Exemption from VAT: advantages and features

The tax legislation gives individual entrepreneurs and some types of organizations the right to exemption from VAT. Thus, Article 145 of the Tax Code provides for exemption from tax, subject to the following conditions:

• Firstly, the revenue during the last 3 months should not be more than two million rubles, not including VAT;
• Secondly, only those organizations and entrepreneurs that sell non-exclusive goods, that is, Do not sell fuel, tobacco and alcohol products.

However, the right to be exempted can be used by the PIs selling excisable goods, but conducting separate accounting for transactions of sale of non-excisable and excisable goods.

Taxpayers need to take into account that when the state is released, the state still has to return the amounts of this tax that were previously accepted for deduction, for services, goods or works purchased for performing transactions that are taxed but not used for these transactions.

Exemption from VAT IP: the procedure for obtaining the right

To exercise their right to exempt from VAT, entrepreneurs need to first notify their tax, located at the place of their registration. The form of notification is established by the Ministry of Finance. This document should be accompanied by documents that give the right to release. It is necessary to provide for organizations an extract from the balance sheet, from the sales book, accounting of incurred expenses and received income and business operations for the IP, a copy of the journal of invoices issued and received.

Entrepreneurs who have switched to the general system, as proof documents for the right to exempt from VAT, must provide an extract from the book of expenses and incomes.

The above listed documents should be submitted no later than the 20th day of the month from which the right to release has appeared.

Exemption from VAT: termination of right

A taxpayer, at his own discretion, may refuse or forfeit the compulsory right to exemption from VAT.

Taking this decision, the entrepreneur should take into account that this regime will have to be used for at least one year. And after the expiration of this period, you can submit a tax notice of a desire to refuse tax exemption or a decision to extend this mode of operation for another year. The documents should be attached to the notification indicating that the revenue for the last quarter did not exceed 2 million rubles.

This notice together with the supporting documents should be submitted no later than the 20th day of the month following the calendar 12th month of the operation of the law. If this is not done, the taxpayer will be fined.

The entrepreneur may lose the right to exemption from VAT. This can happen if any condition of its receipt is violated (revenue more than 2 million or trade in excisable goods). The loss of the rights to release will set the taxpayer a number of problems and issues that will be associated with the restoration of taxes unpaid to the budget, the imposition of fines and the imposition of penalties.

VAT exemption IP: advantages

An individual entrepreneur, exercising his right to exempt from VAT, acquires the opportunity to receive additional profit. For example, at a product price before the release of 236 rubles, the taxpayer can receive the same money, but without VAT.

True, there are some features. Some PIs, which also work without VAT, may become unprofitable to cooperate with other companies, as they will lose the opportunity to take the VAT to the deduction when purchasing products.