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. Last Updated: 07/27/2016

Foreign Firms May Get VAT Refund

Joint ventures and foreign companies which have paid value-added taxes on goods imported as a contribution to their charter fund may be eligible for a refund, the accountancy firm Coopers & Lybrand said Monday.


New rules on VAT and import duties, adopted in June, exempt goods imported in 1993 from VAT and enable companies to reclaim VAT already paid this year. If such goods are imported after July 1, however, they will be subject to import taxes, from which they used to be exempt.


In many joint ventures, the foreign partner delivers part of its contribution to the start-up capital in kind - computers, office equipment, or machinery used in a joint production line. Since January, customs has levied a VAT on such goods because they switched hands inside Russia from the foreign partner to the joint venture.


Steve Giddins, tax partner for Coopers & Lybrand, said that to be eligible for a refund, a joint venture has to have a stipulation in the foundation documents that the foreign shareholder is to contribute capital by way of equipment and materials. The venture must have been registered before Jan. 1, 1993, and must have declared at customs that the goods imported were a contribution to the charter fund of the enterprise.


To obtain future exemptions from the VAT, a firm also has to import these goods before the time period specified for formation of the charter fund has expired. Companies can also apply for exemptions from the import duties.