Change to VAT taxation of E-services

5 July 2022

The Russian Parliament is currently considering a draft law, introducing various changes to the Russian tax legislation

More specifically, according to this Draft law, the foreign e-services providers will be released from an obligation to pay the VAT due to the Russian budget for their e-services flows, except for the cases when rendering them to the Russian individuals. In all other cases (i.e., within the B2B sector) the Russian purchasers of the e-services will be acting as the tax agents in respect to such VAT due.

Accordingly, existing e-services flows within the B2B sector, and the formalizing contractual documentation, may need to be reviewed and potentially amended in a view of the tax agency mechanism re-introduction (at least, the tax gross-up clause). We will be happy to assist you with such a review, and any potential further changes, if required.

As a separate note, please be informed that this Draft law is planned to pass the third reading in the Russian Duma this week and may thus be further amended or elaborated prior to being enacted.

We trust you will find these comments useful and remain at your disposal for further questions or assistance on the above.

Please note that this press release is based on information taken from open sources. Neither Lex Evolution, nor its authors, shall not be held liable for its contents, nor for the legal and other consequences of decision taken based on this publication.

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