Tax consequences of transactions with foreign suppliers carried out through a foreign payment agent in 2024: key points
Settlements with foreign suppliers through a foreign payment agent is a practice that can significantly simplify interaction with foreign counterparties, but it also has certain tax consequences for Russian companies. In 2024, it is important to take into account the current requirements of tax legislation and possible risks. Let’s look at the key aspects that are worth paying attention to when making such calculations.
1. Value added tax (VAT) and its deduction
According to Russian law, when purchasing goods or services from foreign suppliers through a foreign payment agent, there is an obligation to pay VAT. Even if the payments are made through an intermediary, the Russian company is considered as tax agent and is obliged to withhold and transfer VAT. Highlights:
– VAT is calculated at a rate of 20% for most goods and services.
– The obligation to withhold VAT arises even in cases where the agent actually receives funds to his accounts abroad.
– To reflect VAT transactions, it is necessary to document the transaction correctly and keep tax records correctly.
Non-payment or late transfer of VAT can lead to fines and penalties, so it is important for companies to make timely calculations and report to the tax service.
2. Income tax and transfer pricing issues
Settlements through a foreign payment agent may raise questions from tax authorities regarding the reasonableness of expenses and compliance with market conditions. Special attention is paid to:
– The business purpose of the transaction. Transactions with foreign suppliers should have an economic justification, and settlements through a foreign agent should not lead to the creation of artificial conditions for tax evasion.
– Control over transfer prices. If the foreign agent or supplier is affiliated, then transfer pricing controls may apply to transactions. The company must be ready to prove the market nature of the terms of the transaction and, if necessary, provide a justification for the price.
In case of non-compliance with market conditions, additional taxes may be charged, as well as fines imposed.
3. The problem of confirming economic benefits
Settlements through a foreign payment agent often raise questions about the economic feasibility (or “business purpose”) of a transaction. The tax authorities may doubt that the use of an agent has a real purpose and is not aimed at tax evasion. For this, it is important for companies:
– To justify the need to attract a foreign agent by providing documents confirming favorable conditions or restrictions on direct settlements with the supplier.
– Keep all correspondence and invoices confirming business correspondence with foreign suppliers and a payment agent.
4. Double taxation risks
The use of a foreign payment agent may cause a risk of double taxation. For example, in some cases, countries may consider such transactions as income from a foreign supplier subject to taxation in their territory. To avoid this, it is worth:
– Make sure that the tax rate complies with international agreements on the avoidance of double taxation.
– Check whether there is a need to provide tax reports and obtain certificates of proof of residence from foreign counterparties.
5. Documentation and accounting of transactions
Documentation is critical to reduce the risks of tax claims. It is important to:
– Formalize contracts with foreign suppliers and payment agents in such a way that they reflect the real essence of transactions.
– Keep all the accompanying documentation, including invoices, certificates of work performed or deliveries, and correspondence.
– Compile tax registers confirming the calculation and payment of VAT and income tax.
Incorrect paperwork can lead to disputes with the tax inspectorate and additional taxes.
Conclusion
Settlements with foreign suppliers through a foreign payment agent require a careful approach to tax planning and compliance with legislation. It is important for a company to take into account VAT, income tax issues, the business purpose of operations, as well as document all calculations and terms of transactions. This will help to avoid fines and reduce the risks of tax claims in 2024.
