State contract without VAT on the basis. VAT in a government contract under the simplified tax system from the supplier. What to do? The contract did not specifically include VAT

Magazine "CALCULATION"

The price of cooperation

In order to conclude a profitable agreement, financing of which is provided from the budget, the company must be guided by the Federal Law of July 21, 2005 N 94-FZ “On placing orders for the supply of goods, performance of work, provision of services for state and municipal needs.”

A government contract is preceded by a competition for the right to conclude it. The order is placed by recipients of budget funds, including state and municipal unitary enterprises, budgetary institutions, and government bodies. Any organizations or individuals, including individual entrepreneurs, can join the competition for the tender (Clause 1, Article 8 of Law No. 94-FZ). At the same time, the legislator does not establish any restrictions on participation in auctions for persons applying a special tax regime. It turns out that any bidder for the order, including the “simplified” one, has the right to participate in the auction. This point of view is shared by the Ministry of Economic Development of Russia in its Letters dated November 14, 2011 N D28-565, dated October 12, 2011 N D28-452, dated September 15, 2011 N D28-380.

When conducting a tender, the customer establishes in the tender documentation the initial (maximum) price of the contract, as well as the requirements for its formation. For example, the condition for reflecting the price in the application: with or without taxes (clause 5, clause 4, article 22, clause 7, clause 3, article 41.6 of Law No. 94-FZ). As a rule, the customer requires the price including VAT.

Based on the results of the bidding, the contract is concluded with the winner on the terms specified by him, as well as in the tender documentation (clause 3 of article 29, clause 10 of article 41.12 of Law No. 94-FZ). As a general rule, the price of an agreement is fixed and cannot change during its execution (clause 4.1 of Article 9 of Law No. 94-FZ).

Hence, the conclusion of the officials seems quite reasonable: the government contract is concluded at the price of the winning bidder, while the use of the simplified tax system does not entail changes in the terms of the contract, that is, the customer is not allowed to adjust the price proposed by the “simplified” during the tender (Letter of the Ministry of Economic Development of Russia dated November 14, 2011 N D28 -565). The question arises, what should a company in a special regime do with VAT if it won the tender, but is exempt from paying VAT?

Opinion of the Ministry of Finance

Unfortunately, the explanations of representatives of the financial department on this issue are very contradictory. Just last year, the Ministry of Finance stated that organizations and individual entrepreneurs using the simplified tax system sell goods (work, services) without VAT. Therefore, when concluding contracts for municipal needs, the price should be calculated without VAT (Letters dated 08/22/2011 N 03-11-06/2/121, dated 02/02/2011 N 03-07-07/02).

Let me remind you that “simplified people” are recognized as VAT taxpayers only when importing goods, as well as within the framework of legal relations under a simple partnership agreement or trust management of property, as well as a concession agreement (clauses 2 and 3 of Article 346.11 of the Tax Code of the Russian Federation). In addition, “simplers” pay VAT when performing the functions of a tax agent (clause 5 of Article 346.11 of the Tax Code of the Russian Federation). In other cases, this tax is not calculated.

Officials, expressing their point of view, referred only to the general norms of the Tax Code. At the same time, special provisions governing the conclusion of government contracts were not taken into account in principle.

This year, the Ministry of Finance took into account the shortcomings. The result exceeded all expectations - now a diametrically opposite position has been set forth, according to which the price of a government contract is not reduced by the amount of VAT, and the goods supplied (work performed, services rendered) are paid by the customer at the price specified in the contract (Letter dated January 26, 2012 N 03-07 -11/21).

What will the court say?

Arbitration practice on the issue under consideration is determined in each specific case by the specifics of the tender documentation, as well as the terms of the contracts. Let's look at a few examples.

For example, the Resolution of the Federal Antimonopoly Service of the Moscow District of November 2, 2011 N A40-131937/10-59-1153 deserves attention (Decision of the Supreme Arbitration Court of the Russian Federation dated February 21, 2012 N VAS-1045/12 denied the transfer of the case to the Presidium of the Supreme Arbitration Court of the Russian Federation). The essence of the dispute is this: the “simplified” supplier entered into a government contract, the price of which included VAT. The customer paid for the goods in full, but considered that the supplier had inflated the cost of the products sold, increasing the cost of VAT (at the time of signing the contract, the latter was under the simplified tax system). Then the customer applied to arbitration with a claim for recovery of unjust enrichment (Article 1102 of the Civil Code of the Russian Federation). Having examined the materials of the case, the servants of Themis established: the supplier did not issue an invoice highlighting the amount of VAT, and also did not transfer the disputed amount of tax to the budget. At the same time, the judges did not find any grounds for including VAT in the cost of delivery. This means that the funds received by the “simpler” constitute unjust enrichment and are subject to return.

Also noteworthy are the conclusions formulated in the Decision of the Moscow Arbitration Court dated July 10, 2011 No. A40-17779/11-102-147. The dispute arose after payment, when not all the money arrived in the supplier’s account: the amount was reduced by the amount of VAT. The arbitrators studied the case and supported the government customer, since the draft contract, which was part of the tender documentation, and the contract itself had a special condition: if the supplier is exempt from VAT in accordance with tax legislation, the price of the government contract is reduced by the amount of the tax without changing the quantity of supplied products provided for in the contract .

In another trial by the Federal Antimonopoly Service of the Moscow District (Resolution dated September 20, 2011 N A40-477/11-67-4), the arbitrators again sided with the state customer.

