One of the most pressing issues when concluding a government contract is taking into account VAT in the cost of the contract for the performance of work, supply of goods or provision of services.
According to paragraph 4 of Art. 3 44-FZ, any legal entity or individual can become a participant in public auctions, incl. in the form of an individual entrepreneur. The law also does not establish restrictions on the form of taxation that the supplier uses. Organizations subject to special tax regimes can become participants in government orders, i.e. USNO, UTII, etc.
VAT- value added tax, which is included in the cost of goods, work or services sold and is paid to the state to the federal budget.
The standard tax rate is 18%, but there are also certain types of goods for which a tax rate of 10% and 0% is applied.
Video: what to do if the contract specifies VAT?
44-FZ - VAT in the contract price
The state customer, when forming the initial maximum price of the state contract, also includes the amount of VAT in it and indicates the NMCC in the tender documentation, taking into account this tax.
Some customers take into account that companies and individual entrepreneurs under special tax regimes can take part in the bidding, and stipulate that value added tax is taken into account only if the contractor is its payer, i.e. give the winner the opportunity to conclude a contract without VAT.
Note: even if the customer did not specifically note such a condition and, when concluding a contract with the winner on the simplified tax system, demands to pay tax, you can file a complaint with the FAS. In the practice of the antimonopoly authority, such cases have already been considered, and the decision was made in favor of the Supplier. For example, complaint No. 197/KS, despite the fact that the Customer applied to the Arbitration Court, the judges also recognized the decision of the FAS as justified.
Naturally, in such a situation, participants on the simplified tax system have an advantage over participants on the OSNO, because According to Part 1 and Part 2 of Article 34 44-FZ, the contract must be concluded on the terms stipulated in the procurement notice, and the price is fixed and determined for the entire execution period.
This means that the amount of VAT in the contract under 44-FZ, which is obligatory for payment by the participant on OSNO, will be additional income for the participant in the special regime.
But much more often there are situations when the customer simply indicates in the documentation that the price is calculated taking into account value added tax. The regulatory basis for choosing a method for determining the NMCC and carrying out calculations is Order of the Ministry of Economic Development of the Russian Federation of October 2, 2013 N 567, but this document does not regulate the inclusion of VAT in the contract price. However, when forming the NMCC, the customer must take into account the terms of the planned purchase and, if the subject of the contract contains goods, works or services subject to value added tax, the amount of VAT must be included in the initial (maximum) price.
In this case, the situation is different. If the customer in the contract establishes a condition to issue him an invoice, then based on the same Article 34 of 44-FZ, the contractor will be obliged to do this, because this condition was initially provided for in the auction documentation. As in the case described above, the winner will have to conclude a government contract at the price he offered during the procurement procedure.
VAT in the contract for the simplified tax system
If a participant works for the simplified tax system and is not a VAT payer, then fulfilling such conditions will be quite expensive. Because according to paragraph 5 of Art. 173 of the Tax Code of the Russian Federation, in the event that persons who are not taxpayers issue an invoice to the buyer of goods (in this case, the state customer) with the allocation of the amount of value added tax - the entire amount of tax indicated in this invoice is subject to payment to the budget.
Firstly, participants who do not pay attention to the fact that the contract price is indicated with VAT may be in for an unpleasant surprise when it is concluded. Because The price they offer will not include the payment of an 18% tax. In this case, the contractor may sign the contract and perform it at a loss.
Secondly, if the winner refuses to conclude a contract on such terms, then he may end up in the Register of Unscrupulous Suppliers.
Practice of FAS and AS on contracts with VAT
Suppliers working on a simplified taxation system, when faced with 44-FZ contracts with VAT, often file complaints with the FAS: at a maximum, in order to sign an agreement without taking into account the tax, and at a minimum, to refuse the conclusion without entering into the RNP.
The practice of the Federal Antimonopoly Service, as well as Arbitration Courts, in this matter is ambiguous. Much depends on the position of a particular management.
In our work practice, we attended meetings where representatives of regulatory authorities recognized the customer’s right to demand that the winner of a government order issue an invoice. Thus, even if the supplier is under a special tax regime, he will have to file a tax return and pay VAT on the price of the government contract.
And in this case, “simplified” organizations are in a less favorable situation than companies on OSNO, because companies with the simplified tax system will not be able to deduct the amount of this tax, unlike companies on the general taxation system.
If you work under a special taxation regime, then it is important to review the terms of the government contract also in terms of including VAT in the NMCC. After all, even if you win a tender, the execution of which involves issuing an invoice and paying taxes to the budget, and contact the FAS to protect your interests, there is a high probability that the decision will be made in favor of the customer.
Due to the lack of unity in the practice of the Federal Antimonopoly Service and the Arbitration Courts, it is impossible to predict in advance the outcome of the meeting on VAT issues in contracts under 44-FZ. It would be most rational to study similar cases in the region of interest and rely on the practice of a particular OFAS.
VAT in 2019
The Russian government has decided to increase the value added tax rate starting from 2019. up to 20%. In this regard, there will be an increase in prices for goods.
Therefore, we advise suppliers under special tax regimes to read the tender documentation and draft contract very carefully so as not to end up in a situation where 1/5 of the contract value will have to be paid in the form of tax.
Change in contract price when the VAT rate changes
Law No. 303-FZ of August 3, 2018 establishes an increase in the VAT rate from January 1, 2019 from 18 to 20 percent. At the same time, no exceptions are provided for GWS implemented under contracts, prisoners before January 1, 2019.
