Attention: Vat Liability Changes Under STS

13.11.2024

Companies under the simplified tax regime (STS) will be obliged to pay VAT. The change will be effective from 2025 if the company's revenues exceed RUB 60 million per year.

The change will not directly affect subsidiaries, as there are restrictions on the use of the STS by foreign companies. The exception is if the company is acquired by the CEO and transferred to the STS. The risk of business splitting by Russian counterparties becomes relevant. Splitting a single business into several formally independent entities, but with a common beneficiary, for the purpose of "tax savings" may result in your company not being able to recovery input VAT.

Your contact at SCHNEIDER GROUP: Sofia Tsyryulnikova, Head of Tax & Currency Control Practice: TsyryulnikovaSS@schneider-group.com

How we can help

Due to the introduction of a new group of VAT payers, the risk that a contractual counterparty is using a business split scheme and, therefore, is not entitled to use the STS should be identified. Thus, checking counterparties will require even more attention and careful analysis. We are ready to support you both in the analysis and in the update of the approach to the KYC procedure by in-house specialists.