The background to the dispute is as follows. The winner of the open auction in electronic form was the company using the simplified tax system. At the same time, the price of the government contract was set taking into account VAT. In connection with the application of the special regime, the supplier approached the government customer with a proposal to make changes to the government contract and indicate the amount of payment without the words “including VAT.” The state customer sent a request to the Office of the Federal Antimonopoly Service for Moscow (UFAS) to include the company in the register of unscrupulous suppliers, attaching to it a protocol on the evasion of the winning bidder from concluding a contract. The company that won the tender was forced to enter into an agreement at a price including VAT. However, having subsequently issued the primary documents and invoice without VAT, the “simplified” agent did not receive the same amount of tax from the customer. Going to court led nowhere. According to the arbitrators, the government customer has no debt subject to collection.

Dry residue

Let’s say that the government contract allocates the amount of VAT, but the organization is not ready for litigation. In this situation, the “simplifier” involuntarily becomes a VAT taxpayer, since upon completion of the government order he draws up all the primary documents, as well as an invoice with the allocated amount of this tax. In turn, the invoiced VAT amount is subject to payment to the budget at the expense of the company using the simplified tax system (clause 1, clause 5, article 173 of the Tax Code of the Russian Federation). The company will also have to submit a VAT return to the tax office (Letter of the Ministry of Finance of Russia dated October 23, 2007 N 03-07-11/512, Federal Tax Service of Russia for Moscow dated November 17, 2009 N 16-15/120314).

In addition, the VAT allocated in the state contract can cause a lot of trouble when calculating the tax base for the single tax. Firstly, it will not be possible to take this amount of collection into account when calculating the single tax (Letter of the Federal Tax Service of Russia for Moscow dated March 21, 2011 N 16-15/026297@). Secondly, the competent authorities believe that “simplers” who voluntarily issue invoices to buyers highlighting the amount of VAT must take into account income from sales with tax (Letters of the Ministry of Finance of Russia dated April 14, 2008 N 03-11-02/46, dated March 13, 2008 N 03-11-04/2/51 and Federal Tax Service of Russia for Moscow dated November 2, 2010 N 16-15/115179@). Although the servants of Themis are categorically against this approach (Resolution of the Presidium of the Supreme Arbitration Court of the Russian Federation dated September 1, 2009 N 17472/08).

Do I need to include VAT in the contract price? What are the rules of the public procurement law, and what does Law 223-FZ say about this? Read on to learn more about this, as well as what suppliers need to know about VAT.

The price of the government contract must include VAT

Although 44-FZ does not contain a direct indication of the content of VAT in the contract price, this follows from its provisions, as well as from the Tax Code of the Russian Federation. We are talking about cases where the object of purchase is goods, works and services subject to VAT. The list of non-taxable objects can be found in Part 2 of Article 146 and Article 149 of the Tax Code of the Russian Federation. There are quite a lot of such goods, works and services, and here are just a few of them:

• medical equipment;
• land;
• work performed by budgetary and autonomous institutions.

If the customer does not include VAT in the contract price, then it will still have to be paid at the price of the winning bidder. In this sense, the amount of payment does not depend on what taxation system the supplier uses. This was stated in the letter of the Ministry of Economic Development dated April 11, 2016 No. D28i-900.

Registration in ERUZ EIS

From January 1, 2019 to participate in tenders under 44-FZ, 223-FZ and 615-PP registration is required in the ERUZ register (Unified Register of Procurement Participants) on the EIS (Unified Information System) portal in the field of procurement zakupki.gov.ru.

We provide a service for registration in the ERUZ in the EIS:

This conclusion follows from paragraph 2 of Article 34 of Law 44-FZ. The rule states that the contract price cannot exceed the bid of the winning supplier. The only exception is a price change by agreement of the parties, but no more than 10% and only if this is caused by a proportional decrease or increase in the quantity/volume of goods, works or services purchased.

VAT in the contract price from the supplier's point of view

The main thing that the supplier needs to remember is that if they try to withhold VAT from him when paying, then this is contrary to the law 44-FZ. He must receive for his goods, works or services the full price specified in the contract.

For VAT payers

If the supplier is a VAT payer, then after receiving payment he acts in the same way as for any other transaction. That is, it calculates and pays VAT on this amount. So, when making your price offers, you must take into account that you will have to pay tax on the amount received.

For those who do not pay tax

Subjects in special regimes are in a more advantageous position, since they do not pay VAT. For example, two applications were submitted:

• the contract price is 500 thousand rubles - it was submitted by the company to the simplified tax system;
• the contract price is 531 thousand rubles, including VAT 81 thousand rubles - it was submitted by the VAT payer.

All other things being equal, the customer will choose the first application. It would seem that the participant who submitted the second application was greedy, offering a price higher by 31 thousand rubles. In fact, excluding tax, he will receive an income of 450 thousand rubles, because he will pay VAT to the budget.

When a VAT evader wins a purchase, he may be offered several scenarios.

1. In the project documentation, the customer allows the phrase “including VAT” to be replaced with “VAT not subject to.” In this case, the company in a special mode indicates the price without tax, which does not entail any consequences either under the law 44-FZ or in accordance with the Tax Code.
2. The customer indicates in the contract “including VAT” and asks the contractor to allocate the amount of tax. The special regime officer who agrees to do this will have to pay the allocated amount of VAT to the budget from his own pocket. It is clear that this is unprofitable, but there will be no way out. After all, it is impossible to raise the cost of a government contract by the same 18% - essential conditions cannot be changed.
3. The contract price includes VAT, but upon payment the customer withholds the tax amount. This is a violation of Law 44-FZ, since the contract price must remain unchanged. The position was confirmed by the Supreme Court in its ruling dated June 26, 2015 No. 306-KG15-7929.