However, 44-FZ provides for the possibility of making changes to government contracts, including when changing the VAT rate: clauses 2, 3 and 4 of part 1 of Art. 95 establishes that the essential terms of a contract can be changed in the manner prescribed by law if the price of the concluded contract is equal to or exceeds the price established by Resolution No. 1186, and its execution due to circumstances beyond the control of the parties is impossible without changing the conditions.
PP No. 1186 establishes the following conditions:
for contracts for a period of at least 3 years to meet federal needs and the needs of a constituent entity of the Russian Federation, as well as for a period of at least 1 year to meet municipal needs, the following contract prices are established:
- 10 billion rubles- for a contract to meet federal needs. In this case, the price may be changed based on a decision of the Government of the Russian Federation;
- 1 billion rubles- for a contract to meet the needs of a constituent entity of the Russian Federation. The price changes based on the decision of the highest executive body of state power of the constituent entity of the Russian Federation;
- 500 million rubles- for a contract to provide municipal needs. Changes based on the decision of the local administration.
Thus, the contract price can be changed in accordance with the procedure established by the legislation on the contract system, including when the VAT rate changes.
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It's no secret that many organizations want to become suppliers under government contracts. Persons applying the simplified taxation system are no exception. In this case, the contract price usually includes VAT. Many questions arise: is it necessary to allocate the amount of VAT in the contract, is the contract amount paid in full or minus VAT, can the contract be reduced by the amount of tax, does the customer have the right to demand a refund of the transferred VAT, is the simplifier obliged to issue an invoice, should the contractor remit the tax to the budget? The number of cases considered by the courts suggests that this problem is very relevant.
Competitive pricing
All applications for participation in competitions and electronic auctions conducted by state-owned companies are strictly regulated by Federal Law No. 44-FZ dated 04/05/2013 “On the contract system in the field of procurement of goods, works, services to meet state and municipal needs” (hereinafter referred to as Law No. 44-FZ).
Any participants have the right to participate in procurement, incl. who apply a simplified taxation system (Part 4, Article 3 of Law No. 44-FZ). When making a purchase, the documentation establishes the initial (maximum) price of the contract (Part 6, Article 24 of Law No. 44-FZ). The contract is concluded on the terms stipulated by the notice of procurement or invitation to participate, documentation, application, final offer of the winner of the procurement (Part 1, Article 34 of Law No. 44-FZ). Almost the same rules apply when conducting an electronic auction (Part 10, Article 70 and Part 14, Article 78 of Law No. 44-FZ).
It is possible to increase or decrease (by no more than 10%) the quantity of goods, works or services at the customer’s suggestion. In this case, an increase or decrease in the contract price is allowed, but also by no more than 10%, by agreement of the parties (subparagraph b, paragraph 1, part 1, article 95 of Law No. 44-FZ).
In addition, the legislation provides for the right, by agreement of the parties, to reduce the contract price without changing other conditions, if the possibility of change was initially provided for in the procurement documentation and the contract (Part 1, Article 95 of Law No. 44-FZ). By the way, back in 2016 it was possible to increase the price of a contract if it was impossible to fulfill it due to circumstances beyond the control of the parties (no longer in force as of 01/01/2017, Part 1.1 of Article 95 of Law No. 44-FZ and Decree of the Government of the Russian Federation dated 03/14/2016 No. 191 “ On approval of the Rules for changing, by agreement of the parties, the contract execution period, and (or) the contract price, and (or) the unit price of goods, work, services, and (or) the quantity of goods, volume of work, services provided for in contracts, the execution period of which ends in 2016").
Officials' opinion
Let's consider the explanations of the Ministry of Economic Development of Russia, voiced in letters dated November 8, 2016 No. D28i-2922, dated August 19, 2016 No. OG-D28-9909, dated July 13, 2016 No. D28i-1775, etc.
The legislation provides equal conditions for participation in competitive methods of identifying suppliers (contractors, performers) to procurement participants, regardless of their legal form and taxation system. So any procurement participant, incl. which is exempt from paying VAT and applies the simplified tax regime, has the right to participate in procurement.
The contract is concluded and paid by the customer at the price of the winner of the procurement, regardless of the application of the winner’s taxation system.
In letter No. D28i-900 of the Ministry of Economic Development of Russia dated April 11, 2016, it was stated that the customer’s withholding of the amount of VAT when paying for a contract is unlawful, regardless of whether the supplier is a VAT payer.
The calculation of the price of a unit of goods is carried out taking into account the fact that the contract price cannot be higher than that proposed by the tender participant (letter of the Ministry of Economic Development of Russia dated June 10, 2015 No. D28i-1692).
In addition to the initial contract price, the customer sets requirements for pricing. Indicates that, as part of the application, the procurement participant must set the price with or without taxes and other obligatory payments. This conclusion is confirmed by letters from the Ministry of Economic Development of Russia dated June 17, 2016 No. OG-D28-8123, dated June 10, 2016 No. D28i-1483, dated April 18, 2016 No. D28i-1052, dated May 30, 2016 No. D28i-1397, dated May 30, 2016 No. D28i -1398, dated 04/04/2016 No. D28i-831, dated 03/15/2016 No. D28i-721, dated 06/10/2015 No. D28i-1656.
The contract price may be reduced by agreement of the parties, incl. for the amount of VAT if the supplier applies a different taxation system, subject to his consent to reduce the price and if this was provided for in the procurement documentation (letter of the Federal Antimonopoly Service of Russia dated August 21, 2014 No. ATs/33651/14).
