The RF sets the conditions for applying 0% VAT on railway carriage and transportation of exports.

02.06.2010

Legal Update No. 147.

Goltsblat BLP advises that Federal Law No. 50-FZ of 5 April 2010 “On Amendment of Article 164, Part 2 of the Tax Code of the Russian Federation” will comes into effect on 1 July 2010, clarifying the conditions for applying 0% VAT to railway carriage or transportation of exports (sub-clause 9, par. 1, Article 164 of the RF Tax Code (TC)).

Previously, the RF TC made no special provisions for applying 0% VAT to such works (services), resulting in many disputes with the tax authorities over this beneficial rate could be legitimately applied.

To rectify this, sub-clause 9, par. 1, Article 164 of the RF TC has been amended to include the following provisions:

  • first, 0% VAT will be applicable solely to railway carriage or transportation works (service) whose cost is specified in the shipping documents of the exports (exported derivative products);
  • second, 0% VAT will be applicable only if the relevant customs authority has made an entry in the shipping documents confirming that the goods have been placed under the applicable customs treatment regime.

Thus, starting from 1 July 2010, it would be expedient, in order to have 0% VAT applied, to identify in the relevant documents (including carriage or transportation contracts, appendices, and specifications) the cost of carriage or transportation of exports (exported derivative products) to be shown separately in the shipping documents.

For additional information, please contact:

Andrei Shpak,
Partner, Tax Practice, “Goltsblat BLP”,
Tel: +7 (495) 287 44 44,
Email: info@gblplaw.com

Sergei Kalinin,
Senior Associate,
Tax Practice,
“Goltsblat BLP”,
Tel: +7 (495) 287 44 44,
Email: info@gblplaw.com

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