If the winner is an individual

As you know, individuals who are not entrepreneurs do not pay VAT. Therefore, individual price offers are made excluding tax. However, we must remember that citizens pay personal income tax. In this case, the customer must act as a tax agent, so he will withhold the amount of tax from the contract price. Thus, when offering a price, individuals must take into account that they will receive the amount minus personal income tax.

Procurement under 223-FZ and commercial tenders

Corporate and commercial orders have no legal restrictions in this regard. Customers can choose independently whether to include VAT in the purchase price or not. In addition, they have the right to establish rules for assessing applications based on whether the suppliers submitting them are VAT payers or not. For example, participants’ applications for simplified taxation system and OSNO can be compared without taking into account VAT.

The legislation of the Russian Federation provides for tax regulation of business activities. And one of the types of mandatory payments to the budget is value added tax. How is tax taken into account when determining the initial contract price, and how to make payments to the winner? Let's find out in the article.

Concept

VAT is a value added tax provided for in the general taxation system (OSNO). Its essence is that organizations that sell goods, works, services (GWS) and add an additional price to their cost must transfer a certain part of the added amount to the budget.

This type of federal tax is regulated by Chapter 21 of the Tax Code of the Russian Federation. The object of taxation is the sale and import of industrial and industrial materials on the territory of the Russian Federation, and the rate in general from 2019 is 20% (0% - international transportation, goods in the field of space activities; 10% - sales of food products, newspapers, magazines, medical products, etc. ., according to Article 164 of the Tax Code of the Russian Federation).

VAT in purchases under 44-FZ

There are 2 stages where the tax is applied:

1. Contract price.

Order of the Ministry of Economy No. 567 dated October 2, 2013, which discloses methods for determining the NMCC, does not contain recommendations to include VAT in the NMCC, but indicates that the cost must be brought into line with the terms of the planned purchase. Thus, if the subject of the order is included in the list of objects of taxation, the customer must include this contribution to the NMCC (operations that are not recognized as an object of taxation are given in Part 2 of Article 146 of the Tax Code of the Russian Federation).

At the same time, any supplier can take part in the auction, regardless of its legal form and taxation regime.

The question arises at what price to conclude an agreement if the winner is a person under special taxation regimes (simplified system, unified agricultural tax, imputed income, etc.) or an individual.

According to , when concluding a contract, it is indicated that its price is fixed and is determined for the entire period of execution of the contract, which is concluded on the conditions stipulated by the notice, documentation and application. All currently posted in the library of the Unified Information System also indicate that the price must include all costs associated with the payment of taxes, fees and other payments.

Thus, the contract is concluded at the price offered by the winner, regardless of whether the supplier is a VAT payer. Withholding the cost of tax upon payment by the customer will be unlawful. This amount will be an additional income for the participant, which indicates a more advantageous position for the participants on the special. modes, compared to OSNO.

VAT in purchases under 223-FZ

The law on procurement by certain types of legal entities does not so strictly regulate the procedure for determining the NMCC and further concluding a contract. Art. 4 223-FZ only indicates that the notice must contain information about the NMCC, the procedure for its formation (with or without taking into account the costs of paying duties, taxes and other obligatory payments). The customer must indicate how the proposals of participants under different tax regimes will be compared.

There are two positions on the issue of application evaluations:

1. Valuation without VAT violates the principle of equality and cost-effective spending of funds (decision of the St. Petersburg OFAS Russia dated August 12, 2015 on complaint No. T02-405/15, decision of the Khabarovsk OFAS Russia dated September 30, 2014 No. 157).

2. Valuation excluding VAT does not create unequal conditions for participants (Resolution of the Federal Antimonopoly Service of the East Siberian District dated May 15, 2015 No. F02-1709/2015 in case No. A33-10428/2014, Resolution of the Supreme Court of the Russian Federation dated April 11, 2017 in case No. 304- KG16-17592, A27-24989/2015).

Opposite points of view also exist when calculating the cost of a contract concluded with a supplier on a special regime. Reducing the price of a contract by the amount of VAT with the winner in most cases is considered illegal, however, there is a practice where the reduction if the contractor uses the simplified system of the contract is recognized as legal (decision of the Chelyabinsk OFAS dated November 3, 2016 on complaint No. 77-03-18.1/2016).

The lack of uniformity of law enforcement practice creates certain risks for customers and participants, therefore it is necessary to clearly indicate the requirements in procurement regulations and documentation.

The point of view is repeatedly heard at seminars that the Customer is obliged to indicate the amount of VAT in contracts, regardless of the taxation system of the supplier (performer, contractor), without using the term “VAT exempt”, because this may be interpreted by the inspection authorities as a violation and unjust enrichment of the supplier in the amount of VAT. That is, the contract price is not reduced by the amount of VAT, but VAT must be specified and it is the supplier’s problem what to do with this VAT. How should we be?

Answer

The main condition is that the customer must enter into a contract with the winner of the competition, auction, request for quotations, request for proposals at the price proposed by the winner, regardless of the tax regime applied by the winner.