If there is a need for types of work or materials not provided for in the contract, such procurement is carried out through a new competition (letter of the Ministry of Economic Development of Russia dated December 18, 2015 No. D28i-3725).
Law No. 44-FZ does not regulate issues related to the procedure for preparing estimates when concluding a contract with a contractor, operations for the implementation of work, services of which are not subject to VAT (letters of the Ministry of Economic Development of Russia dated July 13, 2016 No. D28i-1787, dated May 10, 2016 No. D28i- 1317).
Arbitrage practice
Judicial practice on this issue is quite diverse. There are many decisions that say that the customer’s withholding of the amount of VAT when paying for a contract is unlawful, regardless of the fact that the supplier is not a VAT payer.
Arbitrage practice
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The courts came to the conclusion that the contractor’s use of the simplified tax system cannot be a way for the customer to save money when paying for the results of work (Resolution of the Moscow District Court No. F05-4344/2016 dated April 28, 2016). The auditors' assertion that the customer paid costs (VAT) not provided for by the terms of the contract was recognized by the courts as unfounded, since they were included in the total cost of contract work (resolution of the Moscow District Arbitration Court dated April 28, 2016 No. F05-4344/2016).
Regardless of the applicable taxation system, the winner’s contract is concluded and paid by the customer at the price of the winning bidder and includes all taxes (decision of the Supreme Court of the Russian Federation dated October 1, 2015 No. 303-ES15-11466).
A situation may arise when the contractor won the competition, being a VAT payer, but during the contract period he switched to a simplified procedure. And in this case, the customer does not have the right to unilaterally reduce the contract price.
Arbitrage practice
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In the case where the contract was concluded at a price that included VAT, but subsequently the supplier switched to the simplified tax system, the customer has no legal grounds to unilaterally change (reduce) the contract price (resolution of the Moscow District Arbitration Court dated October 25, 2016 No. F05-14531 /2016).
The winner of the competition also does not have the right to demand that the phrase “including VAT” be excluded from the contract.
Arbitrage practice
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The courts came to the conclusion that excluding the VAT line from the estimate when concluding a contract at the price offered by the auction winner would entail the impossibility of justifying the contract price, which is a violation due to the direct indication of Art. 22 and part 1 art. 64 of Law No. 44-FZ. This conclusion was made in the resolution of the Administrative Court of the North Caucasus District dated 06/09/2016 No. F08-3551/2016 (determination of the RF Armed Forces dated 10/13/2016 No. 308-KG16-12777).
We found a solution when the arbitrators allowed the simplifier to sign a contract for the full amount without allocating VAT. In this case, the winning bidder receives full payment for the contract and does not transfer tax to the budget.
Arbitrage practice
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The judges decided that if the winner is on the simplified tax system, then filling out the column “VAT is not provided” does not change the terms of the contract. Adjustment of the contract price by the customer is not allowed. Therefore, the court approved the terms of the municipal contract in terms of the price without deducting VAT from it (resolution of the AS of the West Siberian District dated November 19, 2014 No. F04-11932/2014 (determination of the Supreme Court of the Russian Federation dated March 16, 2015 No. 304-ES15-3471)).
If a simplified invoice is issued, the tax amount will have to be transferred to the budget.
Arbitrage practice
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Since the draft contracts placed by the customer during the auctions indicated that the cost of the work includes VAT, the state contract must be concluded on appropriate terms (resolutions of the Arbitration Court of the North Caucasus District dated July 21, 2016 No. F08-4781/2016 and Central District dated June 17, 2016 No. F10-1723/2016 (ruling of the Supreme Court of the Russian Federation dated August 25, 2016 No. 310-KG16-10142)). The contractor is obliged to transfer the specified tax to the budget, regardless of the taxation system applied (Resolution of the Volga Region Autonomous District of 02.04.2015 No. F06-21773/2013 (decision of the Supreme Court of the Russian Federation of 06.26.2015 No. 306-KG15-7929)).
Special rules under Law No. 223-FZ
Everything that we wrote above concerns procurement carried out by state companies under Law No. 44-FZ.
Meanwhile, a considerable number of procurements are regulated by Federal Law No. 223-FZ of July 18, 2011 “On the procurement of goods, works, services by certain types of legal entities” (hereinafter referred to as Law No. 223-FZ). This applies to customers with a state share of more than 50%, some unitary enterprises, organizations with regulated activities (energy, water supply, etc.), natural monopolies.
Law No. 223-FZ does not define procurement methods, conditions for their application and procedure. These issues must be regulated in procurement regulations approved by customers.
In particular, the procurement documentation must specify the procedure for pricing (with or without taking into account the costs of transportation, insurance, payment of customs duties, taxes and other obligatory payments) (Clause 7, Part 10, Article 4 of Law No. 223-FZ ). Thus, the customer has the right to independently determine the need to take into account VAT when forming the contract price. This conclusion is confirmed by letters from the Ministry of Economic Development of Russia dated August 19, 2016 No. D28i-2169, dated February 17, 2016 No. OG-D28-2554, dated December 7, 2015 No. OG-D28-15218, dated October 19, 2015 No. OG-D28-13364, dated August 28 .2015 No. D28i-2654.
So the customer has the right in the requirements for procurement documentation to prescribe a reduction in the contract price by the amount of VAT in the event of concluding a contract with a participant using the simplified tax system (decision of the Chelyabinsk OFAS Russia dated November 3, 2016 on complaint No. 77-03-18.1/2016).
