The Role and Prospects of Development of the Mechanism for Determining the Place of Sale of Goods, Work and Services within the Framework of VAT Taxation

Stankovskii Maksim Vladimirovich ORCID: 0000-0003-0787-6147 Student, Faculty of Taxes, Audit and Business Analysis, Financial University under the Government of the Russian Federation 127349, Russia, Moscow, Moscow, Muranovskaya str., 7b maksj37@gmail.com

Value added tax (VAT) plays an important role in the functioning of the tax system of the Russian Federation. From the standpoint of economic theory, VAT is a form of withdrawal of a certain part of the added value that is created in the production process. It is worth noting that the value added tax by the nature of collection refers to indirect taxes. This means the fact that the actual carrier of the tax and the payer of the tax do not match. A characteristic feature of VAT is that with the help of various stages of production, the tax burden is shifted to the actual consumer. Nevertheless, the legal obligation to pay the tax is imposed on the seller ^[1]. Value added tax accounts for a significant part of the budget revenues of the Russian Federation. Based on the data of the Federal Tax Service, VAT is 19.3% in the tax revenues of the consolidated budget of Russia, which allows it to occupy the third place among all types of tax revenues. In absolute terms, the budget received 5.5 trillion rubles in 2021. It is necessary to focus attention on the fact that the dynamics of income increases every year, both in absolute and relative terms. This fact is due to the development and improvement of tax administration mechanisms ^[2].

Within the framework of the formation and development of market relations, the central place is occupied by the sale of various categories of goods and the performance of a wide range of works and services. These types of economic activities form the basis of the national economy of most countries of the world. In addition, the process of globalization and regional integration determines the development of international interactions between States in various sectors of the economy. This fact was significantly reflected in the conditions of international trade and cross-border provision of services. For the state, economic activity aimed at the sale of goods, works and services is the theoretical basis for VAT taxation. The collection of VAT is due to the use of the mechanism of the place of sale, which allows you to establish the grounds for taxing trade items on the territory of a particular state. This mechanism is designed to improve the efficiency of trade administration both within an individual state and at the supranational level. As a result, there is an objective need to study the current mechanism for determining the place of implementation in the Russian Federation and propose ways to improve it.

The problem of the functioning of the mechanism of the place of implementation attracts the attention of a significant number of scientists and economists. The key aspects regarding the procedure for establishing the place of implementation are reflected in the scientific works of N. S. Milogolov and M. R. Pinskaya. It is important to note that within the framework of regional integration, the peculiarities of national legislations regarding the place of implementation are of particular relevance. These problems found their place in the works of Tikhonova A.V., Medvedeva O. V., Artemyev A. A. The features of establishing the place of sale in relation to certain categories of services were analyzed by the following scientists: Melnikova N. P. and Vishnevskaya N. D.

Theoretical foundations of determining the place of sale of goods, works and servicesThe mechanism for determining the place of sale of goods, works and services on the territory of the Russian Federation is provided for by the following articles of the Tax Code of the Russian Federation: Article 147 regarding the place of determination of the sale of goods and Article 148 regarding the determination of the place of sale of works and services.

When determining the place of implementation, the subject of implementation plays a decisive role. It is easy to determine the physical place of sale of the product, since it has a physical form. In this context, the implementation of works also has a material form as a result of their implementation, which cannot be said about services. In this connection, with respect to goods and works (services), the Tax Code of the Russian Federation provides for various principles for determining the place of sale. To a large extent, these principles depend on the possibilities of tax administration. For example, the actual country of the buyer's location is recognized as the place of sale of property rental services in most cases, since in this situation the basic principle of paying indirect taxes is implemented – at the place of consumption of labor. However, if aboveground vehicles are provided for rent (where a significant proportion of consumers are individuals), it is not possible to pay VAT at the location of consumers. In this connection, the country of location of the seller of the service is recognized as the place of sale of services.

To begin with, it is necessary to analyze the regulatory procedure for determining the place of sale in relation to goods. In accordance with Article 147 of the Tax Code of the Russian Federation, the territory of the Russian Federation is recognized as the place of sale of goods if certain conditions are met. The first condition is that the goods must be located on the territory of the Russian Federation and other territories that are under its jurisdiction, and not be shipped or transported. This category includes real estate objects. The second condition provides for the procedure for determining the place of sale in the case of shipment or transportation. Thus, Russia will be recognized as the place of sale of goods if, at the time of the start of transportation or shipment, the goods are located on the territory of the Russian Federation and other territories that are under its jurisdiction. In the case when the goods are placed under the customs transit procedure, VAT does not arise. It should be noted that the presented conditions regulate the procedure for determining the place of sale for most of the goods, however, additional criteria are established for certain types of categories of goods.

It is worth noting that certain rules for establishing the place of sale are provided for goods sold within the EAEU. When exporting goods from Russia to the territory of the EAEU member state, the Russian Federation will be recognized as the place of sale. At the same time, in Russia, the supplier will apply a 0% rate for the goods sold.

