From 1 January 2019, Russia will introduce new value added tax (VAT) rules with respect to business-to-business (B2B) supplies of e-services provided to Russian customers.

Russia introduced VAT liabilities on offshore providers of electronic services to consumers in January 2017. For B2B transactions, the reverse charge was applied and the Russian taxpayer was responsible for reporting the VAT with no cash payment. This simplification is now being removed by Federal Law No 335-FZ.

Electronic services include:

  • Online gaming;
  • Broadcast TV and radio;
  • Automated domain name-related services;
  • Online software and automated support;
  • Subscriptions to news and other content sites;
  • Online telephony and data services;
  • Webhosting or online databases;
  • Automated, online advertising services; and
  • Cloud or similar online data storage and memory.

Excluded:

  • Internet access;
  • Consulting/advice services provided via email.

New VAT registration and reporting requirements:

  • VAT registration with the Russian tax authorities will be required of foreign B2B e-service providers.
  • The threshold for registration will be sales of e-services having a value of 1 RUB to Russian customers. Foreign suppliers, therefore, will need to register if they make sales of e-services or charge Russian customers with an e-services fee.
  • There will also be VAT reporting and remittance requirements as well as the requirement to maintain an e-services sales ledger.
  • The amount of VAT will need to be listed separately on the invoice.