VAT is a federal tax, due to which almost a third of the Russian budget is replenished. Basically, this tax is paid by large companies. Small business, consisting of individual entrepreneurs and small firms, seeks to avoid the obligation to pay it. Can an LLC work without VAT and how can it be done legally?
What is VAT?
VAT is a value added tax that relates to indirect, rather than direct payments. In Russian tax legislation, VAT is considered to be the most difficult to understand, accrue and pay.
The fact is that the VAT payer is embedded in a kind of chain with its counterparties. And often he has to incur losses if the partner who supplied the goods and services does not fulfill the taxpayer’s duties. Let’s show it by example.
Please note: an example of calculation is given for the year 2018, in which the maximum VAT rate is 18%. But from 2019, the rate will rise to 20%.
The organization “Alpha” bought wholesale goods from the organization “Vega” at a price of 7,000 rubles for one unit. The amount of VAT at the rate of 18% was 1,260 rubles,
VAT on sales is equal to 1,800 rubles, which Alpha must transfer to the budget. But in the amount of 1,800 rubles, there is already input VAT for 1,260 rubles, which were paid when purchasing goods from the organization “Vega”.
That is, “Alpha” can receive the offset of the input VAT and transfer to the budget not 1,800, but only 540 rubles. But to get this deduction, you must fulfill several conditions specified in the Tax Code of the Russian Federation:
- goods, works, services are registered;
- correctly issued invoice (VAT highlighted in a separate line);
- purchased goods, works, services are related to the objects of taxation (they are actually used in transactions subject to VAT, and their acquisition is economically justified).
In addition, the tax inspectorate may refuse to receive a deduction if the counterparty (in our example, this is “Vega”) is declared unfair. So, before you make a deal, you need to check your partner and request documents confirming the legality of his activities. If the tax inspectorate does not confirm the rights of Alfa to offset the input VAT, the tax will have to be paid in full,
But due diligence in choosing a partner is not enough. VAT returns are accepted only in electronic form, therefore for their delivery it is necessary to obtain a reinforced qualified digital signature. And the tax itself is paid in a special order: dividing the amount accrued for the quarter into three equal parts and listing each part once a month.
That is, there are a lot of difficulties with this tax; therefore, small business seeks to avoid working with VAT. How to do it?
Who has the right to work without VAT
Work without VAT is available to most limited liability companies. This tax is paid on the general taxation system, so immediately after registering the LLC, it is necessary to switch to another tax regime.
Such regimes are called preferential, because they allow you to pay less taxes to the budget than on the general system. And most importantly – allow LLC to operate without VAT. You can choose from the following tax regimes:
- USN Revenues with a rate of 6% of the income received;
- USN Revenues minus expenses where the difference between income and expenses at a rate from 5% to 15% is taxed;
- UTII, which pays 15% of the imputed income, calculated by a special formula;
- SAT, designed specifically for agricultural producers who pay only 6% of the difference between income and expenditure.
To understand what kind of preferential taxation system will be the most profitable option in a particular case, it is necessary to carry out an individual calculation of the tax burden.
But besides, check whether you are complying with the conditions for switching to a preferential system:
- timely submission to the tax inspectorate of the notice of the choice of regime;
- compliance with the limits on the number of employees (no more than 100 people for the simplified taxation system and UTII) and annual income (no more than 150 million rubles for the simplified tax system);
- fulfillment of other mandatory conditions stipulated by separate chapters of the Tax Code for each regime.
If, however, a limited liability company does not submit an application for the transition to a preferential regime after registration, it will be the payer of the common system (ESS). And on it, as we have already found out, you have to pay VAT at a rate of up to 18%. And not only him, but also a tax on profits, as well as on real estate, if it is listed for the organization.
Those companies that simply did not know about their right to work at reduced tax rates and therefore did not file an application can correct the situation from the new year. To do this, contact your IFTS at the end of December of this year.
But even if the LLC has switched to preferential treatment on time and is not recognized as a VAT payer, this tax will still have to be paid in the following situations:
- importation of goods into the territory of the Russian Federation;
- issuing an invoice with the allocated amount of value added tax (sometimes companies in special regimes do this at the request of counterparties, but it is better not to do it);
- obtaining the status of a tax agent for VAT (recipient of services of a foreign company, a concessionaire under a concession agreement, a trustee, etc.).
If an organization turned out to be on a common system not at will (sometimes it is intentionally chosen by OSNO, for example, for working with large partners), then with small incomes it can be freed from paying the tax.
LLC without VAT on the general system – these are organizations that have received no more than 2 million rubles of revenue over the past three months and did not sell excisable goods. To receive exemption from value added tax, contact your INFS with a statement (approved by the order of the Federal Tax Service
To prove the amount of income received, prepare statements from sales books and record income and expenses. The deadline for submission of documents is no later than the 20th of the month from which the exemption is declared.
If everything is in order, then the next 12 months, the company does not pay VAT, but on condition that the amount of revenue does not exceed the established limit (2 million rubles for three months). If necessary, the release can be extended for the same period. And even better, if there is such an opportunity, go to a preferential tax system.
And once again briefly about how LLC work without VAT:
- Check whether you are meeting the conditions for the transition to preferential tax systems.
- Order a good accountant to calculate the tax burden in different modes and choose the most profitable option.
- In time to apply for the transition to the selected mode.
- Comply with the necessary restrictions for work under this system (most often, this is the number of employees or the amount of annual income).
- If you find yourself forced into the general system, check that you may be eligible for a VAT exemption.