In Russia VAT is not imposed on outsourcing services rendered by foreign companies

20.10.2011 Quite often organizations registered in Russia use in doing its business outsourcing services provided by both foreign and Russian companies. Really it's a convenient scheme of work which is presently applied in business. In this regard quite often issues on taxation e.g. on the obligation to pay VAT are appeared.

On the 3d of October 2011 The Ministry of Finance of the Russian Federation in its letter N 03-03-06/1/619 explained the necessity of VAT payment in the case of outsourcing services rendered by a foreign organization (in this case it does not have permanent representation in Russia and is not covered by other options specified in Art. 148 of the Tax Code). The text of the document indicates the absence of such a duty as in this case the territory of Russia is not the place of such related services provided by non-resident company realization.

Expert’s opinion

“The existence of official bodies documents clarifying the law has always beneficial effects on the subsequent law enforcement practice. Especially it concerns taxation since there are many problems in understanding the law as well as some gaps. In this situation the absence of the obligation to pay VAT by a foreign provider of outsourcing services rendered to the Russian company only promotes the use of such a scheme of work and helps to optimize the process of doing business”.

On the basis: www.taxpravo.ru

Andrianova Irina ( the lawyer of international consulting department of “Honest & Bright” )