LETTER OF THE MINISTRY OF ECONOMIC DEVELOPMENT OF THE RUSSIA dated January 22, 2016 No. D28i-86 “Contract system: contract price if the procurement winner uses or switches to using the simplified tax system”

“...In accordance with Part 1 of Article 34 of Law No. 44-FZ, the contract is concluded on the terms stipulated by the notice of procurement or the invitation to take part in determining the supplier (contractor, performer), procurement documentation, application, final offer of the procurement participant with whom a contract is concluded, except for cases in which, in accordance with Law No. 44-FZ, a notice of procurement or an invitation to participate in determining the supplier (contractor, performer), procurement documentation, application, or final offer are not provided.

At the same time, in accordance with Part 2 of Article 34 of Law No. 44-FZ, when concluding a contract, it is indicated that the contract price is fixed and is determined for the entire period of execution of the contract, and in cases established by the Government of the Russian Federation, the approximate value of the contract price or the price formula and the maximum value are indicated contract prices established by the customer in the procurement documentation. When concluding and executing a contract, changing its terms is not allowed, except for the cases provided for in this article and Article 95 of Law No. 44-FZ.

At the same time, information about the taxation system used by procurement participants is not included in the list of documents and information that procurement participants must submit as part of an application for participation in the procurement.

Law No. 44-FZ does not define the order of actions of the customer if the winner of the competitive procedure uses or switches to a simplified taxation system.

Thus, the contract is always concluded at the price offered by the winning bidder. The amount stipulated by the contract for goods supplied, work performed, services rendered must be paid to the winner of the purchase in the amount established by the contract...”

New VAT in contracts – 8 answers to key questions

The VAT rate has been increased. At first glance, there is nothing special; taxes are raised almost every year. Everything will probably become more expensive in stores. Now think about it: In almost every contract you enter into, you include tax amounts. In addition, when calculating the NMCC, taxes must also be taken into account. What if the contract was concluded with the same rate, but it is transferable? And if the supplier demands to raise the price, did they conclude at the previous rate? And now that you have realized the full scale of the tragedy, read how to do without tragedies at all. This article will save you from big troubles.

"5. According to the Applicant, the Auction documentation does not provide for the possibility of concluding a contract with a participant subject to a special tax regime.

In accordance with paragraph 4 of Article 3 of the Law on the Contract System, a procurement participant is any legal entity, regardless of its legal form, form of ownership, location and place of origin of capital, or any individual, including those registered as an individual entrepreneur.

Thus, any procurement participant, including those to whom the simplified taxation system is applied, has the right to participate in the procurement.

In accordance with the provisions of the Law on the Contract System, when making a procurement, the initial (maximum) contract price is established in the documentation. When setting the initial (maximum) price, the customer must take into account all factors affecting the price: terms and conditions of delivery, risks associated with the possibility of increasing prices, and other payments associated with payment for the goods (works, services) supplied.

In accordance with Part 1 of Article 34 of the Law on the Contract System, the contract is concluded on the terms stipulated by the notice of procurement or invitation to participate in determining the supplier (contractor, performer), procurement documentation, application, final offer of the procurement participant with whom the contract is concluded.

Thus, taking into account the provisions of the Law on the Contract System, the contract is concluded at the price proposed by the procurement participant with whom the contract is concluded, regardless of the application of the taxation system of this participant.”

Rationale for the second part of the answer

This issue is at the intersection of Law No. 44-FZ and the Tax Code of the Russian Federation and therefore we remind you that in accordance with Part 1 of Art. 168 of the Tax Code of the Russian Federation, when selling goods (work, services), transfer of property rights, the taxpayer (tax agent specified in paragraphs 4 and 5 of Article 161 of the Tax Code of the Russian Federation) in addition to the price (tariff) of the goods (work, services) sold, transferred property rights is obliged to present the appropriate amount of tax for payment to the buyer of these goods (works, services), property rights.

Therefore, if the contract is concluded for the provision of work (supply of goods) subject to VAT, then it is advisable for the customer of the work subject to VAT to take into account its size in the price of the contract, because if VAT is not included in the price of the contract, then the contractor (seller of the work) has the right to demand its payment in excess of the established contract price equal only to the tax base determined in accordance with Part 1 of Art. 154 of the Tax Code of the Russian Federation (explanations on a similar situation are presented in the Resolution of the Plenum of the Supreme Arbitration Court of the Russian Federation dated November 17, 2011 No. 72 “On some issues in the practice of considering disputes related to payments for utility resources”).

For example, for Moscow customers there is a direct obligation to allocate VAT in the contract price (clause 2.3 of Appendix 4 to the Regulations on the procurement system of the city of Moscow, approved by Decree of the Moscow Government dated February 24, 2012 No. 67-PP.

We remind you that the procurement participant is free in his actions and in accordance with Part 1 of Art. 2 of the Civil Code carries out entrepreneurial activities that are aimed at systematically obtaining profit from the use of property, sale of goods, performance of work or provision of services, independently, at its own risk.

Also, he can voluntarily make a transition to a simplified taxation system or return to other taxation regimes.

So according to Part 2 of Art. 346.11 of the Tax Code of the Russian Federation, organizations applying the simplified tax system are not recognized as taxpayers of value added tax, with the exception of value added tax payable when importing goods into the customs territory of the Russian Federation, as well as value added tax paid in accordance with Art. 174.1 Tax Code of the Russian Federation.

In parts 4 and 4.1 of Art. 346.13 of the Tax Code of the Russian Federation defines the conditions and requirements for organizations applying the simplified tax system when they are considered to have lost the right to use the simplified tax system, and in part 5 of this article the obligation to report this to the tax authorities within the established time frame.

Therefore, if the supply of goods, performance of work, or provision of services are subject to VAT, then we recommend indicating VAT in the draft contract.

