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Taxes and Taxation
Reference:

Methodology of separate VAT accounting in the absence of non-taxable transactions

Bondarev Maksim Aleksandrovich

ORCID: 0000-0001-8684-6020

Student, Faculty of Taxes, Audit and Business Analysis, Financial University under the Government of the Russian Federation

117303, Russia, Moskva, g. Moscow, ul. Ulitsa Kerchenskaya, 1A korpus 2

bondarrr2001@yandex.ru
Other publications by this author
 

 
Tipikina Valeriya Alekseevna

ORCID: 0000-0002-0848-6549

Student, Faculty of Taxes, Audit and Business Analysis, Financial University under the Government of the Russian Federation

143405, Russia, Moscow region, Krasnogorsk, Zavodskaya str., 31

Lera_Xemmo@mail.ru

DOI:

10.7256/2454-065X.2022.5.38603

EDN:

IAWDFG

Received:

11-08-2022


Published:

06-11-2022


Abstract: The problem of the lack of legislative certainty in the field of establishing the principles of separate accounting allowed us to determine the purpose of the article – the development of recommendations for separate VAT accounting based on the analysis of judicial practice. Achieving this goal required solving a number of tasks, including: formation of an understanding of the fundamental features of the division of operations into levels of synthetic and analytical accounting; formation of proposals on the most effective methodology for separate accounting based on judicial practice and the experience of economic activities of organizations from different sectors of the economy. The object of scientific work is a set of socio-economic relations arising in the process of applying VAT tax legislation. The subject of the study is the mechanism of separate accounting for value added tax. The novelty of the work consists in identifying problematic aspects of the functioning of the current tax legislation in the field of separate VAT accounting, as well as offering solutions to them. The main conclusions of the study can be considered the following. The absence in the tax legislation of the obligation to keep separate records when using different VAT rates does not exempt the taxpayer from the obligation to separate transactions and tax bases at different tax rates. This conclusion also applies to taxpayers who carry out operations to loans in cash, despite the fact that VAT is fully deductible when performing such operations. In addition, based on the methods of separate accounting considered in the work, it is worth noting that the accounting methodology, which implies the opening of additional sub-accounts to accounting accounts, is the most effective. It is based on the differentiation of accounts and sub-accounts of accounting, this will allow to collect the necessary information on synthetic accounting accounts on the operational requests of tax authorities.


Keywords:

separate accounting, export taxation, provision of loans, tax deductions, tax evasion, VAT-free transactions, avoidance schemes, VAT refund, input VAT, accounting methodology

This article is automatically translated.

Methodology of separate VAT accounting in the absence of non-taxable transactions

The problem of applying value-added tax deductions is at the heart of most of the disputes that arise between taxpayers and tax authorities. This is due to the fact that tax deductions serve as sources of financial savings for businesses and significant budget losses for the state. For example, the ratio of deductions and the amount of VAT payable in all regions of Russia varies from 60% to 150%. The share of deductions in the amount of VAT for some regions is shown in Table 1 below:

Table 1- Average share of deductions in the amount of VAT

 

2019

2020

2021

Krasnodarskiy kray

90,57%

91,97%

86,17%

Belgorod region

91,56%

88,54%

89,76%

Moscow oblast

89,15%

88,86%

89,61%

the city of Moscow

88,71%

87,90%

90,42%

the city of Saint Petersburg

87,90%

90,72%

91,60%

Kaliningrad Region

60,35%

64,26%

67,03%

Murmansk region

122,06%

188,76%

148,34%

Nenets Autonomous Okrug

148,55%

149,24%

152,33%

Amur region

130,07%

131,19%

133,87%

Source: compiled by the authors according to sources [1, 2, 3].

Thus, the amount of deductions for the tax we are considering is more than half of the amount paid, and in some regions even exceeds this value. Abuse in the application of deductions poses a direct threat to the formation of the state budget.

A taxpayer may lose the right to apply deductions due to many different factors. Some of them can be eliminated by the payer himself without significant financial and time costs. Among them are the following:

-incorrect execution of invoices and other documentation [4];

-incorrect accounting of trade transactions with goods [5].

Some factors have a more complex structure and require significant legal resources to solve them. In the framework of this work, we would like to draw special attention to the fact that a significant part of the court proceedings is associated with regulatory difficulties, namely, uncertainty in the field of establishing the principles of separate accounting.

