayers in relation to declarations that were filed after October 1, 2022 for tax periods after the third quarter of 2022 (letter of the Federal Tax Service dated October 6, 2020 No. ED-20-15/129).
During the cameral, the tax office often requests documents confirming the right to deductions: invoices and UPD, primary documents on registration; confirmation of zero rates, payment documents, contracts, etc.
In addition, tax authorities sometimes request books of purchases and sales, invoices, analytical documents, account cards, etc. Not all taxpayers agree with such requirements, so disputes reach the courts. Judicial practice is still ambiguous. If you are ready to sue the tax authorities, you can try to refuse to submit documents.
The check may or may not succeed:
- If no violations are found, the tax office will decide whether to refund VAT within 7 days.
- If there are violations, taxes will not be refunded immediately. First, the tax office will draw up an audit report and then give it to you. This will take up to 15 business days. You can challenge the act within a month.
The result of the entire procedure will be a tax decision on reimbursement. She can reimburse the entire declared amount, partially reimburse or refuse completely (clause 3 of article 176, clause 1 of article 101 of the Tax Code of the Russian Federation). The tax office will announce the final decision to you within five days.
If you requested a tax refund, the inspectorate will approve it in the absence of arrears and send an order to the treasury to return the money.
VAT refund on request
In this procedure, the tax can be returned immediately while the desk audit is ongoing (Clause 1, Article 176.1 of the Tax Code of the Russian Federation). In this way, companies return both all VAT at once and part of it.
This can be used by:
- Organizations that, over the previous 3 years, have transferred at least 2 billion rubles to the budget for VAT, excise taxes, income tax, and mineral extraction tax.
- Taxpayers with a bank guarantee.
- Taxpayers with a guarantee from a Russian organization.
- Residents of special territories with a guarantee from the management company.
There are additional conditions for each group. For example, not every organization can become a guarantor, but only one that has paid 2 billion rubles in taxes over the previous three years. And the guarantee from the bank from the moment of filing the VAT return must be valid for at least another 10 months.
To apply the application procedure, submit an application in any form along with sureties and guarantees. This must be done within five days after filing the declaration or immediately along with it.
Keep in mind that you will need to take on the responsibility to return the excessively refunded VAT to the budget if the tax office reverses its decision in whole or in part. This can happen if, following an audit, it turns out that you requested a refund for a larger amount than the tax office approved after the audit.
The IRS will refund the tax only if you have no arrears. She will check this for 5 days, and then within another 5 days she will communicate her decision.
If you are refused a tax refund in accordance with Article 176.1 of the Tax Code of the Russian Federation, then you can use the standard rules. In this case, the camera room will continue automatically, and after its completion, the tax office may change its opinion.
The main problems of the accelerated (application) VAT refund procedure
The accelerated procedure for refunding value added tax is not so simple for the taxpayer, although initially it was supposed to make his life easier. In particular, the bank that issued the guarantee must be included in the list of banks that meet the requirements for accepting bank guarantees for tax purposes, which is formed by the Ministry of Finance of the Russian Federation. The list of documents that must be submitted to the bank for consideration is often redundant.
There are also many disputes surrounding the extension of a bank guarantee when filing an updated tax return, the procedure for calculating interest for the use of budget money, if during the desk audit itself a decision was made to refuse reimbursement. At the moment, there is already judicial practice on these issues, including decisions to recognize the actions of the tax inspectorate as unlawful.
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VAT refund deadlines and late interest
If the tax office decides to fully or partially refund your VAT, it informs the treasury, which will return the tax to your current account within five days after receiving the message from the Federal Tax Service. The department will inform the tax office when and how much money it transferred.
It turns out that the general period for a return is 12 days from the end of the chamber.
If your return is not completed on time, you will be charged interest for each day of delay. Their sum is calculated using the formula:
Interest = VAT in × Dp × St / Kd , where:
- VAT in - tax refundable;
- Дп — number of days of delay;
- St - refinancing rate for the period of delay;
- Kd is the number of calendar days in a year.
This interest does not need to be included in income when calculating income tax.
