Safe share of VAT deductions in 2017
The safe percentage of VAT deduction is an unofficial indicator. But the interest of the tax authorities in the company’s activities and the decision on the appointment of an on-site audit depends on its size. Therefore, a thinking chief accountant always knows what the share of deductions in the company is. And it checks it quarterly for compliance with the indicators that tax authorities are guided by.
As a general rule, if the share of VAT deductions from the amount of accrued tax is equal to or exceeds 89% for a period of 12 months, then this is one of the risk criteria for assigning an on-site tax audit (Concept of a planning system for on-site tax audits, approved by order of the Federal Tax Service of Russia dated May 30. 07 No. MM-3-06/333@).
However, the VAT deduction limit is determined for each region of the Russian Federation. You can calculate the indicator yourself, knowing the statistical data of the Federal Tax Service of Russia. Currently, the tax department has provided data as of 02/01/2017.
The safe share of VAT deductions is calculated using the formula: Amount of VAT deductions / Tax accrual x 100%.
This formula is simple to apply. Open the Report. Find your region. And apply the formula using the data from lines 100 and 200 of the Report.
In Moscow, as of May 2017, the safe share of VAT deduction is 95.01%
This indicator in Moscow (95.01%) calculated as follows:
3,719,315,651 thousand rubles. (indicator p. 200 of the Report) / 3,914,552,381 thousand rubles. (indicator p. 100 of the Report) x 100% = 95,01 % .
Similarly, a company from another region can calculate a safe share of VAT deductions, which will reduce the chances that tax authorities will pay attention and order an audit.
For example, safe deduction share in the Moscow region as of May 2017 is 90,8% (RUB 656,701,487 thousand / RUB 723,128,227 thousand) x 100%).
The indicator is calculated quickly and simply. Therefore, it is advisable to do this quarterly in order to assess in time the likelihood of claims from inspectors. To calculate the safe share of VAT deductions in a company, you need to do the following:
- determine the amount of VAT to be charged. Sum up the accrued tax for the last 4 completed quarters;
- do the same with deductions. Add up all the amounts in the declarations for the same 4 quarters;
- Divide VAT deductions by accrued tax and multiply by 100%.
- the result obtained is the real share of VAT deductions in the company.
Thus, knowing the share of VAT deductions in the company and the safe tax deduction limit in its region, the company can independently assess the likelihood of increased attention from the tax authorities. If the indicators differ significantly, it is more advisable to obtain appropriate explanations in advance and be ready to send them to the inspectorate.
INTERVIEW
Interviewed by L.A. Elina,
leading expert
Safe share of VAT deductions
Advisor to the State Civil Service of the Russian Federation, 2nd class
- Alevtina Yuryevna, in 2007, one of the criteria for selecting VAT payers for an on-site inspection was a high proportion of deductions from the amount of calculated VAT for the previous 12 months. This indicator was set at 89%Appendix No. 2 to the Order of the Federal Tax Service dated May 30, 2007 No. MM-3-06/333@. What is the current average share of VAT deductions for taxpayers who do not deal with the export of goods abroad?
As of January 1, 2018, the average share of VAT deductions in Russia is 88.06%. In addition, the average share of VAT deductions can be determined for each region. It may be either lower or higher than the national average deduction rate.
The Federal Tax Service does not provide taxpayers with information about safe percentages of deductions. Obviously, they can be calculated based on some information posted on the Federal Tax Service website?
Yes, you can check the current size of the average share of deductions using the 1-VAT report.
The official information of the 1-VAT report is presented in the tables: website of the Federal Tax Service of Russia → Other functions of the Federal Tax Service of Russia → Statistics and analytics → Data on statistical tax reporting forms.
The tax service publishes this report in two forms - consolidated and broken down by constituent entities of the Russian Federation.
Basically, a company can calculate the safe share of VAT deductions using the following formula:
For example, in accordance with the information reflected in the regional report 1-VAT, posted on the website of the Federal Tax Service of Russia, the safe share of VAT deduction in Moscow as of 01/01/2018 is 88.9% (RUB 12,742,673,812 / 14,159,263 499 rub. x 100%).
Exceeding the safe share of VAT deductions is only one of the criteria for assessing tax risks.