The procedure for determining the place of sale of works and services is provided for in Article 148 of the Tax Code of the Russian Federation. It is worth noting that this article contains certain rules for determining the place of sale in relation to certain types of work and services. To begin with, it is necessary to distinguish these economic categories ^[3]. Within the framework of taxation, it is customary to understand work as a certain activity, the results of which have a material embodiment and can be used to meet the needs of economic entities. At the same time, a service is a specific type of activity, the results of which have no material embodiment ^[4].

As noted above, the specifics of determining the place of sale of works and services are based on the application of certain rules that are formulated during the interpretation of the norms of tax legislation. Thus, economists determine the following principles that characterize the mechanism for determining the place of sale in relation to certain categories of works and services ^[5]:

1)                 At the actual location of the property (immovable and movable property);

2)                 At the place of actual implementation of services;

3)                 At the place of actual activity of the buyer of works and services;

4)                 At the place of actual activity of the seller of works and services.

In the course of this scientific work, it is necessary to detail each of the presented rules in order to more fully disclose the mechanism for determining the place of implementation of works and services in the Russian Federation.

The first rule reflects the specifics of determining the place of sale in relation to immovable and movable property. In accordance with subparagraph 1 of paragraph 1 of Article 148 of the Tax Code of the Russian Federation, if works and services are directly related to real estate, then the territory of the Russian Federation is recognized as the place of sale of such services. It is worth noting that in most cases, such works and services include installation, modernization, restoration, various types of repair of immovable equipment, landscaping and rental. Regarding movable property, the following features are established: the territory of the Russian Federation is recognized as the place of sale in the case when services and works are directly related to movable property. Such services should include the assembly, installation, repair and maintenance of movable property. It should be noted that the legislative mechanism for determining the place of sale of works and services in respect of movable property is established by subparagraph 2 of paragraph 1 of Article 148. It is important to note that rental services of movable property do not relate to this rule. According to the general principle, the place of their sale will be determined by the buyer, with the exception of ground vehicle rental services, the place of sale of which is set by the seller ^[6]. In more detail, the reason for such differentiation of the place of sale for rental services was disclosed earlier.

The second rule reflects the mechanism for determining the place of sale in relation to services related to the sphere of culture, education, sports and tourism. In accordance with subparagraph 3 of paragraph 1 of Article 148 of the Tax Code of the Russian Federation, the Russian Federation will be recognized as the place of sale of such services if the services are actually rendered on the territory of Russia. It is worth noting that for this rule it does not matter who is the contractor and the customer of these services, only the fact of their execution in Russia is important.

The third rule characterizes the procedure for determining the place of implementation of a large range of works and services. Based on subparagraph 4 of paragraph 1 of Article 148 of the Tax Code of the Russian Federation, the place of sale of works and services is the territory of Russia in the event that the buyer of such works and services is located in the Russian Federation. In this case, the place of the actual activity of the buyer is determined on the basis of the information of the state registration of the organization or individual entrepreneur. In the absence of these data, the place of activity of the buyer is determined in accordance with the information in the constituent documents for organizations and the place of residence for individuals.

It is necessary to emphasize that the Tax Code of the Russian Federation provides a specific list of works and services, the place of sale of which is determined on the basis of the place of actual activity of the buyer. For example, this list includes legal, auditing, accounting, advertising, marketing, consulting, design services, services for the development of databases for electronic computers. Various services related to the use of intangible assets, such as trademarks, trademarks, licenses and copyrights are also included in this list. In addition, this list includes services for the provision of workers' labor and rental of movable property. The full list of services and works determined in accordance with the third rule is presented in subparagraph 4 of paragraph 1 of Article 148 of the Tax Code of the Russian Federation. It is important to note that within the framework of this subparagraph, only a general name and a generalized classification are given, in connection with which, in practice, disputes arise when detailing it, which will be considered in more detail later.

As part of the application of the fourth rule, it is necessary to consider works and services that cannot be attributed to the first three criteria. In this case, in accordance with subparagraph 5 of paragraph 1 of Article 148 of the Tax Code of the Russian Federation, the place of sale of works and services will be recognized as the place of actual activity of the seller. It is worth noting that the legislation does not provide for a specific list of such works and services, therefore, the taxpayer must independently determine whether certain works and services belong to this rule. As an example, design services and communication services, the place of sale of which is determined on the basis of the place of economic activity of the seller.

As part of writing this paper, it is important to pay special attention to determining the place of sale of transport services. This is due to the fact that a special procedure is provided for transportation services, reflecting the specifics of this particular type of service. The legislation establishes different criteria for residents of the Russian Federation (organizations and individual entrepreneurs) and non-residents. Thus, for residents, the territory of the Russian Federation will be recognized as the place of sale of transport services in the event that the point of departure and (or) destination are located in Russia. With respect to non-residents, the place of sale of transport services will be the territory of the Russian Federation only if both the point of departure and the destination are located in Russia. In addition, a special specificity is inherent in the works and services related to the customs transit procedure. Russia will be recognized as the place of sale of such services only in a certain part: from the moment of arrival on the territory and up to the moment of departure from the territory of the Russian Federation.A key aspect of the functioning of modern tax systems is their development towards unification and standardization.

