E-services in 2019. What does it have in Store for Business?

BDO Unicon Outsourcing held a series of business breakfast meetings for companies providing electronic services. Business representatives gathered at a shared platform to discuss who needs to register in Russia and who is responsible for paying their own VAT, as well as the consequences they face if the new law is ignored.

Starting from 1 January 2019, foreign companies providing electronic services must register with the tax authorities of the Russian Federation. Before 1 January 2019, Russian companies and self-employed entrepreneurs who procured services from foreign organisations that were not registered in the Russian Federation had to pay VAT for the seller as withholding agents. The situation has now changed, and many new questions have emerged as a result of this change. For example, the VAT taxation procedure for other (non-electronic) services after a foreign company has been registered in the Russian Federation, the procedure for VAT deduction for other services if the VAT payment is made by foreign companies, and the procedure for VAT deduction for e-services paid after 1 January 2019, but prior to the registration of the foreign counterparty, and so on.

During the business breakfast meeting, Dmitry Kovalenko, Director of the Accounting Services Department at BDO Unicon Outsourcing, shared the company’s experience with registering clients, addressed issues that required clarification, and spoke about the ways to register and the consequences for any breaches.

BDO Unicon Outsourcing plans to continue with a series of events on this topic where they will analyse additional explanations the Ministry of Finance has given on controversial issues together with the participants at the events, and will also discuss the impact the legislative changes have on business.