Therefore it is better if your contractor on Transport will be "tax exemption of VAT" i.e. tax rate will be zero. If a contractor is a VAT taxpayer in this case it is required many documents and proofs during specialized verification to calculate it correct. It is a long procedure which often leads to the court with tax inspections.
Or for example, your accountant will make a mistake in an exchange difference or a tax authority will consider that calculation was made not for that period and respectively currency rate was another during that period. In this case, you will need to pay a fine, and you will be considered as an unreliable contractor and customs and a bank will be informed about that. The law do not stipulate an accurate instruction on what period to count a dollar exchange rate - a day of tax payment, a day of payment in customs, day of finishing a transaction or delivery, a day when a tax office gets money, etc. Therefore, tax inspection will determine the rate based on the time when it was maximized.
The most unpleasant in FEA that having made payment on the transaction even if it is an advance payment you already should pay a tax on the VAT from this sum to the state. For business it is illogical, because it might happen that the goods are not even produced?? and of course you have not received it yet. But such are the rules and traditions. All these increase the cost of the purchased product and make more difficult foreign economic activity.
Verifications and revision
It is an indispensable attribute of foreign economic activity. The most regular participants of verifications from regulatory, supervisory and permitting authorities are the structures of the FCS, the Ministry of Finance and the Central Bank, the Ministry of Taxes and Tax Collection, Ministry of Health, FSB, the Ministry of Internal Affairs, Ministry of Transport and certification bodies. In total they are 38 state structures and divisions. Independently from each other they directly and indirectly supervise and revise you through verifications of your suppliers, contractors and yours consumers. Revisions are carried out in turns and sometimes and in parallel during 3 years. You will be not only revised, but also verified. And if someone in your chain of movement of goods will do something wrong or it will be a short-lived company, you might get serious problems.
If documents will be issued wrong, not in the right form or with mistakes, you should consider that this is also your problem, even if you did not have any malicious intention or a document was prepared by another side.
Therefore we recommend to do everything correctly and to keep documents for a long time. In such case you'll always be protected, and the expenses will go only on preparation and submission documents, on work with inspectors, courts, etc.