Also, the procurement regulations prescribe the criteria for evaluating and comparing applications for participation in the procurement and the procedure for evaluating and comparing applications (clauses 12 and 13, part 10, article 4 of Law No. 223-FZ). One of the evaluation criteria may be price. In this case, the customer in the procurement regulations has the right to provide for a procedure for comparing the price offers of participants, taking into account the taxation system they apply. For example, the prices of participants’ offers excluding VAT can be used as a single basis for comparing price offers. This was indicated in letters from the Ministry of Economic Development of Russia dated May 26, 2016 No. D28i-1372, dated April 28, 2016 No. D28i-1114, dated February 17, 2016 No. OG-D28-2554, dated November 30, 2015 No. D28i-3499, dated September 30, 2015 No. D28i-2782.
As you can see, the contract based on the results of the procurement, the winner of which is the participant using the simplified procedure, is concluded on the terms determined by the procurement regulations (letter of the Ministry of Economic Development of Russia dated July 13, 2016 No. D28i-1834).
Consequences of issuing an invoice
As a general rule, persons applying the simplified taxation system are not VAT payers. They do not issue invoices to their customers, do not keep books of purchases and sales, and carry out settlements with customers without highlighting tax amounts in the primary documents (clause 2 and clause 3 of Article 346.11 of the Tax Code of the Russian Federation). There are also exceptions (import of goods into the Russian Federation, tax agents, etc.), but we will not touch on them.
You will not have to pay VAT if the buyer mistakenly highlighted the tax amount in the payment order. Officials also agree with this position (letter of the Ministry of Finance of Russia dated November 18, 2014 No. 03-07-14/58618).
If the simplifier personally issues an invoice to the buyer with the allocated amount of VAT, then the entire amount of tax will have to be paid to the budget (subclause 1, clause 5, article 173 of the Tax Code of the Russian Federation, letter of the Ministry of Finance of Russia dated December 8, 2016 No. 03-11-06/2 /73239). Also, a VAT declaration is submitted for the specified amount (clause 5 of Article 174 of the Tax Code of the Russian Federation).
Since 2016, this tax has not been taken into account either in income or in expenses (clause 1 of Article 346.15 and subclause 22 of clause 1 of Article 346.16 of the Tax Code of the Russian Federation). Moreover, for this transaction, the simplifier will not be able to accept the “input” VAT, because despite paying the tax, he is not a taxpayer for VAT (letters of the Ministry of Finance of the Russian Federation dated May 21, 2012 No. 03-07-07/53 and dated March 23, 2007 No. 03-07-11/68, clause 5 of the resolution of the Plenum of the Supreme Arbitration Court of the Russian Federation dated May 30 .2014 No. 33).
Whether the buyer will be able to deduct the allocated VAT is also a big question. Officials previously noted that tax amounts presented by simplifiers are not accepted for deduction from buyers. This conclusion was made in letters of the Ministry of Finance of the Russian Federation dated October 5, 2015 No. 03-07-11/56700, dated May 16, 2011 No. 03-07-11/126, dated November 29, 2010 No. 03-07-11/456, Federal Tax Service of the Russian Federation dated May 6 .2008 No. 03-1-03/1925, Federal Tax Service of the Russian Federation for Moscow dated 04/05/2010 No. 16-15/035198. Later, tax authorities, under the pressure of decisions of the Constitutional Court of the Russian Federation (resolutions dated March 29, 2016 No. 460-O and dated June 3, 2014 No. 17-P), decided that an invoice received for a VAT-free transaction serves as the basis for the buyer to accept VAT amounts for deduction (letter of the Federal Tax Service of Russia dated September 23, 2016 No. SD-4-3/17871@). We think that this conclusion also applies to invoices issued by simplifiers, especially since the budget will not suffer from this, because VAT will be transferred.
Let's sum it up
By taking on the obligation to transfer VAT to the budget, the simplifier often ends up at a loss. So we advise you to carefully study the procurement documentation before taking part in the competition. If the competition is regulated by Law No. 44-FZ, then the entire trading procedure is contained in this law.
The Ministry of Economic Development of Russia, in its explanations regarding Law No. 44-FZ, relied on the following rules:
- any procurement participant, incl. who applies the simplification has the right to participate in procurement;
- the contract is concluded and paid by the customer at the price of the winner of the purchase, regardless of the application of the winner’s taxation system;
- withholding by the customer of the amount of VAT when paying for a contract is unlawful, regardless of whether the supplier is a VAT payer;
- the contract price may be reduced by agreement of the parties, incl. for the amount of VAT if the supplier applies a different taxation system.
If we summarize the judicial practice, it turns out:
- the customer does not have the right to unilaterally reduce the contract price by the amount of VAT;
- The winner of the competition does not have the right to demand that the phrase “including VAT” be excluded from the contract.
If the procurement is carried out in accordance with Law No. 223-FZ, then the customer’s procurement regulations should be studied. After all, a contract based on the results of a procurement, the winner of which is the participant applying the simplified tax system, is concluded on the terms determined by the procurement regulations. The customer has the right to independently determine the need to take into account VAT when forming the contract price.
If the seller has issued an invoice to the buyer with the allocated amount of VAT, then he is obliged to calculate and pay the specified tax to the budget and submit a declaration. In a simplified version, the VAT paid is not taken into account either in income or expenses. Also, under this transaction, the simplifier does not have the right to accept “input” VAT.
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Dmitry Pirozhkov, leading consultant of the audit company MKPTs
Indeed, when issuing an invoice to the buyer, the simplifier is obliged to transfer VAT to the budget and submit the corresponding declaration to the tax authority at the place of his registration (clauses 4, 5 of Article 174, subclause 1 of clause 5 of Article 173 of the Tax Code of the Russian Federation).