To do this, as an option, you can include the following points in the draft contract:

“- The Contract price is _____________________ rubles 00 kopecks, incl. VAT____

.

.

.

- With a Contractor who is not a VAT payer on the basis of clause 2 or 3 of Art. 346.11 Ch. 26.2 “Simplified Taxation System” of the Tax Code of the Russian Federation The contract is concluded at the price offered by him during the auction.”

Also in practice, customers often establish the following conditions in the draft contract without directly indicating VAT:

« 1. The Contract price is _________ rubles ______ kopecks (____________) rubles ______ kopecks, and includes the cost of the work performed, the preparation of estimates, the visit of the Contractor’s specialists to perform the work, the materials used, transportation, insurance (if necessary), taxes, customs duties and other related expenses.

The price of this Contract is fixed for the entire period of execution of the Contract, with the exception of cases provided for by Federal Law dated April 5, 2013 No. 44-FZ “On the contract system in the field of procurement of goods, works, services to meet state and municipal needs.”

All costs and expenses associated with the fulfillment of its obligations shall be borne by the Contractor at his own expense.

2. Payment for work performed by the Customer is made without advance by transferring funds to the Contractor’s bank account, for work actually performed, on the basis of an invoice issued by the Contractor, an acceptance certificate for work performed and costs in form No. KS-2 about 100% readiness of the facility, certificates on the cost of work performed and expenses in form No. KS-3 on completion of the entire scope of work, invoices (if provided), and provision, on the part of the Customer, of an expert opinion on the quality of work performed within ___ banking days.

<…>

3. If this Contract is concluded with an individual, the amount payable to such individual is reduced by the amount of tax payments associated with payment of the Contract.»

In these cases, if the winner is a participant applying the general taxation system, then VAT will already be taken into account by the customer, if the winner is a simplifier, then the contract will be concluded at the price offered by him and then the cost of the work will be billed to him without VAT (delivery of goods without an invoice ), but if the simplifier switches to VAT, he will not be able to add VAT on top.

Additionally, we inform you that if the winner of a competitive purchase is not a VAT payer, then the customer, for example, can fix the price of the winner in the local estimate (estimate) and invite him to independently calculate the estimate in proportion to the price reduction, and also in accordance with the letter of ROSSTROY dated November 27. 2012 No. 2536-IP/12/GS “On the procedure for applying standards for overhead costs and estimated profits at the current price level.”

As for closing acts, if VAT was not taken into account (not indicated) in the cost of work by the customer and acts are closed on the basis of KS-2 and KS-3, then in our opinion payment is made in accordance with the cost of work specified in KS-2 and KS -3.

Also, for example, if the price was formed with VAT, but the winner-simplified VAT was not recalculated and the acts are closed on the basis of KS-2 and KS-3, then, according to experts from the Institute of State and Regulated Procurement, Competition Policy and Anti-Corruption Technologies, accept you need them from the contractor without VAT. That is, all unit prices must remain the same as they were in the estimate at the time of signing the contract. The “simplified” contractor must indicate in the KS “not subject to VAT.” Thus, by the end of the completion of the work, it turns out that the customer “did not pay extra” to the contractor - did not pay the entire contract price (the VAT amount will remain unpaid). The contractor will simply have no reason to demand any payment from the customer, because all KS according to the estimate have already been signed and paid for. The contractor may try to collect the remainder of the contract amount, but it is unlikely that he will be able to do this.

DECISION OF THE ARBITRATION COURT OF SKO dated December 24, 2015 No. F08-9545/2015, A53-3243/2015

Please note that this issue is at the intersection of Law No. 44-FZ and the Tax Code of the Russian Federation. Therefore, regarding payment for work and issues related to tax legislation, we advise you to consult with your financiers and accountants.

Also, if the customer directly sets the contract price with VAT, and also indicates that he makes payments to the Contractor upon completion of the work in accordance with the invoice, then in fact he obliges the simplified contractor to provide an invoice with VAT.

In this case, if the simplified procurement participant signs the contract in this form, the customer will pay him for the work including VAT only if an invoice is provided.

Then the simplifier voluntarily p will transfer VAT to the budget on the basis of clause 5 of Art. 173 of the Tax Code of the Russian Federation (DECISION OF THE ARBITRATION COURT OF THE REPUBLIC OF SAKHA dated April 24, 2015 No. A58-182/2015).

If the simplified contractor does not provide an invoice, the customer will have the right to withhold VAT upon payment and be ready to justify his position in court.

An example of positive judicial practice in a similar situation:

DECISION OF THE FOURTEENTH ARBITRATION COURT OF APPEAL dated June 30, 2015 No. 14AP-3278/2015, A05-463/2015

In turn, if the customer does not establish the mandatory submission of an invoice and the simplifier provides certificates of work performed in an amount equal to the contract price (including VAT or taxes) without indicating VAT, then the customer should pay for the work without withholding VAT, despite the fact that it is indicated in the contract price.

Negative judicial practice for a customer who tried to withhold VAT:

DECISION OF THE ARBITRATION COURT OF THE TOMSK REGION dated January 11, 2016 No. A67-7718/2015

The court's decision was supported by the decision of the SEVENTH ARBITRATION COURT OF APPEALS No. 07AP-1505/2016 dated March 28, 2016.