This problem has repeatedly been the object of research in the scientific works of economists. However, traditionally, the concept of separate accounting is considered in the context of the application of the norms of Article 149 of the Tax Code of the Russian Federation. For example, Korosteleva O.S. raises the question of the need for separate accounting when carrying out transactions both taxable and exempt from VAT, when keeping records at different tax rates and carrying out foreign trade operations [6]. Similar issues are discussed in articles by V.V. Sidorina [7], A.V. Bryzgalina and O.S. Fedorova [8]. Kiseleva O.V. carried out the development of organizational and methodological aspects of separate VAT accounting [9]. I.D. Lezhava raised the problems that taxpayers face when presenting deductions for value added tax, as well as when keeping separate records [10]. Nevertheless, a systematic approach to the construction of the entire methodology for maintaining separate VAT accounting in economic entities when imposing different rates and carrying out separate taxable transactions is not presented in the works of these authors.

The obligation to keep separate records when using the 0 rate%     According to clause 4 of Article 149, the taxpayer is obliged to keep separate records of transactions subject to and non-subject to VAT.

Such an obligation is firmly established only in relation to operations named in Article 149 of the Tax Code of the Russian Federation. However, the taxpayer may also have the right to exemption from VAT in a number of other cases, for example, if the 0% rate is applied, while there is no direct requirement in the Tax Code of the Russian Federation to keep separate records in such situations. Paragraph 4 of paragraph 1 of Article 153 of the Tax Code states that the taxpayer when selling goods, works and services (hereinafter TRU) at various tax rates is obliged to determine the tax base separately for each type of goods, depending on the applicable rates [11].  This means that the taxpayer can choose one of two ways of keeping records. The first implies maintaining separate accounting and separate reflection of transactions, that is, assigning them to different subaccounts and separating them at the level of analytical and synthetic accounting.  The second is a separate definition of the tax base without the use of automated systems. In this case, it is enough for the taxpayer to select from the accounting the necessary data on transactions for each rate, that is, to keep a single record of transactions.  Thus, there is no need to form a special organization for accounting for economic procedures, and taxpayers have the right, but not the obligation, to keep separate records when carrying out transactions with different rates.

At the same time, the analysis of judicial practice leads to the conclusion that the tax authorities consider the above concepts synonymous or equivalent and require taxpayers to initially separate the revenue and the expenses incurred for the reliable formation of the VAT tax liability. For example, based on the Resolution of the Federal Antimonopoly Service of the Ural District of 02/29/2008 N F09-8123/07-C2 in the case N A60-2654/07 [12], it can be noted that the key problem underlying the dispute between the tax authorities and the Verkhnesinyachikhinsky Metallurgical Plant (hereinafter VMZ) was the lack of separate accounting of transactions taxed at the rates 0% (sale of products for export) and 20% for the sale of manufactured goods, as well as the provision of invoices for inspection, which were selected by the method of their selection in any order. This method of separation of transactions, according to the tax authorities and the court, is the reason why VMZ loses the right to receive compensation for overpaid tax. However, it is important to note that on the basis of an appeal filed indicating that the Tax Code does not require separate accounting of tax amounts for purchased goods, which are subsequently used in transactions taxed on the basis of Clause 1, clause 1, Article 164 of the Tax Code of the Russian Federation, the above decision was overturned by the court of cassation instance. Thus, keeping separate records when carrying out transactions taxed at different rates is not mandatory. However, in order to avoid additional costs associated with litigation, as well as to simplify the implementation of economic activities, taxpayers are recommended to keep separate records. In this case, the main problem becomes the definition of an effective way of maintaining such accounting.

The methodology of separate accounting in the implementation of transactions taxed at different ratesIn the Tax Code of the Russian Federation there are no direct instructions on the principles of separate accounting, so the taxpayer himself develops the methodology and fixes it in the accounting policy.

Let's consider several approaches identified on the basis of a review of judicial practice.

The first method is to maintain separate accounting by preliminary differentiation of taxable and non-taxable transactions. Tax authorities often recognize unjustified decisions to deduct or reimburse tax from the budget due to the "complexity" of the algorithm for separating transactions, which does not allow proper control of the validity of the application of deductions. So, on the basis of the Decision of the Seventeenth AAC of 10.10.2019 in case No. A60-7097/2019 [13], the court decided that LLC "Food Processing Plant "SUBR" unlawfully applied tax deductions. The taxpayer, on the basis of the methodology fixed in the accounting policy, first distributed all amounts of general economic expenses and VAT to objects subject to and not subject to VAT, and only then distributed the remaining part of the expenses to account 26 "General economic expenses":Source: compiled by the authors.

