From entry into effect of this Decree, Decree No. 914 on December 2 2000 “Concerning approval of the rules for maintaining journals of VAT invoices received and issued, purchase ledgers and sales ledgers for VAT settlements” that was effective starting from 2001 and some other decrees of the government that have amended the mentioned Decree No. 914 forfeit their validity.
Entry in to effect of the Decree
The new rules shall be applied from the date of entry in to effect of the Decree. The Decree by itself does not envisage the special procedure of its entry in to effect. Therefore the common procedure of the entry into effect of normative legal acts should be taken into account. In accordance with the Edict of the President of May 23 1996 No. 763, acts of the government that concern rights, liberties and duties of the individuals and organisations shall come in to force upon expiration of seven days after the day of their first official publication. As the official publication of the acts is deemed the publications of their texts in the “Russian Newspaper” or in the “Collection of the legislation of the Russian Federation”. The considered Decree has not been published in the “Russian Newspaper”.
Based on preliminary information, the Decree is included in the magazine “Collection of the legislation of the RF” No. 3 which will be dated January16 2012. In these circumstances the Decree and, therefore, the new formats and rules for drawing-up (maintenance) documents applied to VAT settlements formally should come in to force and become mandatory for the application of taxpayers from January 24 2012.
Meanwhile according to the Determination of the Constitutional Court dated October 24 1996 No. 17-P, the day by which the edition of the “Collection of the legislation of the RF” is dated may not be treated as the date of publishing of the normative act if on this day the edition is sent to the press, but the receipt by the addressees of the information on the content of the normative act is not ensured.
Besides, in consideration of the norm of article 5 of the Tax Code of the RF which stipulates that legislative acts concerning taxes and normative legislative acts concerning taxes of the federal executive authorities come into force not earlier than the expiration of one month from their official publication and not earlier than the first day of the regular tax period, it may be concluded that even in the case of the publication of the Decree in the “Collection of the legislation of the RF” on January 16, it shall come into force not earlier than April 1 2012.
As of today, neither the Ministry of Finance nor the Federal Tax Service have expressed any official position concerning the date of the entry into effect of the Decree. According to the oral comments of the representatives of the Ministry of Finance, the new rules shall be applied from January 24 2012. At present the Federal Tax Service has submitted to the Ministry of Finance a request on this matter. The official clarifications are expected in the beginning of February.
It seems reasonable to establish the transition period during which taxpayers would have the opportunity to prepare for the new requirements of the law by means of the respective modification of the applied (tax) accounting systems.
What new does the Decree introduces?
New forms of documents
The Decree stipulates a number of changes in the details of VAT invoices, namely: number and date of amendment, code and name of the currency, code of units of measure, code of the country of origin (for goods imported into the territory of the Customs Union between the Republic of Belarus, the Republic of Kazakhstan and the Russian Federation).
Besides the original (common) VAT invoice, the Decree provides for the issuance of the corrective and amended VAT invoices. In addition, the Decree stipulates the forms of such VAT invoices and the procedure of their registration in the journal of the VAT invoices received and issued.
Amendments have also touched upon the procedure of the maintenance of the sales and purchase ledgers. The mentioned amendments correspond with the changes related with the possibility of the issuance of the corrective and amended VAT invoices and the electronic documentary flow. Also, rules are established on the procedure for making entries in the sales and purchase ledgers, as well as in the supplementary sheets to them in case of the need to make the corrections and amendments. The Decree stipulates the form of the journal of VAT invoices received and issued which represents the tax register mandatory for maintenance by taxpayers. Previously the legislation was not comprised of similar rules, and taxpayers developed the form of this document by themselves or could not maintain it all. In the Decree it is stated that the journal of the VAT invoices received and issued consists of two parts for the registration of the received and issued VAT invoices, respectively. The registration of the VAT invoices is made in chronological order. This procedure of registration formally covers the common, amended as well as corrective VAT invoices. The journal may be maintained in paper and electronic forms.
New format of the documentary flow in the electronic format
Besides the new or amended forms of the documents applied by the VAT calculation, the Decree envisages the variation of the format of this documentary flow: the procedure for the maintenance and issuance of VAT invoices in the paper and electronic forms as well as the procedure for the maintenance of the purchase and sales ledgers and journals of VAT invoices in the electronic form are set. From the practical standpoint of the implementation of the electronic documentary flow, the adaptation of the accounting system of a taxpayer would be most likely required.
Notably, for the exchange of the VAT invoices in the electronic forms it is required that the Federal Tax Service notifies taxpayers regarding the format of the VAT invoices to be applied. It is expected that such notification will come in the nearest future.
Open questions related to the introduction of the new rules
In view of the significant amount of amendments introduced by the Decree, taxpayers need to modify their accounting system and, most likely, change the documentation flow to bring it in line with the new rules for the issuance of VAT invoices, purchase and sales ledgers and journal of VAT invoices received and issued. As the situation with the date of entry into effect of the Decree, and therefore the beginning of the application of the new rules based on the formats of the mentioned documents is not settled, the question of from what moment the accounting systems should be modified is open.
Since the date of entry in to effect of the Decree remains subject to discussion, in practice the question of which form the supplier should issue the VAT invoice to its customer in may arise. Despite the fact that upon the issuance of the incorrect VAT invoices (for instance, based on the invalid form) the supplier formally does not face negative tax implications, such a situation may potentially have a negative impact on the buyer that claims recovery based on these VAT invoices. Thus, the buyer may not accept VAT invoices in invalid formats. Moreover, considering that it is not currently obvious in what form the VAT invoices should be drawn up, a number of the buyers may conclude that the issuance of VAT invoices based on the new form is not legitimate due to absence of the official publication of the Decree.
The procedure for issuing VAT invoices in the framework of the Decree envisages the distinct fixing of the dates of their issuance, sending and receiving (especially, upon their drawing-up in the electronic form). Because of the significant number of varying dates, questions concerning the correct period for claiming VAT recovery may arise. The variety of the fixed dates has particular significance in cases where they fall in different tax periods. In this case the buyer may begin to hesitate as to the date the VAT recovery, based on such VAT invoices, should be claimed.
Besides the issuance of common VAT invoices, the issuance of corrective and amended VAT invoices is also envisaged. The Decree does not clarify in exactly which cases either type of VAT invoice should be applied. Moreover, registration of VAT invoices in the journal of VAT invoices received and issued should be made in chronological order. Because of the need to issue corrective and amended VAT invoices, a question arises regarding compliance with the chronological order of registration in the journal and respective modification of the accounting system of a taxpayer.
The new VAT invoice form contains details such as the currency code. It has not been clarified as to what currency code should be reflected in cases where the obligations under an agreement are nominated in currency and the payment is effected in rubles (so called “notional units”). Notional units are not recognised as currency, and the legislation does not envisage a special code for notional units. The result is the infeasibility of the issuance of VAT invoices in notional units and the need to the recalculate notional units for the purpose of drawing-up the VAT invoices in rubles. During the recalculation of notional units, a question may arise regarding the exchange course of recalculation and the correct reflection of the cost of goods (works, services) in VAT invoices and the primary accounting documents.
The Decree also changes the timeframe of the storage of documents for the purposes of VAT settlements. Now such documents must be stored for four years. The four-year timeframe for different documents may be calculated from different dates. Questions may arise concerning the timeframe of the storage of documents confirming the VAT recovery right.
Alexei Matveev, tax director, Ernst&Young Moscow
Alexei.Matveev@ru.ey.com