Nevertheless, the principles of VAT taxation vary significantly from one state to another. The current economic situation is characterized by the fact that, due to different interpretations of the fundamental principles of VAT, a lot of controversial issues arise regarding the determination of the place of sale of various categories of services.Discrepancies in national legislation on the issue of VAT taxation carry significant risks for business, especially for organizations engaged in international provision of services and cross-border trade.

In practice, there are often problems of double taxation or non-taxation of various categories of services due to the peculiarities of national legislation. These circumstances have a negative impact on the formation of state budgets on the one hand, and on the other hand increase the costs of international companies.When formulating the theoretical foundations for determining the place of sale in order to impose VAT, economists often use the following postulate: "Any consumption should be taxed where it directly occurs" ^[7].

This statement really has an important background in the context of the application of the mechanism for determining the place of sale in international trade in services. In addition, a number of reputable international organizations, such as the Organization for Economic Cooperation and Development and the Council of the European Union, believe that international trade should be based on determining the place of final consumption of services. Therefore, the meaning of VAT taxation is as simple as possible to understand: consumption tax in its economic essence should arise only at the place and at the time of actual consumption of various categories of labor.In practice, this situation has not received an unambiguous interpretation.

Currently, within the framework of VAT taxation, there are two approaches to determining the place of sale of services: "European" and "New Zealand"^[8].The European approach is based on the establishment of one general condition of the place of sale of services, for example, at the place of actual activity of the seller.

Nevertheless, this mechanism provides for the introduction of additional rules for determining the place of sale in relation to certain categories of works and services. As an example, we can cite services for organizing exhibitions, renting property, and communication services. It is an objective fact that this system of determining the place of implementation has become most widespread in the countries of Western Europe and the countries of the former socialist bloc, including Russia.In turn, the New Zealand approach to determining the place of sale of services is mostly focused on the theoretical postulate of the correspondence of the actual place of consumption and the place of origin of VAT.

This goal is achieved by establishing certain rules for VAT taxation of exports and imports. Thus, as part of the implementation of this approach, there are no requirements for determining the place of sale of various categories of services. Of paramount importance in the New Zealand approach is the actual place of consumption of the services provided. This approach has been widely recognized in New Zealand, Japan, Singapore, Australia, and Canada.Statistical and economic analysis of the scale of cross-border trade in services in Russia

In modern conditions, international trade has a significant impact on the functioning of the national economies of most countries of the world.

            It is worth noting that the structure of cross-border trade has undergone significant changes in recent decades due to the development of globalization and internationalization processes between countries. A natural consequence of these events was the predominance of international trade in services over cross-border supplies of goods ^[9]. Consequently, within the framework of taxation, the issue of establishing the place of sale of works and services within the framework of cross-border trade is becoming increasingly relevant.

            It should be noted that the structure of modern trade in services has a wide variety. In other words, there are a huge number of different types of work and services that act as an object within the framework of cross-border trade. This fact complicates the processes of administration and control in order to collect VAT.

            It is necessary to focus attention on the fact that cross-border trade in services is an integral part of the economy of the Russian Federation. As part of the scientific work, it seems necessary to assess the scale of international provision of services in relation to Russia. To accomplish this task, a statistical analysis was carried out on the basis of data provided by the Central Bank of the Russian Federation on foreign trade in services. In the course of the analysis, relative indicators were obtained characterizing the share of exports and imports of works and services in the gross domestic product of Russia in dynamics for the period 2010-2021. The results obtained are presented in Table 1.

Table 1 - Export and import of services in the Russian Federation for the period 2010-2021 ^[10]

            Based on the data presented in the table, it can be determined that the Russian economy is more focused on the import of international services. Consequently, the foreign trade of the Russian Federation in services is characterized by a negative balance. In addition, it is worth paying attention to the fact that the export and import of services occupies a significant share relative to the gross domestic product of the state. In total, these two indicators in relative terms, on average, for the period 2010-2021, I reach 8-9% of GDP. Thus, the data presented in the table confirm that international trade in services occupies an important place in the Russian economy. It is important to note that cross-border trade is the basis for VAT taxation, which in turn determines the use of a mechanism for determining the place of sale. 

            As part of the analysis of foreign trade of the Russian Federation, it is necessary to assess the structure of cross-border supply of services. It is worth noting that this structure will reflect the specific weight of various types of work and services in relation to exports and imports. It is necessary to emphasize that the analysis will use the classification of services in accordance with the methodology of the balance of payments of the Russian Federation. This classifier is used by the Central Bank of the Russian Federation in order to generate annual analytical reports on cross-border trade in services. It is important to note that this list is based on the classifier of services established by the GATS. It also contains 12 service sectors, however, certain positions differ from the provisions of the GATS due to the national characteristics of the Russian economy. Data for 2021 will be used for the analysis, as they are the most relevant at this point in time.