 
 

Figure 1. Methodology of separate accounting by preliminary differentiation of taxable and non-taxable transactions

It is important to note that LLC "SUBR" did not fix the methodology for determining costs in the accounting policy, and therefore the tax authority could not verify the actual distribution of expenses and VAT in terms of rental services, cargo transportation, etc. On the basis of this resolution, it can be concluded that the inaccuracy of the wording when fixing the methodology of separate accounting it leads to the fact that it can be misinterpreted by the tax authorities, which entails making a decision on the absence of separate accounting at all. When determining the methodology of separate accounting, it is important to fix the principles of determining the allocated expenses in the accounting policy.

The second method is the final decryption of the line of the VAT tax return. As part of case no. KA-A40/14151-07 on 15.01.2008 [14], the tax authority claimed that the taxpayer in the person of CJSC Anics Group did not keep separate records: therefore, it becomes impossible to determine whether the deductions taken for the specified tax period relate to export operations. However, such arguments were rejected by the court on the basis that Anics CJSC carried out the decoding of line 410 of the tax declaration (the total amount of tax deductions for the sale of goods at a tax rate of 0%), which was established in the accounting policy of the organization. That is, separate accounting is carried out by deciphering the operations of line 410 of the tax return on the corresponding accounting accounts. The court found this methodology acceptable and sufficient for the taxpayer to have the right to apply tax deductions.

The third method is by opening additional sub-accounts to accounting accounts. Next, consider the Resolution of the Federal Arbitration Court of the Volga-Vyatka District of March 5, 2012 N F01-503/12 in case N A28-2547/2011 [15]. Within the framework of this case, the tax inspectorate considered that "... part of the "input" VAT is subject to reimbursement only at the time of confirmation of the fact of export of goods outside the customs territory of the Russian Federation ..." and the methodology of separate accounting and determination of input VAT applied by the taxpayer to Vyatka Plywood Mill LLC (hereinafter referred to as VFK LLC) cannot be recognized as legitimate due to the fact that it does not allow to ensure the correctness of the calculation  the part of the tax paid by suppliers that would correspond to the costs of material resources used in the production and sale of goods for export (paragraph 1 of paragraph 1 of Article 164 of the Tax Code of the Russian Federation). The court did not agree with the arguments of the inspection, since in accordance with the methodology fixed in the accounting policy, separate accounting is organized as follows. To differentiate the amounts of input VAT on transactions taxed at different rates, the following accounts are opened: for export transactions – account 19.07, accounting for sales expenses – account 44.02.1, accounting for revenue – 90.01.1. The latter is intended to account for total revenue, both received from the sale of goods for export and on the territory of the Russian Federation Federation. It is important to note that on the account 19.07, the input VAT was recorded for goods sold for export. This means that its size was determined by the formula:

VATin = S * p, where

VATin - input VAT on export goods

S - the amount of input VAT for all purchased goods

p is the share of revenue from the sale of goods for export in the total revenue.

Moreover, it was fixed in the accounting policy that in the case when it is not possible to establish a direct connection of the purchased goods (work or services) to the sale of products for export, the amounts of input VAT are first taken into account on accounts 19.01, 19.02 and 19.03, and then transferred to the account 19.07 "VAT on goods sold at a rate of 0% (export)". And already upon confirmation of the 0% rate, these amounts are credited to the account 68.22.2 "VAT to be reimbursed in connection with the application of the 0 percent rate" with the reflection of these transactions in the purchase book: Source: compiled by the authors.

Figure 2. Methodology of separate accounting by opening additional sub-accounts

Thus, the court sided with the taxpayer and confirmed that the specified method of distribution of "input" VAT does not contradict paragraph 10 of Article 165 of the Tax Code of the Russian Federation, and by virtue of Article 2 of the Constitution of the Russian Federation and paragraph 7 of Article 3 of the Tax Code of the Russian Federation is lawful. In addition, the application of this method of distribution of input VAT does not lead to overstatement of tax deductions.

The need for separate accounting when granting loansThe problem of the need for separate accounting arises not only in terms of the implementation of export operations.

Often in practice, there are court proceedings between taxpayers and tax authorities due to the fact that it is quite difficult to determine the need for separate accounting when granting loans.