Example. Late refund of VAT with accrued interest
For the 1st quarter of 2022, at Elektronik LLC, the amount of tax deductions for VAT exceeded the amount of accrued tax by 46,000 rubles. Elektronik decided to reimburse this amount from the budget while VAT for the 1st quarter has not yet been paid (until April 25, 2022). To do this, on April 16, the organization submitted to the inspectorate a VAT return with the tax to be refunded and an application for refund.
The tax office conducted a desk audit and decided to fully refund the tax. But the money arrived in the organization’s bank account 6 days late.
Let's calculate the interest payable: 46,000 × 6 × 4.25% / 365 = 32 rubles.
In accounting, the organization will make the following entries:
- Dt 51 Kt 68 “VAT” - 46,000 - tax refunded according to the declaration for the 1st quarter of 2022.
- Dt 51 Kt 76 - 32 rubles - interest received for late return of refundable tax.
- Dt 76 Kt 91-1 - 32 rubles - interest for late return is taken into account
Bank guarantee
The bank guarantee must be irrevocable and non-transferable. Its validity period cannot be less than eight months from the date of filing the declaration in which VAT is claimed for refund. In addition, the guarantee must allow for the undisputed debiting of funds from the company's account if it does not comply with the payment requirement. Only a bank included in the relevant list of credit institutions maintained by the Russian Ministry of Finance can issue a guarantee.
To be included in this list, a bank must meet the following requirements:
- have a license from the Bank of Russia;
- have been operating for at least five years;
- have own funds of at least 1 billion rubles;
- comply with the standards mandatory for credit institutions, and not have requirements from the Bank of Russia to take measures for financial recovery.
From October 1, 2013, the following requirements apply to the bank guarantee (clause 3 of article 74.1 and clause 4 of article 176.1 of the Tax Code of the Russian Federation):
1) the validity period of the bank guarantee must expire no earlier than eight months from the date of filing the tax return in which the amount of tax to be reimbursed is declared;
2) the amount for which the bank guarantee is issued must ensure the fulfillment of obligations to return to the budget in full the amount of tax claimed for reimbursement.
The bank guarantee must be provided by a bank included in the list maintained by the Ministry of Finance of Russia on the basis of information received from the Bank of Russia.
To be included in this list, a bank must meet the following requirements:
- have a license to conduct banking operations issued by the Bank of Russia and conduct banking activities for at least five years;
- have own funds (capital) of at least 1 billion rubles;
- comply with mandatory standards for all reporting dates during the last six months;
- not have requirements from the Bank of Russia to implement financial recovery measures.
When refunding VAT on tax returns submitted starting from the first quarter of 2016, the right to an accelerated VAT refund without a bank guarantee is granted to organizations that have paid a total of 7 billion rubles in taxes over the three previous calendar years. That is, the amount of taxes that allows for accelerated VAT reimbursement has been reduced from 10 to 7 billion rubles since 2016. Federal Law No. 397-FZ of December 29, 2015 introduced corresponding amendments to Article 176.1 of the Tax Code.
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Why may a refund be denied?
The tax office refuses for various reasons. Most often they become:
- lack of documents confirming deductions, errors or unacceptable corrections in them;
- missed deadline - the declaration was submitted more than three years after the end of the corresponding quarter;
- the tax office's opinion on the unreasonableness of the refund.
The tax office will tell you the exact reason for its refusal in the decision it will issue after checking your declaration. If you do not agree, you can contact higher tax authorities or court.
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Partial Refund
The provisions of Article 176.1 of the Tax Code do not prevent payers from exercising the right to a VAT refund in the application form, both in relation to the entire amount of tax declared for refund, and for part of the declared VAT amount. This conclusion is contained in the Letter of the Federal Tax Service dated November 7, 2011 No. ED-4-3/ [email protected] , as well as in the Letter of the Ministry of Finance dated April 4, 2012 No. 03-07-15/32. In another Letter dated October 17, 2012 No. ED-4-3/17586, the Federal Tax Service explained that submitting a bank guarantee to the inspectorate for part of the tax amount does not contradict the current norms of the Code.