It's no secret that many organizations want to become suppliers under government contracts. Persons applying the simplified taxation system are no exception. In this case, the contract price usually includes VAT. Many questions arise: is it necessary to allocate the amount of VAT in the contract, is the contract amount paid in full or minus VAT, can the contract be reduced by the amount of tax, does the customer have the right to demand a refund of the transferred VAT, is the simplifier obliged to issue an invoice, should the contractor remit the tax to the budget? The number of cases considered by the courts suggests that this problem is very relevant.

Competitive pricing

All applications for participation in competitions and electronic auctions conducted by state-owned companies are strictly regulated by Federal Law No. 44-FZ dated 04/05/2013 “On the contract system in the field of procurement of goods, works, services to meet state and municipal needs” (hereinafter referred to as Law No. 44-FZ).

Any participants have the right to participate in procurement, incl. who apply a simplified taxation system (Part 4, Article 3 of Law No. 44-FZ). When making a purchase, the documentation establishes the initial (maximum) price of the contract (Part 6, Article 24 of Law No. 44-FZ). The contract is concluded on the terms stipulated by the notice of procurement or invitation to participate, documentation, application, final offer of the winner of the procurement (Part 1, Article 34 of Law No. 44-FZ). Almost the same rules apply when conducting an electronic auction (Part 10, Article 70 and Part 14, Article 78 of Law No. 44-FZ).

It is possible to increase or decrease (by no more than 10%) the quantity of goods, works or services at the customer’s suggestion. In this case, an increase or decrease in the contract price is allowed, but also by no more than 10%, by agreement of the parties (subparagraph b, paragraph 1, part 1, article 95 of Law No. 44-FZ).

In addition, the legislation provides for the right, by agreement of the parties, to reduce the contract price without changing other conditions, if the possibility of change was initially provided for in the procurement documentation and the contract (Part 1, Article 95 of Law No. 44-FZ). By the way, back in 2016 it was possible to increase the price of a contract if it was impossible to fulfill it due to circumstances beyond the control of the parties (no longer in force as of 01/01/2017, Part 1.1 of Article 95 of Law No. 44-FZ and Decree of the Government of the Russian Federation dated 03/14/2016 No. 191 “ On approval of the Rules for changing, by agreement of the parties, the contract execution period, and (or) the contract price, and (or) the unit price of goods, work, services, and (or) the quantity of goods, volume of work, services provided for in contracts, the execution period of which ends in 2016").

Officials' opinion

Let's consider the explanations of the Ministry of Economic Development of Russia, voiced in letters dated November 8, 2016 No. D28i-2922, dated August 19, 2016 No. OG-D28-9909, dated July 13, 2016 No. D28i-1775, etc.

The legislation provides equal conditions for participation in competitive methods of identifying suppliers (contractors, performers) to procurement participants, regardless of their legal form and taxation system. So any procurement participant, incl. which is exempt from paying VAT and applies the simplified tax regime, has the right to participate in procurement.

The contract is concluded and paid by the customer at the price of the winner of the procurement, regardless of the application of the winner’s taxation system.

In letter No. D28i-900 of the Ministry of Economic Development of Russia dated April 11, 2016, it was stated that the customer’s withholding of the amount of VAT when paying for a contract is unlawful, regardless of whether the supplier is a VAT payer.

The calculation of the price of a unit of goods is carried out taking into account the fact that the contract price cannot be higher than that proposed by the tender participant (letter of the Ministry of Economic Development of Russia dated June 10, 2015 No. D28i-1692).

In addition to the initial contract price, the customer sets requirements for pricing. Indicates that, as part of the application, the procurement participant must set the price with or without taxes and other obligatory payments. This conclusion is confirmed by letters from the Ministry of Economic Development of Russia dated June 17, 2016 No. OG-D28-8123, dated June 10, 2016 No. D28i-1483, dated April 18, 2016 No. D28i-1052, dated May 30, 2016 No. D28i-1397, dated May 30, 2016 No. D28i -1398, dated 04/04/2016 No. D28i-831, dated 03/15/2016 No. D28i-721, dated 06/10/2015 No. D28i-1656.

The contract price may be reduced by agreement of the parties, incl. for the amount of VAT if the supplier applies a different taxation system, subject to his consent to reduce the price and if this was provided for in the procurement documentation (letter of the Federal Antimonopoly Service of Russia dated August 21, 2014 No. ATs/33651/14).

If there is a need for types of work or materials not provided for in the contract, such procurement is carried out through a new competition (letter of the Ministry of Economic Development of Russia dated December 18, 2015 No. D28i-3725).

Law No. 44-FZ does not regulate issues related to the procedure for preparing estimates when concluding a contract with a contractor, operations for the implementation of work, services of which are not subject to VAT (letters of the Ministry of Economic Development of Russia dated July 13, 2016 No. D28i-1787, dated May 10, 2016 No. D28i- 1317).

Arbitrage practice

Judicial practice on this issue is quite diverse. There are many decisions that say that the customer’s withholding of the amount of VAT when paying for a contract is unlawful, regardless of the fact that the supplier is not a VAT payer.

Arbitrage practice

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The courts came to the conclusion that the contractor’s use of the simplified tax system cannot be a way for the customer to save money when paying for the results of work (Resolution of the Moscow District Court No. F05-4344/2016 dated April 28, 2016). The auditors' assertion that the customer paid costs (VAT) not provided for by the terms of the contract was recognized by the courts as unfounded, since they were included in the total cost of contract work (resolution of the Moscow District Arbitration Court dated April 28, 2016 No. F05-4344/2016).

Regardless of the applicable taxation system, the winner’s contract is concluded and paid by the customer at the price of the winning bidder and includes all taxes (decision of the Supreme Court of the Russian Federation dated October 1, 2015 No. 303-ES15-11466).