Let's consider the problem of maintaining separate accounting in organizations whose activity is the provision of loans. The complexity is explained by the specifics of this operation and the contradictions contained in regulatory legal acts. In accordance with Article 807 of the Civil Code of the Russian Federation [16], on the basis of a loan agreement, the subject of the contract is transferred to ownership, including both cash and securities, and non-monetary objects defined by generic characteristics, with the obligation of the receiving party to return the borrowed funds in full.

When granting a loan in kind, separate accounting is not required, since such an obligation, according to paragraph 4 of Article 149 of the Tax Code of the Russian Federation, arises only when performing operations reflected in Article 149 of the Tax Code of the Russian Federation. Operations for the provision of non-monetary loans, as well as interest provided for by the non-monetary loan agreement are not included in this list, which, based on the Letter of the Ministry of Finance dated 04.03.2020 No. 03-07-14/15994 [17], allows us to conclude that the transfer of goods under the loan agreement is recognized as a sale and is subject to value added tax in the general procedure.

The specifics of the application of separate accounting for the provision of loans in cash has its own characteristics. According to Clause 15, clause 3, Article 149 of the Tax Code of the Russian Federation, loans provided in cash are exempt from taxation. In accordance with this, an organization that carries out taxable and non-taxable transactions in this tax period (in our case, the issuance of a loan) is obliged to keep separate records in accordance with the rules established in Article 170, paragraph 4 of the Tax Code of the Russian Federation. On the basis of Article 809 of the Civil Code of the Russian Federation, the lender has the right to receive interest under the loan agreement. Due to the fact that the provision of funds as a loan is not subject to taxation in accordance with Article 146, paragraph 2 of the Tax Code of the Russian Federation and Article 39, paragraph 3, paragraph 1 of the Tax Code of the Russian Federation, the amount of interest is recognized as the cost of the services provided for the loan. Based on this, the question arises how exactly to calculate the proportion when conducting separate accounting. In 2014, Federal Law No. 420?FZ of December 28, 2013 [18] introduced the rule of determining the proportion in the Tax Code of the Russian Federation, contained in Article 170, paragraph 4.1, paragraph 4, according to which, when determining the proportion, only the amount of income in the form of interest on loans issued, which are accrued in the current tax period, is taken into account. However, as mentioned above, the amount of tax on purchased TRU is deducted in proportion if these TRU are used to carry out both taxable and non-VAT operations. If the purchased TRU are used only for taxable transactions, then VAT is deducted in full, and separate accounting is not required. This decision was reflected in the Letter of the Ministry of Finance of the Russian Federation dated 11.01.2007 No. 03-07-15/02 [19]. Due to the fact that the provision of loans to other organizations is, in accordance with paragraph 3 of PBU 19/02 [20], financial investments, and according to paragraph 9 of this provision, general economic and other expenses are not included in the costs of their acquisition, except when they are directly related to the acquisition of financial investments. It is impossible to determine which of the goods (works, services) received after registration will subsequently be associated with loan operations, therefore the taxpayer has the right to use the deduction in full.

Some arbitration courts adhered to this approach when making decisions in relation to disputes that arose before 01.04.2014. For example, in the Resolution of 22.01.2015 in case No. A40-646/14 [21], the main claim on the part of the tax authorities in relation to CJSC "DPP-PLAZA" was the lack of separate accounting of taxable and non-taxable transactions in connection with receiving income in the form of interest on loan agreements that are not subject to VAT. The court authorities recognized the conclusions of the tax authority as unfounded, emphasizing that a cash loan is not exempt from VAT, but is an operation that is not recognized as an object of taxation, and therefore the company did not need to keep separate records of "input" VAT when issuing a loan to third parties. There were other judicial precedents, according to the results of which, the arbitration court made a decision in favor of the taxpayer. For example, in the Resolution of 27.01.2015 No. 09AP-56396/2014 in case no. A40-93948/13 [22] by court decision, it was found that until 01.04.2014 taxpayers had no obligation to keep separate records due to the fact that the acquired TRU were not used to perform loan operations. Despite the fact that amendments were made to the Tax Code of the Russian Federation in 2014 in this part, all the above arguments remain relevant at the present time. When purchasing a TRU, there is no "input" VAT, which relates to operations for issuing a loan and to receiving income in the form of interest on loans issued. Thus, there is a contradiction of the norms of tax legislation, and, according to paragraph 7 of Article 3 of the Tax Code of the Russian Federation, all irremediable doubts, contradictions and ambiguities of legislative acts on taxes and fees are interpreted in favor of the taxpayer. Based on the above judicial practice, it can be concluded that, regardless of the fact of separate accounting, VAT on purchased TRU is deducted in full due to the absence of borrowing costs in practice.