Figure 1 – Structure of Russian services exports for 2021 ^[11]

            Figure 1 shows information that reflects the structure of the export of services of the Russian Federation for the period 2021. It should be noted that one third of the total exports are transport services. This category represents the provision of services using various types of transport, for example, automobile, air, sea. It is important to note that the definition of the place of sale in relation to transport services, as noted earlier, has its own specifics. Consequently, Russia will be recognized as the place of sale of transport services, since the place of departure is located on its territory. In addition, it is worth paying attention to telecommunications services, the place of sale of which, when exported, is recognized as the territory of the Russian Federation. Thus, this graphic object allows you to determine the export orientation of the state in the international arena in the process of implementing various categories of services. Within the framework of VAT taxation, this material is of fundamental importance due to the fact that it demonstrates the key categories of services that are subject to VAT in accordance with the current mechanism for determining the place of sale in Russia. Consequently, an increase or decrease in the volume of trade in various categories of services presented in the figure can have a significant fiscal impact on the budget of the Russian Federation in terms of VAT receipts.

            To create a holistic picture of international trade in services in relation to the Russian Federation, it is necessary to consider the structure of imports of services, which is shown in Figure 2.

Figure 2 - Structure of Russian services imports for 2021 ^[11]

            As part of the analysis of the import structure, it is necessary to focus on the fact that other business services account for a quarter of the total volume of services supplied to Russia. This category includes auditing, accounting, marketing and consulting services, the place of implementation of which will be recognized as the territory of Russia. It is also important to note that works and services related to construction and services related to intellectual property account for 18% of total imports. It is important to note that as part of the import of such services, the territory of the Russian Federation will be recognized as the place of sale. Thus, the analysis of the import structure is of great fiscal importance due to the fact that the mentioned categories of services are subject to VAT on the territory of Russia on the basis of the current mechanism for determining the place of sale. 

For a comprehensive analysis of cross-border trade in services, it is necessary to identify the main partners of the Russian Federation and assess their impact on the formation of total trade turnover. To achieve this goal, 15 of Russia's largest partners in terms of cross-border trade in services were taken, in addition, relative indicators characterizing the influence of individual states on the formation of the structure of foreign trade were calculated. The data obtained during the analysis are presented in Table 2.

Table 2 - Foreign trade in services by major partner countries for 2021 ^[11]

            It is important to note that trade in services with the represented states amounts to more than 60% of the total trade turnover of Russia. It is necessary to focus attention on the fact that the main partners of the Russian Federation in the framework of trade in services are the countries of Western Europe. The current situation in the world is characterized by instability and unpredictability. Additional sanctions directed against the Russian Federation can have a significant impact on the scale of cross-border trade in services. It is likely that in the near future there will be a sharp reduction in trade turnover with the countries of the European Union and the United States, which in turn will cause a decrease in VAT revenues to the Russian budget. Thus, the data presented in the tables give a clear understanding that a significant part of Russia's trade turnover is formed due to mutual cooperation with the countries of Western Europe and the United States. This fact poses problems for the economy of the Russian Federation due to the unpredictability of the decisions of Western partners. A logical solution to this issue may be the diversification of trade turnover in terms of increasing trade volumes with the countries of the Asia-Pacific region.

            Thus, in the context of the development of cross-border trade in services, the mechanism for determining the place of sale, which ensures the collection of VAT in relation to various categories of works and services, is of paramount importance.

Problematic aspects of determining the place of sale of goods, works and servicesIn the context of the application of the norms of the tax legislation of the Russian Federation regarding the determination of the place of implementation of TRU in practice, questions arise due to incorrect interpretation of the norms of the Tax Code of the Russian Federation.

As a result, there is an objective need to consider explanations of authorized bodies and court decisions in order to form a holistic picture of the procedure for determining the place of implementation.

To begin with, it is advisable to analyze the problematic aspects of the application of the norms established in the Tax Code of the Russian Federation, in accordance with the first rule of determining the place of sale, works and services. It should be noted that paragraph 1, subparagraph 1 of Article 148 of the Tax Code of the Russian Federation provides only certain types of work and services, for example, restoration, construction and installation. In fact, the maintenance of real estate may involve a whole range of works and services that are not directly named in the legislation. This situation is relevant for most organizations performing construction work. For example, during the construction of a plant, the technological cycle may include the following types of work and services: testing of equipment for capacity, training of customer personnel in order to ensure safety at work, etc. Thus, the question arises regarding the determination of the place of implementation of these works and services. The Ministry of Finance of the Russian Federation adheres to the following position in relation to this situation: the mechanism for establishing the place of sale in relation to works and services caused by the technological cycle should be determined in accordance with the terms of the civil contract concluded between the contractor and the customer ^[12]. Therefore, if a potential taxpayer considers determining the place of implementation of the mentioned works and services in accordance with the first rule, then these conditions must be prescribed in the contract. Thus, this decision will avoid claims from the tax authorities.