- Is there a gradation of the safe share of deductions by industry - construction, manufacturing, trade, etc.?
The tax service does not currently publish publicly available data on the share of deductions by industry. However, if the share of VAT deductions for a particular taxpayer differs significantly from the average, when conducting a desk audit, the inspector can take into account the industry-specific feature that affected tax deductions.
The taxpayer may also refer in his explanations to the industry specific features of his activities.
- As we understand, the share of deductions is determined for 12 months. Which 1-VAT report should you focus on when determining the share of safe deductions based on the results of the first quarter of 2018?
To determine the share of safe deductions for the VAT tax return for the first quarter of 2018, it is necessary to focus on the information in the 1-VAT report as of 01/01/2018, which takes into account VAT returns for the following tax periods: IV quarter of 2016, I - III quarters of 2017
How can an organization that has no export operations determine whether the proportion of VAT deductions it claims in its return corresponds to a safe value? Which declaration lines should be used for calculation?
The share of VAT deductions is determined as follows:
The resulting share of deductions must be compared with the average (safe) share of deductions in the region.
If the share of VAT deductions for an organization is higher than the safe share for the region, then inspectors may be interested in it. What actions can they take: request clarification, call a commission, schedule an on-site inspection?
Exceeding the safe share of VAT deductions is just one of the criteria for assessing tax risks used by inspectorates when selecting taxpayers for on-site audits. Such an excess in itself does not mean automatic inclusion in the inspection plan. However, if there are other alarming criteria, the tax authority may decide to schedule an on-site audit.
However, for the same reason, companies that are trying to avoid unnecessary control from the tax authorities by adjusting deductions to the required amount must understand that indicating deductions that are obviously below the safe value cannot guarantee a lack of attention from tax inspectors.
Let me also remind you that tax authorities have the right to:
call taxpayers to give explanations by sending a written notice to this effect e subp. 4 paragraphs 1 art. 31 Tax Code of the Russian Federation. Both the head of the organization and its representative, who has the appropriate power of attorney, can appear to give explanations to the inspectorate. b clause 1 art. 26, paragraph 1, art. 27, paragraph 1, art. 29 Tax Code of the Russian Federation;
send the taxpayer a request for explanations. Accordingly, you need to be prepared to present them. There should be no claims from inspectors if the taxpayer can show that he is calculating tax liabilities in accordance with the law, and this is confirmed by the documents he has.
When selecting organizations for an on-site tax audit, Federal Tax Service specialists evaluate their activities according to certain criteria. For each of them there is threshold value. If a company's score on this criterion goes beyond the threshold, then its chances of becoming a candidate for an on-site audit increase. In total there are more than 40 such criteria, but regarding VAT for tax authorities the main criterion is share of VAT deductions.
How to assess whether an organization pays enough value added tax? After all, absolute numbers in this regard are completely uninformative. The amount of tax depends on a combination of factors, including the type of activity, profitability, markup, seasonality and many others, including the general economic situation in the country. Therefore, the wording of the question “ How much VAT should I pay so that the tax authorities do not want to come with an audit? "is itself incorrect.
It is much more correct to ask the question about the share of deductions in the total amount of accrued VAT, because it is this indicator that tax authorities pay attention to. Officially, it is called the share of VAT deductions in the calculated amount of VAT on taxable items.
The average threshold for this indicator for the Russian Federation as of 11/01/2018 amounts to
Information on the safe percentage of deductions by region— these are the numbers the local tax office focuses on when checking.
Calculation of the share of VAT deductions
What does this indicator mean and how is it calculated? This is nothing more than a percentage of VAT deductions in the amount of accrued tax. To calculate it, you need only two values, which can be found in section 3. This is line 190 (VAT deductible) and line 118 (VAT accrued).
The indicator is calculated using the following formula:
VAT deductible / VAT accrued * 100%
In order to see the dynamics of this indicator, it is better to take the relevant data from the last four declarations.
The result of the calculation will be a percentage value corresponding to the share of VAT deductions in the total amount of accrued tax. In other words, this value shows what percentage of the accrued VAT the company claims to deduct. It is this that the tax authorities will compare with the threshold indicator in order to draw a conclusion about the degree of tax risks of the company for VAT. If the proportion of VAT deductions according to the taxpayer’s declaration is greater, then this immediately attracts the attention of tax inspectors.