Conclusion

In conclusion, we note that the absence in the tax legislation of the obligation to keep separate records when using different VAT rates does not exempt the taxpayer from the obligation to separate transactions and tax bases at different tax rates. Moreover, in order to avoid claims from the tax authorities, as well as to exclude additional expenses for court proceedings, it is recommended to carry out separate accounting in any case. This conclusion also applies to taxpayers who carry out operations to issue loans in cash, despite the fact that VAT is fully deductible when performing such operations.

Based on the methods of separate accounting discussed above, it is worth noting that the third method of separate accounting, in our opinion, is the most understandable and simple enough to avoid excessive encumbrance of the taxpayer in connection with additional accounting and settlement. It is based on the differentiation of accounts and sub-accounts of accounting, this will allow you to collect the necessary information on synthetic accounting accounts on the operational requests of tax authorities. Moreover, as the analysis showed, this technique is recognized as legitimate in the court, which significantly reduces the likelihood of potential tax risks (as a judicial precedent) in the event of complaints and claims from the tax inspectorate.

References
1. The average share of VAT deductions for the constituent entities of the Russian Federation // Consultant Plus.-[Electronic resource]: Access mode: http://www.consultant.ru/document/cons_doc_LAW_320076/4926abf4f839da96f9168f6abe32a7f1028b43cb/;
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4. Gorshkova L.L. Controversial issues about invoices / L.L. Gorshkova-Accounting in budgetary and non-profit organizations. 2011. No. 8 (272). pp. 43-47;
5. Grekova V.A. Typical errors in accounting for operations with goods, identified during the audit, and ways to solve them / V.A. Grekova, L.R. Dzhaferova, E.Z. Yagyaeva-New University. Series: Economics and Law. 2017. No. 1 (71). pp. 9-13;
6. Korosteleva O.S. SEPARATE VAT RECORDING AS AN ELEMENT OF ACCOUNTING POLICY / O.S. Korosteleva-Economics and management in the 21st century: development trends. 2013. No. 11. P. 112-116;
7. Sidorina V.V. PROCEDURE FOR RECOGNITION OF TAX DEDUCTIONS FOR VAT ON EXPORT OPERATIONS / V.V. Sidorina-Collection: INNOVATIVE AND TECHNOLOGICAL DEVELOPMENT OF SCIENCE. collection of articles of the international scientific-practical conference: in 3 parts. 2017. S. 210-213;
8. Bryzgalin A.V. OBJECT OF TAXATION. THE TAX BASE. SOME QUESTIONS ON TAXATION FROM 01.01.2018 ON SCRAP SALES OPERATIONS. TAX RATES. VAT deductions. RECOVERY OF TAX DEDUCTIONS FOR VAT. ISSUES OF REGISTRATION OF INVOICES. ISSUES OF SEPARATE ACCOUNTING / A.V., Bryzgalin, O.S. Fedorova-Taxes and financial law. 2018. No. 8. P. 8-129;
9. Kiseleva O.V. SEPARATE VAT RECORDING: ORGANIZATION AND METHODOLOGY / O.V. Kiseleva, O.V. Skripkina, D.I. Tolstykh-International Accounting. 2019. V. 22. No. 8 (458). pp. 885-908;
10. Lezhava I.D. FEATURES OF TAX ADMINISTRATION AND VAT ACCOUNTING / I.D. Lezhava-Economics. Business. Banks. 2018. No. S5. pp. 74-84;
11. Tax Code of the Russian Federation. Part two [Electronic resource]: dated 08/05/2000 No. 117-FZ: (as amended on 11/29/2021) // Consultant Plus.-Access mode: http://www.consultant.ru/document/cons_doc_LAW_28165 /;
12. RESOLUTION OF THE FEDERAL ARBITRATION COURT OF THE URAL DISTRICT of February 29, 2008 N F09-8123 / 07-C2 in case N A60-2654 / 07 [Electronic resource]-URL: http://www.consultant.ru/cons/cgi/online .cgi?req=doc&base=AUR&n=79174#WSTNPwSrCmsZkjNF;
13. DECISION OF THE SEVENTEENTH ARBITRATION COURT OF APPEALS dated October 10, 2019 in case No. À60-7097/2019 [Electronic resource] – URL: https://sudact.ru/arbitral/doc/2tBzGQZ23NH9/;
14. RESOLUTION FAS MO dated January 15, 2008 No. ÊÀ-À40/14151-07 [Electronic resource] – URL: https://www.glavbukh.ru/npd/edoc/96_875435281;
15. DECISION OF THE FEDERAL ARBITRATION COURT OF THE VOLGA-VYATKA DISTRICT dated March 5, 2012 N F01-503/12 in case N A28-2547/2011 [Electronic resource]-URL: https://base.garant.ru/39611402/;
16. Civil Code of the Russian Federation Part 2 (Civil Code of the Russian Federation Part 2) of January 26, 1996 N 14-FZ (Edition of 07/01/2021) // [Electronic resource]-URL: http://www.consultant.ru/ document/cons_doc_LAW_9027/;
17. Letter of the Ministry of Finance dated March 4, 2020 No. 03-07-14 / 15994 / “On VAT on operations under a commodity loan agreement concluded between companies on the OSNO and IP on the simplified tax system” [Electronic resource]-URL: https://www. audit-it.ru/law/account/1012011.html;
18. FEDERAL LAW No. 420-FZ of December 28, 2013 “On Amendments to Article 27.5-3 of the Federal Law “On the Securities Market” and Parts One and Two of the Tax Code of the Russian Federation” [Electronic resource] – URL: http:// www.consultant.ru/document/cons_doc_LAW_156529/;
19. Letter of the Ministry of Finance of Russia dated January 11, 2007 No. 03‑07‑15/02 [Electronic resource]-URL: https://www.audar-info.ru/na/article/view/type_id/7/doc_id/30345/ ;
20. REGULATION ON ACCOUNTING "ACCOUNTING FOR FINANCIAL INVESTMENTS" PBU 19/02 [Electronic resource]-URL: http://www.consultant.ru/document/cons_doc_LAW_40251/88f48d60ea32b0c5fb1f51c32664f1b364b7e1a1/;
21. DECISION OF THE ARBITRATION COURT OF THE MOSCOW DISTRICT dated January 22, 2015 in case No. À40-646/14 [Electronic resource] – URL: https://sudact.ru/arbitral/doc/zO5N9PLRO1Yt/;
22. DECISION OF THE NINTH ARBITRATION COURT OF APPEALS dated January 27, 2015 in case No. À40-93948/2013 [Electronic resource] – URL: https://sudact.ru/arbitral/doc/3EAE3mP9Pfg/