The considered situation is closely related to the provision of so-called "support services". In accordance with the Tax Code of the Russian Federation, auxiliary services and works should be understood as such services and works that are of an additional nature in relation to the main types of activities. This situation may arise when an economic entity is engaged in the sale of services and works, the full implementation of which causes the implementation of other operations. It should be noted that the category of auxiliary works and services can be applied only to one taxpayer ^[13]. In other words, the main and auxiliary works and services must be carried out by one enterprise or sole proprietor.

The practical application of paragraph 3 of Article 148 of the Tax Code of the Russian Federation is complicated by the fact that there is a wide variety of different categories of work and services, as a result of which it seems impossible to legislate all the features of recognizing certain types of activities as auxiliary for VAT purposes. Therefore, it is advisable in this part of the scientific work to consider the recognition of specific works and services as auxiliary.

To begin with, we will analyze the situation of providing services for the development of software systems and databases for electronic computers. A significant number of domestic developers in the IT field provide their own services for foreign countries. In relation to these services, the place of sale will be determined by the buyer.  In other words, in this case, the mentioned services will not be subject to VAT on the territory of Russia, since their place of sale will be a foreign state. It is important to note that for the effective use of software (software) and databases, foreign buyers need to have the appropriate competencies. As a result, the manufacturing company can provide additional services for the purpose of technical training of foreign clients. In this case, these services will be called auxiliary to the services for granting the right to use the software. Based on the explanations of the authorized bodies, the place of implementation of technical training services for foreign customers will be determined in accordance with the main type of services provided ^[14]. In our example, the place of implementation of support services will be a foreign country.

The next important aspect is the determination of the place of sale in relation to works and services related to the lease of drilling facilities, in particular drilling rigs. It should be emphasized that the drilling rig belongs to the category of real estate. Therefore, the place of sale of services in relation to the lease of a drilling rig is determined in accordance with the first rule.

For a more detailed consideration of this issue, it is appropriate to consider the court decision No. A42-2701/2011 in relation to an organization that provides drilling rig rental services to foreign clients in Russia. In addition, it provides customers with its own specialists for the purpose of servicing these drilling rigs. During the on-site tax audit, the IFNS added VAT to the organization in respect of personnel services. During the trial, the organization referred to the norms established by subparagraph 4 of paragraph 1 of Article 148 of the Tax Code of the Russian Federation. In other words, the organization, in relation to services for the provision of personnel to the customer, determined the place of sale at the place of the actual activity of the buyer. Since the buyer was a foreign company without a representative office in Russia, the VAT on the territory of the Russian Federation was not paid by the company. This position regarding the determination of the place of sale of the mentioned services was recognized by the court as unlawful. The Court ruled that the services for the provision of personnel for the maintenance of drilling facilities are auxiliary in nature, therefore, to determine the place of their implementation, it is necessary to use paragraph 3 of Article 148 ^[15]. Thus, the Russian Federation will be recognized as the place of implementation of these services, since the main services for the rental of drilling rigs are implemented in Russia. Consequently, the IFNS lawfully added VAT and applied the appropriate tax sanctions.

In the context of the development of cross-border trade, States are paying increasing attention to the unification and harmonization of tax legislation. To this end, various economic unions and partnerships are being created, which have a significant impact on the functioning of national tax systems. It should be noted that agreements concluded within the framework of economic unions may directly contradict the norms of national law.  As a result, there are disagreements regarding the application of certain elements of the legal system. It should be emphasized that this situation is also characteristic of tax law. This is due to the fact that the basis of international trade ? exports and imports, are administered and controlled by tax authorities. Consequently, there is an objective need to analyze the norms of international law regarding the determination of the place of implementation of TRU within the framework of the functioning of individual economic unions, of which the Russian Federation is a member. The essence of this review will be to identify problematic aspects of the procedure for determining the place of implementation at the supranational level.

As part of the consideration of this issue, it is advisable to analyze the international agreements concluded within the framework of the Eurasian Economic Union. This decision is due to the fact that a significant part of the total volume of foreign trade of the Russian Federation consists of transactions with the member countries of the EAEU (about 7% of the total trade turnover of Russia).

For a comprehensive analysis of the mechanism for determining the place of implementation of TRU between the EAEU member states, it is necessary to consider "Annex No. 18 to the Treaty on the Eurasian Economic Union" ^[16]. This document regulates the procedure for determining the place of implementation in relation to TRU between the EAEU members. It should be noted that within the framework of this work, the procedure for determining the place of implementation is of the greatest scientific interest in relation to various categories of services and works. This is due to the fact that the mechanism of VAT taxation of exports and imports in respect of goods is maximally unified in many modern states. In other words, the export of goods is taxed at a zero rate if certain criteria are met, for example, when providing relevant documents that confirm the fact of the sale of goods abroad. In turn, the import of various categories of goods is a separate VAT object and is taxed at the standard rate. Consequently, as a rule, there are no controversial issues regarding the determination of the place of sale of goods in practice.