An example of calculating the safe amount of VAT deduction
Let’s assume that during the reporting period a taxpayer from Moscow paid VAT in the amount 100 000 rubles
It is impossible to say whether this is a lot or a little for this organization. But the picture becomes clearer if we calculate the share of VAT deductions:
According to the company’s declaration, for the specified period the amount of calculated VAT, taking into account the restored amounts 1 500 000 rubles ().
The tax deduction for the same period was 1 400 000 rubles ().
Substituting these numbers into the above formula 1 400 000/1 500 000 we find that the share of VAT deductions in the amount of accrued tax in the period under review was 93,33% .
This is more than the threshold value 88,52% for Moscow (as of November 1, 2018), which means the tax office has a reason to take the taxpayer "on a pencil".
What should be the amount of VAT in the considered example for Moscow, so as not to attract increased attention from tax authorities?
Based on the criteria used by the Federal Tax Service, the company in our example needs to pay at least 172,200 rubles VAT, so as not to leave the “safe” zone.
What are the consequences of exceeding the threshold value?
Obviously, verification will not knock on your door as soon as the specified indicator leaves the “safe” zone. After all, as mentioned above, there are four dozen criteria for assessing tax risks. This is exactly why the fact that the share of VAT deductions is in the “safe” zone in no way guarantees the lack of interest of the Federal Tax Service in the taxpayer.
Thus, if the share of VAT deductions has gone beyond the threshold value, we can assume that the scales have tilted slightly towards an on-site tax audit of your company. However, you should not be afraid of this, because if the business is conducted honestly, then the entrepreneur, director or accountant always has something to object to the claims of the Federal Tax Service employees.
Safe VAT deduction by region
Information about safe share of VAT deduction for the 1st, 2nd, 3rd and 4th quarters of 2018 and the 1st quarter of 2019 can be calculated according to the tax report 1-VAT.
All data has already been calculated by us and summarized in one table:
| Safe share of deductions as of 11/01/2018 | Safe share of deductions as of 08/01/2018 | Safe share of deductions as of 05/01/2018 | Safe share of deductions as of 02/01/2018 | Safe share of deductions as of 01/01/2018 | |
| RUSSIA | 86,89% | 86,59% | 87,08% | 87,43% | 88,06% |
| including: | |||||
| CENTRAL FEDERAL DISTRICT | |||||
| Moscow city | 88,52% | 88,37% | 88,10% | 88,96% | 90,00% |
| Moscow region | 90,27% | 90,30% | 90,51% | 90,00% | 90,39% |
| Belgorod region | 89,40% | 88,73% | 89,57% | 90,60% | 91,23% |
| Bryansk region | 87,77% | 86,47% | 92,15% | 95,37% | 91,75% |
| Vladimir region | 85,56% | 84,95% | 84,79% | 84,13% | 86,18% |
| Voronezh region | 92,88% | 92,65% | 92,64% | 92,70% | 94,60% |
| Ivanovo region | 92,51% | 92,55% | 92,74% | 93,54% | 93,23% |
| Kaluga region | 88,09% | 87,24% | 86,60% | 88,35% | 89,59% |
| Kostroma region | 85,21% | 84,71% | 84,15% | 85,06% | 88,53% |
| Kursk region | 91,27% | 92,86% | 88,30% | 88,94% | 91,16% |