In this case, the declaration must be submitted exclusively in electronic form via telecommunication channels through an electronic document management operator (clause 5 of Article 174 of the Tax Code of the Russian Federation). A declaration on paper will be considered not submitted (letter of the Federal Tax Service dated January 30, 2015 No. OA-4-17/1350@, Federal Tax Service of Moscow dated January 14, 2015 No. 13-11/000824). For violation of the deadline for submitting a declaration, a fine may be imposed (clause 1 of Article 119 of the Tax Code of the Russian Federation).
Accordingly, it should be remembered that the simplifier will also have to incur costs for purchasing, installing and updating licensed software for generating and submitting electronic reports, costs for connecting to the telecom operator’s system and obtaining a qualified electronic signature.
But first of all, a simplifier can be advised to carefully analyze the possibility of incurring expenses in a situation where, after completing a sales operation, the obligation to pay VAT to the budget will already arise, and funds for payment under the contract may not yet be received from the customer. In such a situation, the simplifier will have to pay the tax to the budget in full (without the possibility of applying tax deductions) with his own money, temporarily excluding it from his working capital.
The organization, being on the main taxation system, entered into a government contract for the provision of services. The price of the services provided includes VAT (specified in the contract). Since the new year, the organization has switched to a simplified taxation system. Should the organization indicate the amount of VAT in the certificate of completion of work and issue an invoice? Does the customer have the right to accept VAT as a deduction?
No, you shouldn't.
A company using the simplified tax system is not a VAT payer, regardless of the terms of the agreement. The main thing is not to issue an invoice under the contract. If the document is issued at the request of the customer and the terms of the contract, the company will calculate and pay VAT.
It should be noted that the organization is not obliged to issue an invoice under the contract with the terms and VAT using the simplified tax system. Reason – letter of the Federal Tax Service of Russia dated November 8, 2016 No. SD-4-3/21119@.
Rationale
From the letter of the Federal Tax Service of Russia dated November 8, 2016 No. SD-4-3/21119@
Question: About the payment of VAT by the executor of a government contract using the simplified tax system.
Answer:
The Federal Tax Service has considered an appeal regarding the payment of value added tax (hereinafter referred to as VAT) by a taxpayer who is executing a government contract using a simplified taxation system, and reports the following.
According to paragraph 1 of Article 346.11 of the Tax Code of the Russian Federation (hereinafter referred to as the Code), the simplified taxation system for organizations and individual entrepreneurs is applied along with other taxation regimes provided for by the legislation of the Russian Federation on taxes and fees.
The transition to a simplified taxation system or a return to the general taxation regime is carried out voluntarily by organizations and individual entrepreneurs in the manner prescribed by Chapter 26.2 of the Code.
In accordance with paragraphs 2 and 3 of Article 346.11 of the Code, organizations and individual entrepreneurs applying the simplified taxation system are not recognized as VAT payers, with the exception of VAT payable in accordance with the Code when importing goods into the customs territory of the Russian Federation, as well as value added tax , paid in accordance with Article 174.1 of the Code.
Paragraph 3 of Article 169 of the Code establishes that VAT taxpayers are required to draw up invoices when performing transactions recognized as subject to taxation by the specified tax in accordance with Chapter 21 of the Code (with the exception of transactions that are not subject to taxation (exempt from taxation) in accordance with Article 149 of the Code) .
In this regard, organizations and individual entrepreneurs using the simplified taxation system, when carrying out operations for the sale of goods (works, services), should not prepare and issue invoices to buyers.
In the event that persons who are not VAT payers, including organizations and individual entrepreneurs who have switched to a simplified taxation system, issue an invoice to the buyer of goods (work, services), highlighting the amount of VAT, the entire amount of tax indicated in this invoice, in in accordance with paragraph 5 of Article 173 of the Code, it is subject to payment to the budget.
The stated position corresponds to the position of the Constitutional Court of the Russian Federation, expressed by it in paragraph 4.1 of the resolution dated 06/03/2014 N 17-P “In the case of verifying the constitutionality of the provisions of paragraphs 6 and 7 of Article 168 and paragraph 5 of Article 173 of the Tax Code of the Russian Federation in connection with a complaint from a society Limited Liability "Trading House "Kamsnab".
In this regard, if in a state contract for the supply of goods (work, services) their cost is indicated “including VAT” and when paying for these goods (work, services), the customer allocates the amount of VAT in the payment order if an invoice is not issued to the seller applying the simplified taxation system, the obligation to pay VAT to the budget in accordance with the provisions of Chapter 21 of the Code does not arise.
The Federal Tax Service of Russia also notes that when considering the issue of calculating (inflating) the price of a state contract for the performance of work in this situation, it is necessary to take into account that, on the basis of subparagraph 3 of paragraph 2 of Article 170 of the Code, the amount of VAT on goods (work, services) presented to persons not who are payers of this tax are taken into account in the cost of these purchased goods (works, services).
At the same time, we inform you that the issues of determining the price of goods (works, services) when concluding government contracts relate to civil law relations between business entities and do not fall within the competence of the Federal Tax Service of Russia.
In accordance with paragraph 1 of Resolution of the Government of the Russian Federation dated August 26, 2013 N 728, the Ministry of Economic Development of the Russian Federation has been designated as the federal executive body for regulating the contract system in the field of procurement of goods, works, and services for state and municipal needs.
Your personal expert Olga Pushechkina.