Let's turn to the mechanism of collecting value added tax when performing works and rendering services between the member states of the Eurasian Economic Union. According to Appendix No. 18, VAT is collected in the state that is recognized as the place of implementation of the relevant works and services ^[17].

With respect to real estate, the procedure is similar to the mechanism for determining the place of sale in the Russian Federation. That is, the actual location of the property is recognized as the place of implementation of works and services. Nevertheless, the Tax Code of the Russian Federation refers works and services related to ships and aircraft to the rule of determining the place of sale for the location of movable property, while the EAEU agreement does not provide for any exceptions with respect to immovable property. With respect to movable property, there is a similar procedure for determining the place of sale, with the exception of the above-mentioned features regarding ships and aircraft. Within the framework of the EAEU, the procedure for recognizing the place of sale in relation to educational, cultural and sports services is identical to the mechanism used in the Russian Federation. It is also necessary to focus attention on the fact that the EAEU treaty provides for the application of the third rule (at the place of the buyer's actual activity) in relation to a whole range of works and services. For example, the place of sale of accounting, engineering and design services will be determined in accordance with the place of activity of the buyer. It is worth noting that a similar mechanism for these categories of services is used in the Russian Federation. Nevertheless, there is a different approach regarding design services, the place of sale of which, in accordance with subparagraph 5 of paragraph 1 of Article 149 of the Tax Code of the Russian Federation is determined by the place of activity of the seller, while based on the provisions provided for in subparagraph 4 of paragraph 29 of Annex No. 18 to the EAEU treaty, these services relate to the third rule for determining the place of sale.

Regarding other works and services that do not directly fall under these principles, the procedure for determining the place of sale at the place of the seller's actual activity is applied, this fact is regulated by subparagraph 5 of paragraph 29 of Annex No. 18 to the EAEU Treaty. It is important to note that the EAEU treaty provides for the assignment of services in electronic form to this rule for determining the place of sale, since they are not directly mentioned in the first three paragraphs. In other words, the place of sale of such services will be established on the basis of the place of activity of the seller. In turn, in accordance with subparagraph 4 of paragraph 1 of Article 148 of the Tax Code of the Russian Federation, services rendered in electronic form belong to the third rule.  That is, the place of their sale will be determined based on the actual place of activity of the buyer. The difference in methodological approaches of the EAEU member states contradicts the principles of free competition, as a result of which there is a need to reform and improve the mechanisms for determining the place of sale in order to collect VAT both at the supranational level in general and within a particular state in particular.

Directions for improving mechanisms for determining the place of sale for the purposes of value added taxThe mechanism of establishing the place of sale is important for the functioning of the Russian tax system.

In general, methodological approaches to VAT taxation demonstrate their effectiveness and consistency in the conditions of practical application of tax legislation. The mechanism for determining the place of sale ensures proper collection of VAT on goods, works and services that are sold both on the territory of Russia and within the framework of cross-border trade.

It is important to note that this mechanism has its own shortcomings and flaws. As a result, an urgent issue is the development of sound proposals for improving and modernizing the current procedure for determining the place of sale in order to collect and control VAT ^[18].

To begin with, it is appropriate to consider the problematic aspects arising in the process of economic integration within the framework of the Eurasian Economic Union. It is important to note that the provisions established by the EAEU regarding the place of implementation of the TRU have priority over the national legislations of the participating states. As a result, various obstacles may be created to ensure free competition in international trade. In addition, this fact may contradict national goals in the framework of VAT taxation in relation to various categories of works and services ^[19].

As noted earlier, one of the most important problems in the interaction between the EAEU members is the discrepancy in the principles of establishing the place of sale of services provided on the territory of the Union. During the analysis of the norms of the Tax Code of the Russian Federation and the provisions established by the EAEU treaty, it was found that the main contradictions arise regarding design services and services provided in electronic form. It should be noted that disagreements regarding the place of determining the place of implementation of works and services carry additional tax risks for both the business sector and the state ^[20].

To create a holistic picture of the functioning of the mechanism for determining the place of implementation, it is worth analyzing the situation when a Russian company acquires design services from a state that is a member of the EAEU, for example, from the Republic of Kazakhstan. In accordance with the Tax Code of the Russian Federation, the place of sale of these services is generally recognized as the place of activity of the seller, that is, Kazakhstan. Nevertheless, due to the priority of the provisions of the EAEU treaty over the national legislation of the Russian Federation, the place of sale will be the place of activity of the buyer, that is, Russia. In this case, VAT must be paid on the territory of Russia. Consequently, for a Russian organization, additional obligations arise for calculating, withholding and transferring VAT from the budget, since as part of this operation, it will be recognized as a tax agent. Thus, for the buyer there are risks associated with the fulfillment of tax obligations to the budget of the Russian Federation. It is worth noting that in this case, a more preferable solution for a domestic firm would be to purchase services from foreign companies that are not members of the Eurasian Economic Union. In this case, the place of sale will be a foreign country, which will allow the buyer of services to avoid claims from the tax authorities. This solution is especially relevant for the small business sector, whose task is to minimize the risks associated with the fulfillment of tax obligations. Thus, obstacles are created to ensure competition between the services provided by the EAEU member states and similar services performed by other foreign countries. This situation negatively affects the economic development of the EAEU, contributing to disagreements and contradictions within the union.

