Russian e-services VAT

Key points

• New VAT rules apply to B2B supplies of e-services much wider than those for B2C supplies.
• New providers must register for VAT in Russia within 30 days after the first provision of e-services.
• All IT and procurement companies in multinational businesses must comply.
• Penalties apply for non-compliance.
• Foreign businesses can take several steps to reduce risk.

The modern Russian economy is moving fast towards digitalisation. Many governmental services business-to-customer (B2C) services and business-to-business (B2B) services are rendered through the internet using mobile devices by private persons and computer equipment by business customers. A large part of the country has developed and is developing infrastructure to drive this process.

Due to such digitalisation many international companies working in Russia actively implement internet technologies in their intercompany services while others operating in the sphere of e-commerce are actively investing in Russia or at least investigating the Russian market for opportunity.

Russian tax authorities do...