Any organization can participate in the competition for concluding a government contract, including those working on a simplified basis. The contract is concluded with the winner at the price set by him, adjustment of which is not allowed. What does arbitration practice decide on the issue of charging VAT “simplified” within the framework of a government contract?
Collect VAT in court
Arbitration practice on the issue under consideration is determined in each specific case by the specifics of the tender documentation, as well as the terms of the contracts. Let's look at a few examples.
So, for example, the Resolution of the Federal Antimonopoly Service of the Moscow District dated November 2, 2011 No. A40-131937/10-59-1153 deserves attention (Decision of the Supreme Arbitration Court of the Russian Federation dated February 21, 2012 No. VAS-1045/12 denied the transfer of the case to the Presidium of the Supreme Arbitration Court of the Russian Federation) . The essence of the dispute is this: the “simplified” supplier entered into a government contract, the price of which included VAT. The customer paid for the goods in full, but considered that the supplier had inflated the cost of the products sold, increasing the cost of VAT (at the time of signing the contract, the latter was under the simplified tax system). Then the customer applied to arbitration with a claim for recovery of unjust enrichment (Article 1102 of the Civil Code of the Russian Federation). Having examined the materials of the case, the servants of Themis established: the supplier did not issue an invoice highlighting the amount of VAT, and also did not transfer the disputed amount of tax to the budget. At the same time, the judges did not find any grounds for including VAT in the cost of delivery. This means that the money received by the “simpler” is unjust enrichment and is subject to return.
Having examined the case materials, the judges established: the supplier did not issue an invoice highlighting the amount of VAT, and also did not transfer the disputed amount of tax to the budget. At the same time, the judges did not find any grounds for including VAT in the cost of delivery.
Also noteworthy are the conclusions formulated in the Decision of the Moscow Arbitration Court dated July 10, 2011 No. A40-17779/11-102-147. The dispute arose after payment, when not all the money arrived in the supplier’s account: the amount was reduced by the amount of VAT. The arbitrators studied the case and supported the government customer, since the draft contract, which was part of the tender documentation, and the contract itself had a special condition: if the supplier is exempt from VAT in accordance with tax legislation, the price of the government contract is reduced by the amount of the tax without changing the quantity of supplied products provided for in the contract .
In another trial by the Federal Antimonopoly Service of the Moscow District (Resolution No. A40-477/11067-4 dated September 20, 2011), the arbitrators again sided with the state customer. The background to the dispute is as follows. The winner of the open auction in electronic form was the company using the simplified tax system. At the same time, the price of state contact was set taking into account VAT. In connection with the application of the special regime, the supplier approached the government customer with a proposal to make changes to the government contract and indicate the amount of payment without the words “including VAT.” The state customer sent a request to the Office of the Federal Antimonopoly Service for Moscow (UFAS) to include the company in the register of unscrupulous suppliers, attaching to it a protocol on the evasion of the winning bidder from concluding a contract. The company that won the tender was forced to enter into an agreement at a price including VAT. However, having subsequently issued the primary documents and invoice without VAT, the “simplified” agent did not receive the same amount of tax from the customer. Going to court led nowhere. According to the arbitrators, the government customer has no debt subject to collection.
How to deal with VAT?
VAT allocated in a government contract can also cause a lot of trouble when calculating the tax base for a single tax.
Let’s say that the government contract allocates the amount of VAT, but the organization is not ready for litigation. In this situation, the “simplifier” involuntarily becomes a VAT taxpayer, since upon completion of the government order he draws up all the primary documents, as well as an invoice with the allocated amount of this tax. In turn, the invoiced VAT amount is subject to payment to the budget at the expense of the company using the simplified tax system (clause 1, clause 5, article 173 of the Tax Code of the Russian Federation). The company will also have to submit a VAT return to the tax office (Letters of the Ministry of Finance of the Russian Federation dated October 23, 2007 No. 03-07-11/512, Federal Tax Service of the Russian Federation for Moscow dated November 17, 2009 No. 16-15/120314).
In addition, the VAT allocated in the state contract can cause a lot of trouble when calculating the tax base for the single tax. Firstly, it will not be possible to take this fee into account when calculating the single tax (Letter of the Federal Tax Service of the Russian Federation for Moscow dated March 21, 2011 No. 16-15/026297@). Secondly, the competent authorities believe that “simplers” who voluntarily issue invoices to buyers highlighting the amount of VAT should take into account the income from sales with tax. (Letters of the Ministry of Finance of the Russian Federation dated April 14, 2008 No. 03-11-02/46, dated March 13, 2008 No. 03-11-04/2/51 and the Federal Tax Service of the Russian Federation for Moscow dated November 2, 2010 No. 16 -15/115179@). Although the servants of Themis are categorically against this approach (Resolution of the Presidium of the Supreme Arbitration Court of the Russian Federation dated September 1, 2009 No. 17472/08).
The point of view is repeatedly heard at seminars that the Customer is obliged to indicate the amount of VAT in contracts, regardless of the taxation system of the supplier (performer, contractor), without using the term “VAT exempt”, because this may be interpreted by the inspection authorities as a violation and unjust enrichment of the supplier in the amount of VAT. That is, the contract price is not reduced by the amount of VAT, but VAT must be specified and it is the supplier’s problem what to do with this VAT. How should we be?
Answer
The main condition is that the customer must enter into a contract with the winner of the competition, auction, request for quotations, request for proposals at the price proposed by the winner, regardless of the tax regime applied by the winner.