Services rendered in electronic form also attract considerable attention in the context of the development of modern economic relations ^[21]. It is important to note that for Russia, the import of these services significantly exceeds exports. This fact served as the basis for determining the place of sale of services in electronic form at the place of activity of the buyer in order to increase the amount of VAT collected. Nevertheless, in accordance with the provisions of the EAEU, the place of sale of these services depends on the location of the seller. In other words, when delivering services in electronic form from the EAEU countries to Russia, VAT will be paid abroad. The described situation contradicts the national interests of the Russian Federation with regard to VAT taxation of services within the framework of cross-border trade.

The revealed shortcomings of the procedure for establishing the place of sale of services provided within the framework of the Eurasian Economic Union made it possible to identify specific proposals and areas for improvement. Firstly, it is advisable to unify the classification of various types of property into categories of movable and immovable. In particular, this proposal applies to aircraft, ships and space objects that need to be classified as movable property, due to the specifics of this type of property. It is proposed to retain the definition of the place of sale at the location of movable and immovable property, respectively, while it is necessary to prescribe in the EAEU Treaty (Annex 18) specific definitions characterizing the marked categories of property and their components. This decision will make it possible to unambiguously determine the place of sale in relation to immovable and movable property on the territory of the EAEU countries in order to form general rules for VAT collection when performing works and rendering services within the union. It is assumed that this decision will not significantly affect the formation of the budgets of the EAEU countries. Nevertheless, it will help to avoid practical inconsistencies in the rules for determining the place of sale of services and will ensure high efficiency of tax administration.

In addition, it is proposed to develop a general concept that allows to eliminate disagreements regarding services, the place of implementation of which is established on the basis of various rules in accordance with national legislation and the provisions of the EAEU Treaty. Special attention should be paid to services that are provided in electronic form and are connected to the Internet. An objective solution to the described problem can be the attribution of services in electronic form to the third rule of determining the place of sale. Consequently, in this case, the place of sale will be recognized as the territory of the state where the customer of these services is located. This mechanism has already been reflected both in the tax legislation of the Russian Federation and in the national legislations of the EAEU member states. For example, in Belarus and Kazakhstan, VAT taxation of services in electronic form occurs when an individual acts as a buyer ^[22;23]. In Kyrgyzstan and Armenia, the place of sale is also recognized as the place of activity of the buyer of services ^[24;25]. At the same time, both individuals and legal entities can act as a buyer. A similar solution in the framework of the collection of indirect taxes between the EAEU member states will allow, on the one hand, to achieve compliance with the interests of the participating countries, and on the other hand, it will eliminate barriers that have a negative impact on competitiveness between services provided within the framework of the Economic Union and services imported from other foreign states. This decision will bring significant economic effects for the budgets of the budgetary systems of the EAEU member states. First of all, this will ensure an increase in VAT receipts, since most of the services related to the Internet are provided by states that are not members of the EAEU in the process of importing services. It is important to note that the problem of providing services in electronic form attracts considerable attention of domestic scientists. So, Melnikova N.P. and Vishnevskaya N.G. in their scientific works carried out a complex analysis of the current mechanism for determining the place of sale of services in digital form. In addition, the scientists assessed the tax consequences of providing services via the Internet and identified problematic aspects of administration in the process of providing electronic services. As a result, this issue is relevant and requires an appropriate solution.

The mentioned recommendations will ensure compliance with the principle of the "four freedoms" proclaimed within the framework of the EAEU treaty, and will also contribute to increasing the efficiency of VAT administration in the supply of services to the territory of the member states of the Union ^[26].In general, the mechanism of the place of implementation demonstrates its effectiveness in the context of the development of cross-border trade in services.

Nevertheless, during the analysis of the practical application of the norms of tax legislation, the problems arising in the framework of cross-border delivery of services were highlighted. As a result, it is important to propose ways to improve the procedure for determining the place of sale in the conditions of international trade.

It is worth noting that the theoretical basis of VAT is the consumption of various categories of TRU. Based on this postulate, ideally VAT should occur only on the territory of the state where actual consumption occurs ^[27]. Nevertheless, the international practice of VAT collection has mechanisms that directly contradict the theoretical concept.

