The Russian Ministry of Finance (MoF) has announced updates regarding VAT repayment rules for legal entities and individual entrepreneurs transitioning to the simplified tax system, outlined in Guidance letter No. 03-07-11/69416 on 17 September 2024.
Under the new regulations, those whose income for the preceding calendar year exceeds RUB 60 million will be classified as VAT payers. Taxpayers falling under this category will face rates based on their annual income.
A reduced rate of 5% is set for those earning up to RUB 250 million and 7% for those exceeding that threshold, though neither will have access to VAT deductions. Alternatively, entities opting for the standard VAT rate will be liable for 20% (or 10% for certain goods) and will be allowed to deduct VAT.
Additionally, businesses transitioning from the standard tax regime to the simplified tax system will need to repay any previously deducted VAT amounts on goods, services, and assets if they had an income of up to RUB 60 million or were subject to the reduced rates of 5% or 7%.
However, those with an annual income exceeding RUB 60 million, who adopt the general VAT rate, will not be required to repay previously claimed VAT amounts.