LETTER OF THE MINISTRY OF ECONOMIC DEVELOPMENT OF THE RUSSIA dated January 22, 2016 No. D28i-86 “Contract system: contract price if the procurement winner uses or switches to using the simplified tax system”
“...In accordance with Part 1 of Article 34 of Law No. 44-FZ, the contract is concluded on the terms stipulated by the notice of procurement or the invitation to take part in determining the supplier (contractor, performer), procurement documentation, application, final offer of the procurement participant with whom a contract is concluded, except for cases in which, in accordance with Law No. 44-FZ, a notice of procurement or an invitation to participate in determining the supplier (contractor, performer), procurement documentation, application, or final offer are not provided.
At the same time, in accordance with Part 2 of Article 34 of Law No. 44-FZ, when concluding a contract, it is indicated that the contract price is fixed and is determined for the entire period of execution of the contract, and in cases established by the Government of the Russian Federation, the approximate value of the contract price or the price formula and the maximum value are indicated contract prices established by the customer in the procurement documentation. When concluding and executing a contract, changing its terms is not allowed, except for the cases provided for in this article and Article 95 of Law No. 44-FZ.
At the same time, information about the taxation system used by procurement participants is not included in the list of documents and information that procurement participants must submit as part of an application for participation in the procurement.
Law No. 44-FZ does not define the order of actions of the customer if the winner of the competitive procedure uses or switches to a simplified taxation system.
Thus, the contract is always concluded at the price offered by the winning bidder. The amount stipulated by the contract for goods supplied, work performed, services rendered must be paid to the winner of the purchase in the amount established by the contract...”
New VAT in contracts – 8 answers to key questions
The VAT rate has been increased. At first glance, there is nothing special; taxes are raised almost every year. Everything will probably become more expensive in stores. Now think about it: In almost every contract you enter into, you include tax amounts. In addition, when calculating the NMCC, taxes must also be taken into account. What if the contract was concluded with the same rate, but it is transferable? And if the supplier demands to raise the price, did they conclude at the previous rate? And now that you have realized the full scale of the tragedy, read how to do without tragedies at all. This article will save you from big troubles.
Decision of the Federal Antimonopoly Service of Russia dated December 2, 2015 No. K – 1657/15"5. According to the Applicant, the Auction documentation does not provide for the possibility of concluding a contract with a participant subject to a special tax regime.
In accordance with paragraph 4 of Article 3 of the Law on the Contract System, a procurement participant is any legal entity, regardless of its organizational and legal form, form of ownership, location and place of origin of capital, or any individual, including those registered as an individual entrepreneur.
Thus, any procurement participant, including those to whom the simplified taxation system is applied, has the right to participate in the procurement.
In accordance with the provisions of the Law on the Contract System, when making a procurement, the initial (maximum) contract price is established in the documentation. When setting the initial (maximum) price, the customer must take into account all factors affecting the price: terms and conditions of delivery, risks associated with the possibility of increasing prices, and other payments associated with payment for the goods (works, services) supplied.
In accordance with Part 1 of Article 34 of the Law on the Contract System, the contract is concluded on the terms stipulated by the notice of procurement or invitation to participate in determining the supplier (contractor, performer), procurement documentation, application, final offer of the procurement participant with whom the contract is concluded.
Thus, taking into account the provisions of the Law on the Contract System, the contract is concluded at the price proposed by the procurement participant with whom the contract is concluded, regardless of the application of the taxation system of this participant.”
Rationale for the second part of the answer
This issue is at the intersection of Law No. 44-FZ and the Tax Code of the Russian Federation and therefore we remind you that in accordance with Part 1 of Art. 168 of the Tax Code of the Russian Federation, when selling goods (work, services), transfer of property rights, the taxpayer (tax agent specified in paragraphs 4 and 5 of Article 161 of the Tax Code of the Russian Federation) in addition to the price (tariff) of the goods (work, services) sold, transferred property rights is obliged to present the appropriate amount of tax for payment to the buyer of these goods (works, services), property rights.
Therefore, if the contract is concluded for the provision of work (supply of goods) subject to VAT, then it is advisable for the customer of the work subject to VAT to take into account its size in the price of the contract, because if VAT is not included in the price of the contract, then the contractor (seller of the work) has the right to demand its payment in excess of the established contract price equal only to the tax base determined in accordance with Part 1 of Art. 154 of the Tax Code of the Russian Federation (explanations on a similar situation are presented in the Resolution of the Plenum of the Supreme Arbitration Court of the Russian Federation dated November 17, 2011 No. 72 “On some issues in the practice of considering disputes related to payments for utility resources”).
For example, for Moscow customers there is a direct obligation to allocate VAT in the contract price (clause 2.3 of Appendix 4 to the Regulations on the procurement system of the city of Moscow, approved by Decree of the Moscow Government dated February 24, 2012 No. 67-PP.
We remind you that the procurement participant is free in his actions and in accordance with Part 1 of Art. 2 of the Civil Code carries out entrepreneurial activities that are aimed at systematically obtaining profit from the use of property, sale of goods, performance of work or provision of services, independently, at its own risk.
Also, he can voluntarily make a transition to a simplified taxation system or return to other taxation regimes.
So according to Part 2 of Art. 346.11 of the Tax Code of the Russian Federation, organizations applying the simplified tax system are not recognized as taxpayers of value added tax, with the exception of value added tax payable when importing goods into the customs territory of the Russian Federation, as well as value added tax paid in accordance with Art. 174.1 Tax Code of the Russian Federation.