The procedure for determining the place of sale in Russia largely corresponds to the theoretical principle of VAT collection. This fact is confirmed by the mechanism for determining the place of sale in relation to goods, when the actual collection of VAT occurs only in the country where the customer of trade items is located ^[28]. In turn, the recognition of the place of sale in relation to services is contradictory. Rules 1-3 regarding the place of sale fully comply with the principle of actual consumption. Regarding the fourth rule, the situation is radically opposite, that is, VAT is levied in a country where actual consumption does not occur in principle. In addition, it should be noted that this rule covers a significant range of works and services that are not named in the first three principles. Therefore, the described mechanism contradicts the theoretical basis of VAT collection.

An expedient solution to the indicated contradiction is the use of the general "default" rule for establishing the place of sale of works and services for the buyer and the exclusion of the rule of determination in accordance with the place of actual activity of the seller. It is worth noting that this decision involves a radical transition to a new mechanism for recognizing the place of sale, which in turn can cause significant financial and time costs. As a result, it is initially recommended to determine the place of implementation for all works and services within B2B operations with subsequent extrapolation of the mechanism to the B2C sector. It is important to note that this decision has been reflected in the scientific works of Russian scientists. So, Tikhonova A.V. is considering the option of complete unification of the place of sale of services by switching to the principle of the country of destination, which has gained wide popularity in international taxation. In addition, Milogolov N.S. and Medvedeva O.V. in their scientific works considered the potential possibility of establishing a general rule for determining the place of implementation of TRU in accordance with the principle of the country of destination ^[29]. This fact indicates the need to reform legislation in this direction.The next important aspect is the problem of determining the place of implementation in relation to support services.

When analyzing court decisions and explanations of authorized bodies, it was noted that some categories of taxpayers abuse the norms of tax legislation. This fact is expressed in the fact that in the international provision of services, the place of sale of which is not recognized as the territory of Russia, taxpayers are trying to classify various types of services rendered as auxiliary in order to avoid VAT taxation in Russia. In addition, taxpayers may unknowingly underestimate the tax base, due to incorrect interpretation of the norms of tax legislation.

To solve this problem, it is proposed to make adjustments to the mechanism for determining the place of implementation in relation to auxiliary works and services. It is necessary to develop industry standards that will prescribe the appropriate criteria for classifying various types of services as auxiliary. These standards should be formed on the basis of the classification of services in accordance with the methodology of the balance of payments of Russia or on the basis of the classifier established by the General Agreement on Working with Services. Thus, this proposal will allow unambiguously classifying the services provided as auxiliary in accordance with industry specifics in order to prevent VAT evasion.

ConclusionThe mechanism for determining the place of sale plays a primary role in the effective functioning of the VAT procedure for goods sold, works performed and services rendered.

Within the framework of this scientific work, the importance and relevance of the topic under study was revealed both for the economy of the Russian Federation and for international cooperation between states. In the process of the analysis, the entire set of tasks was solved, and the goal was fulfilled.

For a holistic disclosure of the topic, the prerequisites for the formation of a mechanism for establishing the place of sale in relation to indirect taxes were studied. In addition, the theoretical foundations for establishing the place of implementation in the Russian Federation were considered, which are based on the establishment of four basic rules for various categories of TRU.

To assess the role of the mechanism for establishing the place of sale, a statistical and economic analysis of cross-border trade in services was carried out, which was based on data from the Central Bank of the Russian Federation. The structure of exports and imports of services in Russia was also analyzed, absolute and relative indicators characterizing the volume of cross-border trade were determined. The results of the study confirmed the importance of the procedure for determining the place of sale in terms of administration and collection of VAT in the international supply of services.

Within the framework of this scientific work, problematic aspects of the practical application of the procedure for determining the place of implementation were identified. On the basis of court rulings and written explanations of the authorized bodies, the main problematic issues arising in relation to the determination of the place of sale have been identified. In addition, on the example of the EAEU, disagreements regarding indirect taxation were analyzed, inconsistencies and contradictions regarding the establishment of the place of implementation that arise between the national legislations of the participating states and the provisions of the Union treaty were revealed.

In order to solve problematic issues in the scientific work, ways to improve the mechanism for establishing the place of implementation are proposed. Firstly, it is necessary to make a legislative division of the categories of movable and immovable property within the framework of the provision of TRU on the territory of the EAEU, while it is proposed to classify air, sea vessels and space objects as movable property due to the practical specifics of this group of property. Secondly, in order to prevent unlawful understatement of tax obligations, it is advisable to regulate the classification of services as auxiliary, taking into account the industry specifics of the activities of individual taxpayers. Thirdly, in order to fully unify the procedure for determining the place of implementation of TRU, it is advisable to radically switch to the principle of the country of destination within the framework of cross-border trade.  In other words, it is proposed to use the general "default" rule for establishing the place of implementation of works and services for the buyer. This solution will increase the level of tax administration of international trade and ensure proper collection of VAT. Thus, this scientific work may be of interest to a wide range of users, since it contains material that allows for a comprehensive understanding of the functioning of the mechanism for determining the place of implementation in the Russian Federation.