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The Supreme Arbitration Court can change the court practice in the sphere of VAT payments


				08.02.2012
						Until the recent times the Russian legal entities that paid income to foreign counterparts based on transactions refused to calculate and pay VAT to the state budget in spite of the fact that the Russian organizations in this case are the tax agents. Such a situation was possible because of the absence of the provision in the Tax Code of the Russian Federation to collect the tax compulsorily, moreover the court practice followed the path of non-imposing of the obligation to pay the sums of VAT by the Russian legal entities, only the sum of penalty was collected in the amount of 20% of duly payments and fine.

However recently the Supreme Arbitration Court of the Russian Federation considered the case with the participation of OJSC “Ulyanovskiy engine plant” and territory department of the FTS on large taxpayers and established that if the Russian firm didn’t keep VAT from the transaction with non-resident because of its own fault, it is obliged to pay arrears to the budget. Thus, if the presidium of the Supreme Arbitration Court makes the final decision, it’ll be possible that the tax agent non-performance of his obligation to calculate and keep tax won’t exempt him from the performance of the duty to pay the sums of VAT to the budget, including at the expense of his own funds.

Details of the case:

«From the materials of the case the next circumstances follow: 17.06.2007 OJSC “Ulyanovskiy engine plant” concluded the Agreement with Ultra Motive Limited, the company founded under the laws of the UK with registered address: Langley Witney, Oxon, 0X29 9EF UK (volume 2, 1-6).

The paragraph 1.1 of the Agreement provides the obligation of the company Ultra Motive Limited to render services on the engines estimation (UEP & 249 SOHC/DOHC) and next additional revision of engines till they meet the requirements claimed for installation on LCV GAZel including the comparison of the engines Chrysler 2.4 and UEP 4216, detailed estimation of the basic requirements and the work of engine, analysis of the producing squares and the system of quality of OJSC “UEP”, planning of PR-strategy for the market informing about the improvement of UEP engine.”
Expert’s opinion

«That’s it, the last and decisive battle the Supreme Arbitration Court will give to all the persons who decided to get round the Tax Code in the part of VAT payment under the services obtaining from non-residents.
25 March 2011 in the city of Samara the Eleventh arbitration appellation court considered the case N А72-5929/2010.

From the very beginning of the consideration in 2007 the lawyers of OJSC “Ulyanovskiy Engine Plant” created the strategy in such a way that they didn’t argue  about the fact that they were tax agents under the transaction with the foreign company. Nevertheless, OJSC “Ulyanovskiy Engine Plant” didn’t have the possibility to keep and pay the tax into the budget.
And that was instead of organization of the scheme of work in such a way: to transfer the place of realization from the Russian Federation territory and the place of these services using - abroad.

Maybe the Supreme Arbitration Court will solve the case in favor of OJSC “UEP”.
But such a situation can’t exist for a long period of time – the tax authorities will sooner or later achieve their goal. Let’s pay attention to the size of paragraph 4 of art. 148 and other subparagraphs up to the 5th! They are bigger than the first three subparagraphs, and all the 148 article of the Tax Code is the 4th subparagraph by nature, that includes everything and the 5th one with subparagraphs that includes everything that is not included in the 4th one!

That is exact signal to scheme lawyers: prepare the schemes according to the transfer of the realization place and services using from the non-resident abroad.

It’s extremely interesting to watch what consulting firms will create instead of the previous scheme”.

On the basis: http://ras.arbitr.ru/

Lomakin Yaroslav ( the managing partner of Honest and Bright)

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