| Lipetsk region | 92,57% | 87,30% | 88,32% | 90,39% | 89,89% |
| Oryol Region | 94,51% | 94,00% | 92,90% | 92,04% | 90,79% |
| Ryazan Oblast | 84,92% | 85,11% | 85,11% | 86,84% | 85,68% |
| Smolensk region | 94,13% | 93,03% | 91,67% | 91,51% | 93,33% |
| Tambov Region | 95,44% | 95,81% | 95,50% | 96,96% | 95,17% |
| Tver region | 88,88% | 89,03% | 88,89% | 88,68% | 87,83% |
| Tula region | 92,71% | 91,49% | 91,57% | 93,26% | 91,81% |
| Yaroslavl region | 87,10% | 86,35% | 85,70% | 85,52% | 86,46% |
| NORTHWEST FEDERAL DISTRICT | |||||
| city of St. Petersburg | 90,05% | 89,83% | 90,13% | 90,31% | 90,47% |
| Leningrad region | 81,52% | 81,19% | 86,18% | 85,09% | 81,24% |
| Republic of Karelia | 83,65% | 84,26% | 84,56% | 86,13% | 84,18% |
| Komi Republic | 78,51% | 79,25% | 79,33% | 81,23% | 75,59% |
| Arhangelsk region | 81,89% | 82,44% | 88,38% | 84,88% | 81,79% |
| Vologda Region | 88,18% | 83,39% | 83,48% | 84,83% | 87,27% |
| Kaliningrad region | 62,83% | 64,04% | 65,70% | 67,64% | 66,49% |
| Murmansk region | 81,49% | 79,25% | 78,73% | 80,33% | 76,79% |
| Novgorod region | 89,92% | 86,92% | 87,39% | 84,43% | 87,19% |
| Pskov region | 87,26% | 88,11% | 88,85% | 90,63% | 93,09% |
| Nenets Autonomous Okrug | 121,00% | 119,79% | 116,18% | 126,09% | 111,71% |
| NORTH CAUCASIAN FEDERAL DISTRICT | |||||
| The Republic of Dagestan | 85,00% | 85,42% | 86,21% | 85,54% | 87,01% |
| The Republic of Ingushetia | 96,33% | 93,89% | 94,11% | 97,86% | 98,17% |
| Kabardino-Balkarian Republic | 92,41% | 92,47% | 93,37% | 93,05% | 92,72% |
| Karachay-Cherkess Republic | 91,59% | 92,78% | 93,28% | 95,03% | 92,39% |
| Republic of North Ossetia-Alania | 87,15% | 86,56% | 87,56% | 86,39% | 87,63% |
| Chechen Republic | 101,07% | 101,54% | 103,37% | 102,19% | 104,44% |
| Stavropol region | 88,74% | 88,37% | 88,77% | 90,58% | 88,74% |
| SOUTHERN FEDERAL DISTRICT | |||||
| Republic of Adygea | 85,48% | 85,40% | 86,29% | 85,39% | 87,47% |
| Republic of Kalmykia | 82,39% | 80,57% | 79,74% | 76,70% | 69,49% |
| Republic of Crimea | 87,73% | 87,89% | 88,07% | 87,53% | 97,28% |
| Krasnodar region | 89,87% | 89,63% | 89,45% | 89,67% | 89,71% |
| Astrakhan region | 62,76% | 60,96% | 58,25% | 55,68% | 72,08% |
| Volgograd region | 86,34% | 85,62% | 86,88% | 87,21% | 86,01% |
| Rostov region | 92,02% | 91,71% | 92,13% | 91,53% | 93,48% |
| city of Sevastopol | 82,06% | 82,12% | 82,30% | 81,23% | 85,89% |
| VOLGA FEDERAL DISTRICT | |||||
| Republic of Bashkortostan | 87,99% | 87,39% | 87,39% | 87,53% | 88,66% |
| Mari El Republic | 90,86% | 89,75% | 90,78% | 92,39% | 89,29% |
| The Republic of Mordovia | 89,97% | 89,91% | 89,50% | 88,37% | 87,52% |
| Republic of Tatarstan | 87,89% | 87,91% | 88,31% | 88,21% | 88,96% |
| Udmurt republic | 81,13% | 80,12% | 80,12% | 80,94% | 83,32% |
| Chuvash Republic | 83,57% | 83,17% | 83,03% | 82,21% | 84,65% |
| Kirov region | 86,51% | 86,46% | 84,78% | 86,72% | 85,68% |
| Nizhny Novgorod Region | 87,92% | 87,84% | 87,00% | 87,68% | 87,22% |
| Orenburg region | 69,82% | 69,62% | 71,30% | 74,43% | 75,76% |
| Penza region | 90,74% | 90,13% | 89,94% | 89,49% | 89,99% |
| Perm region | 79,25% | 78,83% | 79,23% | 79,42% | 79,65% |
