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Saving on VAT
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Saving on VAT for cargo transportation from China

Save on VAT while transporting cargo from China

Customers booking shipments from Asia to Russia can save a lot of money by claiming a refund of VAT paid to the shipper. The Supreme Arbitration Court of the Russian Federation in considering several cases has proved the applicability of 0% rate for international transportation. This rule is stipulated in the Tax Code (sub-s 2.1 para. 1 article 164). We successfully implement this practice to help our customers pay less.

What are the issues faced by customers of other companies?

If the decisions of The Supreme Arbitration Court on tax reliefs are not followed the shipping company will have to pay 20% VAT, and these expenses are incurred by its customers. As a result, customers do not have a right to get a VAT refund. Many schemes adopted in transportations business are illegal or entail court proceedings for customers (in order to claim penalties for an unjust enrichment on the part of the shipper). Customers shall incur expenses without a guarantee of tax refund.

East Global Logistics clients never face such problems. Our specialists perfectly know when zero-rated taxation should be applied. When booking a shipment with us you will get full information.

When to use a zero-rated VAT?

The Tax Code rule on zero-rated VAT applies for the import and export of goods by any transport. The Supreme Arbitration Court stated that the application of a 0% rate cannot be impeded by the third-party involvement in the provision of services or by fulfilment of the contract by several agents on the part of the shipper. Essentially, the point of origin or destination must be located outside the borders of Russia.

It is possible to get a refund of VAT for the return of empties to the customer. In tax practice, there were cases when the inspection treated empty legs as a separate service. The Supreme Arbitration Court proved that it is an indispensable part of transportation, thus a customer is entitled to compensation for all the services provided. Note, that you can get a VAT refund for the fuel used during empty legs.

Court decisions for consideration
  • Provision 18 of Resolution of the Supreme Arbitration Court Plenary Session #33 as of 05.30.2014 (who is entitled to arrange international transportation);
  • Resolution of the Supreme Arbitration Court of the East Siberian Region as of 08.29.2014 with regard to case # 33-90/2013 (0% rate is applied even when third-parties are involved by the shipper);
  • Resolution of the Supreme Arbitration Court of the West Siberian Region as of 11.28.2014 with regard to case # 21-9765/2013 (0% rate is applied for empty legs during transportation).

Resolution of the Supreme Arbitration Court of the West Siberian Region as of 11.28.2014 with regard to case # 21-9765/2013 (0% rate is applied for empty legs during transportation).

Take an opportunity of VAT with a 0% rate and save on transportation with EGL.