A situation may arise when the contractor won the competition, being a VAT payer, but during the contract period he switched to a simplified procedure. And in this case, the customer does not have the right to unilaterally reduce the contract price.

Arbitrage practice

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In the case where the contract was concluded at a price that included VAT, but subsequently the supplier switched to the simplified tax system, the customer has no legal grounds to unilaterally change (reduce) the contract price (resolution of the Moscow District Arbitration Court dated October 25, 2016 No. F05-14531 /2016).

The winner of the competition also does not have the right to demand that the phrase “including VAT” be excluded from the contract.

Arbitrage practice

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The courts came to the conclusion that the exclusion of the VAT line from the estimate when concluding a contract at the price offered by the auction winner would entail the impossibility of justifying the contract price, which is a violation due to the direct indication of Art. 22 and part 1 art. 64 of Law No. 44-FZ. This conclusion was made in the resolution of the Administrative Court of the North Caucasus District dated 06/09/2016 No. F08-3551/2016 (determination of the RF Armed Forces dated 10/13/2016 No. 308-KG16-12777).

We found a solution when the arbitrators allowed the simplifier to sign a contract for the full amount without allocating VAT. In this case, the winning bidder receives full payment for the contract and does not transfer tax to the budget.

Arbitrage practice

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The judges decided that if the winner is on the simplified tax system, then filling out the column “VAT is not provided” does not change the terms of the contract. Adjustment of the contract price by the customer is not allowed. Therefore, the court approved the terms of the municipal contract in terms of the price without deducting VAT from it (resolution of the AS of the West Siberian District dated November 19, 2014 No. F04-11932/2014 (determination of the Supreme Court of the Russian Federation dated March 16, 2015 No. 304-ES15-3471)).

If a simplified invoice is issued, the tax amount will have to be transferred to the budget.

Arbitrage practice

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Since the draft contracts placed by the customer during the auctions indicated that the cost of the work includes VAT, the state contract must be concluded on appropriate terms (resolutions of the Arbitration Court of the North Caucasus District dated July 21, 2016 No. F08-4781/2016 and Central District dated June 17, 2016 No. F10-1723/2016 (ruling of the Supreme Court of the Russian Federation dated August 25, 2016 No. 310-KG16-10142)). The contractor is obliged to transfer the specified tax to the budget, regardless of the taxation system applied (Resolution of the Volga Region Autonomous District of 02.04.2015 No. F06-21773/2013 (decision of the Supreme Court of the Russian Federation of 06.26.2015 No. 306-KG15-7929)).

Special rules under Law No. 223-FZ

Everything that we wrote above concerns procurement carried out by state companies under Law No. 44-FZ.

Meanwhile, a considerable number of procurements are regulated by Federal Law No. 223-FZ of July 18, 2011 “On the procurement of goods, works, services by certain types of legal entities” (hereinafter referred to as Law No. 223-FZ). This applies to customers with a state share of more than 50%, some unitary enterprises, organizations with regulated activities (energy, water supply, etc.), natural monopolies.

Law No. 223-FZ does not define procurement methods, conditions for their application and procedure. These issues must be regulated in procurement regulations approved by customers.

In particular, the procurement documentation must specify the procedure for pricing (with or without taking into account the costs of transportation, insurance, payment of customs duties, taxes and other obligatory payments) (Clause 7, Part 10, Article 4 of Law No. 223-FZ ). Thus, the customer has the right to independently determine the need to take into account VAT when forming the contract price. This conclusion is confirmed by letters from the Ministry of Economic Development of Russia dated August 19, 2016 No. D28i-2169, dated February 17, 2016 No. OG-D28-2554, dated December 7, 2015 No. OG-D28-15218, dated October 19, 2015 No. OG-D28-13364, dated August 28 .2015 No. D28i-2654.

So the customer has the right in the requirements for procurement documentation to prescribe a reduction in the contract price by the amount of VAT in the event of concluding a contract with a participant using the simplified tax system (decision of the Chelyabinsk OFAS Russia dated November 3, 2016 on complaint No. 77-03-18.1/2016).

Also, the procurement regulations prescribe the criteria for evaluating and comparing applications for participation in the procurement and the procedure for evaluating and comparing applications (clauses 12 and 13, part 10, article 4 of Law No. 223-FZ). One of the evaluation criteria may be price. In this case, the customer in the procurement regulations has the right to provide for a procedure for comparing the price offers of participants, taking into account the taxation system they apply. For example, the prices of participants’ offers excluding VAT can be used as a single basis for comparing price offers. This was indicated in letters from the Ministry of Economic Development of Russia dated May 26, 2016 No. D28i-1372, dated April 28, 2016 No. D28i-1114, dated February 17, 2016 No. OG-D28-2554, dated November 30, 2015 No. D28i-3499, dated September 30, 2015 No. D28i-2782.

As you can see, the contract based on the results of the procurement, the winner of which is the participant using the simplified procedure, is concluded on the terms determined by the procurement regulations (letter of the Ministry of Economic Development of Russia dated July 13, 2016 No. D28i-1834).

Consequences of issuing an invoice

As a general rule, persons applying the simplified taxation system are not VAT payers. They do not issue invoices to their customers, do not keep books of purchases and sales, and carry out settlements with customers without highlighting tax amounts in the primary documents (clause 2 and clause 3 of Article 346.11 of the Tax Code of the Russian Federation). There are also exceptions (import of goods into the Russian Federation, tax agents, etc.), but we will not touch on them.