| Samara Region | 84,49% | 84,02% | 84,82% | 86,11% | 86,22% |
| Saratov region | 84,92% | 85,14% | 85,51% | 85,23% | 86,36% |
| Ulyanovsk region | 91,97% | 91,63% | 91,14% | 90,78% | 91,89% |
| URAL FEDERAL DISTRICT | |||||
| Kurgan region | 87,22% | 87,23% | 87,40% | 88,68% | 85,15% |
| Sverdlovsk region | 88,18% | 87,17% | 86,66% | 87,37% | 87,88% |
| Tyumen region | 84,02% | 83,35% | 83,68% | 85,37% | 84,93% |
| Chelyabinsk region | 88,31% | 86,68% | 87,08% | 88,30% | 87,07% |
| Khanty-Mansi Autonomous Okrug - Yugra | 58,52% | 60,29% | 62,01% | 63,14% | 66,24% |
| Yamalo-Nenets Autonomous Okrug | 69,40% | 65,95% | 97,08% | 71,02% | 69,97% |
| SIBERIAN FEDERAL DISTRICT | |||||
| Altai Republic | 89,85% | 90,48% | 89,99% | 92,31% | 91,40% |
| The Republic of Buryatia | 88,92% | 88,30% | 85,57% | 80,25% | 88,74% |
| Tyva Republic | 76,53% | 74,91% | 73,91% | 77,57% | 77,38% |
| The Republic of Khakassia | 89,73% | 89,89% | 89,91% | 92,82% | 88,44% |
| Altai region | 90,37% | 89,95% | 89,51% | 89,71% | 89,98% |
| Krasnoyarsk region | 76,32% | 75,02% | 76,02% | 78,26% | 77,68% |
| Irkutsk region | 77,39% | 77,80% | 79,33% | 80,34% | 82,71% |
| Kemerovo region | 83,41% | 82,57% | 81,46% | 84,07% | 82,91% |
| Novosibirsk region | 89,51% | 89,17% | 88,92% | 89,62% | 90,47% |
| Omsk region | 83,97% | 82,89% | 82,00% | 85,11% | 81,68% |
| Tomsk region | 75,41% | 73,80% | 73,76% | 73,32% | 81,57% |
| Transbaikal region | 89,53% | 89,94% | 90,81% | 91,29% | 96,89% |
| FAR EASTERN FEDERAL DISTRICT | |||||
| The Republic of Sakha (Yakutia) | 86,35% | 86,97% | 84,69% | 87,66% | 85,86% |
| Primorsky Krai | 95,78% | 95,28% | 95,02% | 92,84% | 92,82% |
| Khabarovsk region | 89,64% | 89,13% | 88,16% | 88,38% | 88,36% |
| Amur region | 116,47% | 113,68% | 116,87% | 106,62% | 107,17% |
| Kamchatka Krai | 89,66% | 89,08% | 88,70% | 82,70% | 82,75% |
| Magadan Region | 98,83% | 99,88% | 100,13% | 90,77% | 90,96% |
| Sakhalin region | 98,65% | 97,73% | 93,50% | 103,17% | 99,87% |
| Jewish Autonomous Region | 97,01% | 94,46% | 87,04% | 94,24% | 94,21% |
| Chukotka Autonomous Okrug | 104,79% | 102,98% | 96,14% | 104,12% | 104,25% |
| BAIKONUR | |||||
| Baikonur | 60,44% | 61,08% | 59,18% | 45,87% | — |
The current size of the average share of deductions can be calculated according to the 1-VAT report published on the website of the Federal Tax Service of Russia nalog.ru. The safe share of VAT deductions is calculated using the formula: Share of VAT deductions by region = Amount of VAT deductions (column 210.1 of the 1-VAT report by region) / Tax accrued (column 110.1 of the 1-VAT report by region) x 100%
For example, the figures for Moscow from the 1-VAT report as of 01/01/2018: 12 742 673 812 / 14 159 263 499 * 100% = 90,00%
Reason for checking
Exceeding the above values of the safe share of deductions is fraught with an audit by the tax authority. The Federal Tax Service explains this in its letter dated July 17, 2013 No. AS-4-2/12722.
A high share of VAT deductions can lead to close attention from inspectors. How is the safe percentage of VAT deductions calculated, where can I find its value and how is it applied?
About this in an interview with an IRI Federal Tax Service specialist on desk control.