In Letter No. 03-07-08/145 dated June 7, 2012, the Ministry of Finance emphasized that what was said is true not only for the initial, but also for the updated declaration.
Additional penalties
In paragraph 4 of Art. 176 of the Tax Code of the Russian Federation establishes that arrears and debt on fines (penalties), payable in cases specified by the Code, are subject to deduction. The control body independently counts the amount to be returned to the payer towards the repayment of these payments. If a decision was made on partial or full compensation in the presence of arrears that arose between the day of filing the declaration and the day of return and did not exceed the amount of the deduction to be reimbursed, no penalties are charged on it.
Notification Features
They are explained in paragraph nine of Art. 176 of the Tax Code of the Russian Federation. Thus, the norm allows personal delivery to an individual entrepreneur to the director of an organization, as well as to representatives of these entities against signature. In Art. 176 of the Tax Code of the Russian Federation stipulates that the Federal Tax Service may use another method of notification. However, it must be such that it is possible to reliably establish the fact of notification and the calendar date on which it occurred.
Interest accrual
Paragraph 10 of the norm in question defines the consequences of violating the deadline for returning the tax amount from the 12th day from the completion of the desk audit, based on the results of which the control service made a decision on partial/full compensation of the amount paid. In such circumstances, the law provides for the accrual of interest in accordance with the refinancing rate in force at that time.
In the process of resolving disputes related to establishing the period for their calculation, it is necessary to proceed from the following. If the territorial body of the Federal Tax Service did not make a decision on compensation within the period provided for in paragraph two of the norm under consideration, due to the detection of violations, but subsequently these conclusions were found to be erroneous, including by the court, interest must be accrued according to the rules of paragraph 10. It establishes that the calculation is carried out from the 12th day from the date of completion of the desk audit, based on the results of which a decision should be made on compensation of the tax amount. A similar approach is applied when considering disputes regarding the accrual of interest in favor of the payer in case of violation of the deadlines established for the return of established payments in a declarative manner. Their payment is also provided for in clause 10.
Payer notice
The tax service is obliged to notify the subject of the decision in writing. The notification is carried out within a five-day period from the date of its issuance. This notification can be transmitted to the head of the company, individual entrepreneur, as well as representatives of these entities against signature in person or in some other way certifying the fact and calendar date of receipt.
Explanations
Art. 176 of the Tax Code of the Russian Federation (in the new edition) establishes the rules for the return (offset) of VAT. After an economic entity has submitted a declaration in which it has declared appropriate compensation, a desk audit is organized. In this case, the control body must be guided by Art. 88 of the Code. In this case, the general procedure applies. A desk audit cannot exceed three months. from the date of submission of the declaration by the payer. Upon completion, the control body is obliged to make a decision on credit/refund within seven days. This is possible only if there are no violations of the law on the part of the payer. If they are identified, the control inspection draws up an inspection report. It is formed in accordance with the rules of Art. 100 Code.
Specifics of calculating time limits under Art. 176 Tax Code of the Russian Federation
The comments to the norm in question explain the peculiarity of the rules of Art. 101, in accordance with which the period for making a decision is established. According to their meaning, 10 days are allotted for its adoption. The calculation begins from the expiration of two weeks, during which the payer must present his objections. Within the specified period, the head of the inspection makes a decision to hold the subject accountable for violations discovered during the desk audit or to refuse to do so. At the same time, a decision is made on VAT refund or on dissatisfaction of the payer’s application. Compensation may be partial or full. The control service is obliged to inform the economic entity about the decision made. This must be done within a five-day period from the date of its issuance.
Deadlines
The decision to offset/return the deduction amount is made simultaneously with the issuance of a decision on full/partial compensation. According to clause 8 of Art. 176 of the Tax Code of the Russian Federation, an order issued in accordance with it must be sent by the control service to the territorial division of the Federal Treasury. This is done no later than the day following the date of the decision. The territorial division of the Treasury shall return the amount to the payer within five days from the date of receipt of the order. During the same period, it notifies the Federal Tax Service of the date of reimbursement and the amount of deductions.