You will not have to pay VAT if the buyer mistakenly highlighted the tax amount in the payment order. Officials also agree with this position (letter of the Ministry of Finance of Russia dated November 18, 2014 No. 03-07-14/58618).

If the simplifier personally issues an invoice to the buyer with the allocated amount of VAT, then the entire amount of tax will have to be paid to the budget (subclause 1, clause 5, article 173 of the Tax Code of the Russian Federation, letter of the Ministry of Finance of Russia dated December 8, 2016 No. 03-11-06/2 /73239). Also, a VAT declaration is submitted for the specified amount (clause 5 of Article 174 of the Tax Code of the Russian Federation).

Since 2016, this tax has not been taken into account either in income or in expenses (clause 1 of Article 346.15 and subclause 22 of clause 1 of Article 346.16 of the Tax Code of the Russian Federation). Moreover, under this transaction, the simplifier will not be able to accept the “input” VAT, because despite paying the tax, he is not a taxpayer for VAT (letters of the Ministry of Finance of the Russian Federation dated May 21, 2012 No. 03-07-07/53 and dated March 23, 2007 No. 03-07-11/68, clause 5 of the resolution of the Plenum of the Supreme Arbitration Court of the Russian Federation dated May 30 .2014 No. 33).

Whether the buyer will be able to deduct the allocated VAT is also a big question. Officials previously noted that tax amounts presented by simplifiers are not accepted for deduction from buyers. This conclusion was made in letters of the Ministry of Finance of the Russian Federation dated October 5, 2015 No. 03-07-11/56700, dated May 16, 2011 No. 03-07-11/126, dated November 29, 2010 No. 03-07-11/456, Federal Tax Service of the Russian Federation dated May 6 .2008 No. 03-1-03/1925, Federal Tax Service of the Russian Federation for Moscow dated 04/05/2010 No. 16-15/035198. Later, tax authorities, under the pressure of decisions of the Constitutional Court of the Russian Federation (resolutions dated March 29, 2016 No. 460-O and dated June 3, 2014 No. 17-P), decided that an invoice received for a VAT-free transaction serves as the basis for the buyer to accept VAT amounts for deduction (letter of the Federal Tax Service of Russia dated September 23, 2016 No. SD-4-3/17871@). We think that this conclusion also applies to invoices issued by simplifiers, especially since the budget will not suffer from this, because VAT will be transferred.

Let's sum it up

By taking on the obligation to transfer VAT to the budget, the simplifier often ends up at a loss. So we advise you to carefully study the procurement documentation before taking part in the competition. If the competition is regulated by Law No. 44-FZ, then the entire trading procedure is contained in this law.

The Ministry of Economic Development of Russia, in its explanations regarding Law No. 44-FZ, relied on the following rules:

• any procurement participant, incl. who applies the simplification has the right to participate in procurement;
• the contract is concluded and paid by the customer at the price of the winner of the purchase, regardless of the application of the winner’s taxation system;
• withholding by the customer of the amount of VAT when paying for a contract is unlawful, regardless of whether the supplier is a VAT payer;
• the contract price may be reduced by agreement of the parties, incl. for the amount of VAT if the supplier applies a different taxation system.

If we summarize the judicial practice, it turns out:

1. the customer does not have the right to unilaterally reduce the contract price by the amount of VAT;
2. The winner of the competition does not have the right to demand that the phrase “including VAT” be excluded from the contract.

If the procurement is carried out in accordance with Law No. 223-FZ, then the customer’s procurement regulations should be studied. After all, a contract based on the results of a procurement, the winner of which is the participant applying the simplified tax system, is concluded on the terms determined by the procurement regulations. The customer has the right to independently determine the need to take into account VAT when forming the contract price.

If the seller has issued an invoice to the buyer with the allocated amount of VAT, then he is obliged to calculate and pay the specified tax to the budget and submit a declaration. In the simplified version, the VAT paid is not taken into account either in income or expenses. Also, under this transaction, the simplifier does not have the right to accept “input” VAT.

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Dmitry Pirozhkov, leading consultant of the audit company MKPTs

Indeed, when issuing an invoice to the buyer, the simplifier is obliged to transfer VAT to the budget and submit the corresponding declaration to the tax authority at the place of his registration (clauses 4, 5 of Article 174, subclause 1 of clause 5 of Article 173 of the Tax Code of the Russian Federation).

In this case, the declaration must be submitted exclusively in electronic form via telecommunication channels through an electronic document management operator (clause 5 of Article 174 of the Tax Code of the Russian Federation). A declaration on paper will be considered not submitted (letter of the Federal Tax Service dated January 30, 2015 No. OA-4-17/1350@, Federal Tax Service of Moscow dated January 14, 2015 No. 13-11/000824). For violation of the deadline for submitting a declaration, a fine may be imposed (clause 1 of Article 119 of the Tax Code of the Russian Federation).

Accordingly, it should be remembered that the simplifier will also have to incur costs for purchasing, installing and updating licensed software for generating and submitting electronic reports, costs for connecting to the telecom operator’s system and obtaining a qualified electronic signature.

But first of all, a simplifier can be advised to carefully analyze the possibility of incurring expenses in a situation where, after completing a sales transaction, the obligation to pay VAT to the budget will already arise, and funds for payment under the contract may not yet be received from the customer. In such a situation, the simplifier will have to pay the tax to the budget in full (without the possibility of applying tax deductions) with his own money, temporarily excluding it from his working capital.