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The reviewed article is devoted to improving the methodology of separate VAT accounting in the absence of non-taxable transactions. The methodology of the study is based on the study of literary sources on the topic of the work, processing data on the ratio of deductions and VAT amounts for the subjects of the Russian Federation, a review of judicial practice, the application of a systematic approach to the construction of a methodology for maintaining separate VAT accounting in business entities when imposing different rates and carrying out individual taxable transactions. The authors of the article attribute the relevance of the study to the fact that tax deductions serve as sources of financial savings for businesses and significant budget losses for the state. The scientific novelty of the presented research, according to the reviewer, consists in comparing various methods of separate accounting, identifying the most understandable and simple in order to avoid excessive encumbrance of the taxpayer in connection with additional accounting and settlement. In the article, the authors have identified the following structural sections: The obligation to keep separate records when using the 0% rate, the methodology of keeping separate records when carrying out transactions taxed at different rates, the need to keep separate records when granting loans, Conclusion, Bibliography. The authors note that the ratio of deductions and the amount of VAT payable by regions of Russia varies from 60% to 150%. The article examines the factors influencing the possibility of taxpayers losing the right to apply VAT tax deductions, special attention is paid to the fact that a significant part of court proceedings is associated with regulatory difficulties, with uncertainty in the field of establishing the principles of separate accounting. The analysis of various methods of separate accounting: by preliminary differentiation of taxable and non-taxable transactions; the final decoding of the VAT tax return line; the opening of additional subaccounts to accounting accounts is accompanied by a review of judicial practice materials and conclusions about the advantages of the third method. The bibliographic list includes 22 names of sources – scientific articles in domestic periodicals, decisions of arbitration courts, regulatory materials and Internet sources, to which the text contains address links indicating the presence of an appeal to opponents in the publication. The reviewed article is not without flaws. Firstly, the initial part of the article is not titled, it would be logical to call it an introduction. Secondly, when designing table 1, it is advisable to reflect the units of measurement in the title of the table, rather than indicate after each value, this will help improve the perception of the material by readers. The topic of the article is relevant, the material corresponds to the subject of the journal "Taxes and Taxation", may arouse interest among readers and is recommended for publication after the shortcomings are eliminated.