- Alevtina Yuryevna, in 2007, one of the criteria for selecting VAT payers for an on-site inspection was a high proportion of deductions from the amount of calculated VAT for the previous 12 months. This figure was set at 89%. What is the current average share of VAT deductions for taxpayers who do not deal with the export of goods abroad?
As of January 1, 2018, the average share of VAT deductions in Russia is 88.06%. In addition, the average share of VAT deductions can be determined for each region. It may be either lower or higher than the national average deduction rate.
- The Federal Tax Service does not provide taxpayers with information about safe percentages of deductions. Obviously, they can be calculated based on some information posted on the Federal Tax Service website?
Yes, you can check the current size of the average share of deductions using the 1-VAT report. The official information of the 1-VAT report is presented in tables on the website of the Federal Tax Service of Russia: nalog.ru → Other functions of the Federal Tax Service of Russia → Statistics and analytics → Data on statistical tax reporting forms.
The official information of the 1-VAT report is presented in the tables: website of the Federal Tax Service of Russia → Other functions of the Federal Tax Service of Russia → Statistics and analytics → Data on statistical tax reporting forms.
The tax service publishes this report in two forms - consolidated and broken down by constituent entities of the Russian Federation.
Share of VAT deductions for Russia/for a specific region = Amount of VAT deductions (line 210 of the 1-VAT report for the Russian Federation/for the region) / Tax accrued (line 110 of the 1-VAT report for the Russian Federation/for the region) x 100%
That is, when determining the safe share of deductions for those who are not engaged in export operations, only operations taxed at the tax rates provided for in paragraphs are taken into account. 2-4 tbsp. 164 Tax Code of the Russian Federation.
For example, in accordance with the information reflected in the regional report 1-VAT, posted on the website of the Federal Tax Service of Russia, the safe share of VAT deduction in Moscow as of 01/01/2018 is 88.9% (RUB 12,742,673,812 / 14,159,263 499 rub. x 100%).
- Is there a gradation of the safe share of deductions by industry - construction, manufacturing, trade, etc.?
The tax service does not currently publish publicly available data on the share of deductions by industry. However, if the share of VAT deductions for a particular taxpayer differs significantly from the average, when conducting a desk audit, the inspector can take into account the industry-specific feature that affected tax deductions.
The taxpayer may also refer in his explanations to the industry specific features of his activities.
- As we understand, the share of deductions is determined for 12 months. Which 1-VAT report should you focus on when determining the share of safe deductions based on the results of the first quarter of 2018?
To determine the share of safe deductions for the VAT tax return for the first quarter of 2018, it is necessary to focus on the information in the 1-VAT report as of 01/01/2018, which takes into account VAT returns for the following tax periods: IV quarter of 2016, I -III quarters of 2017
- How can an organization that has not had export operations determine whether the share of VAT deductions it declares in its declaration corresponds to a safe value? Which declaration lines should be used for calculation?
The share of VAT deductions is determined as follows:
Share of VAT deductions of the taxpayer = Amount of declared deductions (line 190 of section 3 of the VAT return) / Amount of calculated VAT taking into account the restored amounts (line 118 of section 3 of the VAT return) x 100%
The resulting share of deductions must be compared with the average (safe) share of deductions in the region.
- If the share of VAT deductions for an organization is higher than the safe share for the region, then inspectors may be interested in it. What actions can they take: request clarification, call a commission, schedule an on-site inspection?
Exceeding the safe share of VAT deductions is just one of the criteria for assessing tax risks used by inspectorates when selecting taxpayers for on-site audits. Such an excess in itself does not mean automatic inclusion in the inspection plan. However, if there are other alarming criteria, the tax authority may decide to schedule an on-site audit.
However, for the same reason, companies that are trying to avoid unnecessary control from the tax authorities by adjusting deductions to the required amount must understand that indicating deductions that are obviously below the safe value cannot guarantee a lack of attention from tax inspectors.
Let me also remind you that tax authorities have the right to:
- call taxpayers to give explanations by sending a written notice. Both the head of the organization and its representative who has the appropriate power of attorney can appear to the inspectorate to give explanations;
- send the taxpayer a request for explanations. Accordingly, you need to be prepared to present them.
There should be no claims from inspectors if the taxpayer can show that he is calculating tax liabilities in accordance with the law, and this is confirmed by the documents he has.