In parts 4 and 4.1 of Art. 346.13 of the Tax Code of the Russian Federation defines the conditions and requirements for organizations applying the simplified tax system when they are considered to have lost the right to use the simplified tax system, and in part 5 of this article the obligation to report this to the tax authorities within the established time frame.
Therefore, if the supply of goods, performance of work, or provision of services are subject to VAT, then we recommend indicating VAT in the draft contract.
To do this, as an option, you can include the following points in the draft contract:
“- The Contract price is _____________________ rubles 00 kopecks, incl. VAT____
.
.
.
- With a Contractor who is not a VAT payer on the basis of clause 2 or 3 of Art. 346.11 Ch. 26.2 “Simplified Taxation System” of the Tax Code of the Russian Federation The contract is concluded at the price offered by him during the auction.”
Also in practice, customers often establish the following conditions in the draft contract without directly indicating VAT:
« 1. The Contract price is _________ rubles ______ kopecks (____________) rubles ______ kopecks, and includes the cost of the work performed, the preparation of estimates, the visit of the Contractor’s specialists to perform the work, the materials used, transportation, insurance (if necessary), taxes, customs duties and other related expenses.
The price of this Contract is fixed for the entire period of execution of the Contract, with the exception of cases provided for by Federal Law dated April 5, 2013 No. 44-FZ “On the contract system in the field of procurement of goods, works, services to meet state and municipal needs.”
All costs and expenses associated with the fulfillment of its obligations shall be borne by the Contractor at his own expense.
2. Payment for work performed by the Customer is made without advance by transferring funds to the Contractor’s bank account, for work actually performed, on the basis of an invoice issued by the Contractor, an acceptance certificate for work performed and costs in form No. KS-2 about 100% readiness of the facility, certificates on the cost of work performed and expenses in form No. KS-3 on completion of the entire scope of work, invoices (if provided), and provision, on the part of the Customer, of an expert opinion on the quality of work performed within ___ banking days.
<…>
3. If this Contract is concluded with an individual, the amount payable to such individual is reduced by the amount of tax payments associated with payment of the Contract.»
In these cases, if the winner is a participant applying the general taxation system, then VAT will already be taken into account by the customer, if the winner is a simplifier, then the contract will be concluded at the price offered by him and then the cost of the work will be billed to him without VAT (delivery of goods without an invoice ), but if the simplifier switches to VAT, he will not be able to add VAT on top.
Additionally, we inform you that if the winner of a competitive purchase is not a VAT payer, then the customer, for example, can fix the price of the winner in the local estimate (estimate) and invite him to independently calculate the estimate in proportion to the price reduction, and also in accordance with the letter of ROSSTROY dated November 27. 2012 No. 2536-IP/12/GS “On the procedure for applying standards for overhead costs and estimated profits at the current price level.”
As for closing acts, if VAT was not taken into account (not indicated) in the cost of work by the customer and acts are closed on the basis of KS-2 and KS-3, then in our opinion payment is made in accordance with the cost of work specified in KS-2 and KS -3.
Also, for example, if the price was formed with VAT, but the winner-simplified VAT was not recalculated and the acts are closed on the basis of KS-2 and KS-3, then, according to experts from the Institute of State and Regulated Procurement, Competition Policy and Anti-Corruption Technologies, accept you need them from the contractor without VAT. That is, all unit prices must remain the same as they were in the estimate at the time of signing the contract. The “simplified” contractor must indicate in the KS “not subject to VAT.” Thus, by the end of the completion of the work, it turns out that the customer “did not pay extra” to the contractor - did not pay the entire contract price (the VAT amount will remain unpaid). The contractor will simply have no reason to demand any payment from the customer, because all KS according to the estimate have already been signed and paid for. The contractor may try to collect the remainder of the contract amount, but it is unlikely that he will be able to do this.
DECISION OF THE ARBITRATION COURT OF SKO dated December 24, 2015 No. F08-9545/2015, A53-3243/2015
Please note that this issue is at the intersection of Law No. 44-FZ and the Tax Code of the Russian Federation. Therefore, regarding payment for work and issues related to tax legislation, we advise you to consult with your financiers and accountants.
Also, if the customer directly sets the contract price with VAT, and also indicates that he makes payments to the Contractor upon completion of the work in accordance with the invoice, then in fact he obliges the simplified contractor to provide an invoice with VAT.
In this case, if the simplified procurement participant signs the contract in this form, the customer will pay him for the work including VAT only if an invoice is provided.
Then the simplifier voluntarily p will transfer VAT to the budget on the basis of clause 5 of Art. 173 of the Tax Code of the Russian Federation (DECISION OF THE ARBITRATION COURT OF THE REPUBLIC OF SAKHA dated April 24, 2015 No. A58-182/2015).
If the simplified contractor does not provide an invoice, the customer will have the right to withhold VAT upon payment and be ready to justify his position in court.
An example of positive judicial practice in a similar situation:
DECISION OF THE FOURTEENTH ARBITRATION COURT OF APPEAL dated June 30, 2015 No. 14AP-3278/2015, A05-463/2015
In turn, if the customer does not establish the mandatory submission of an invoice and the simplifier provides certificates of work performed in an amount equal to the contract price (including VAT or taxes) without indicating VAT, then the customer should pay for the work without withholding VAT, despite the fact that it is indicated in the contract price.
Negative judicial practice for a customer who tried to withhold VAT:
DECISION OF THE ARBITRATION COURT OF THE TOMSK REGION dated January 11, 2016 No. A67-7718/2015
The court's decision was supported by the decision of the SEVENTH ARBITRATION COURT OF APPEALS No. 07AP-1505/2016 dated March 28, 2016.
