D. N. Varfolomeeva, A. A. Bavrin The Possibility of Introducing VAT for Consolidated Groups of Taxpayers in Russia

Abstract: The consolidated group of taxpayers (hereinafter — CGT) is a voluntary association of income tax payers organizations created on the basis of the agreement on the establishment of CGT in the manner and under the conditions stipulated by the Tax Code, for the purpose of calculation and payment of corporate income tax based on the total financial result of economic activities of these taxpayers. For Russia, the introduction of CGT is a completely new method of payment of the tax, and for the time being consolidation is applied only to corporate profit tax. The introduction of VAT consolidation regime is of great importance since the VAT is one of the main sources of the federal budget revenues in the Russian Federation. But despite all the attempts in this area the VAT consolidation regime is still not applied. The purpose of this paper is to develop a system for application of the VAT consolidation regime in Russia. The research project uses the methods of empirical investigation and general logic methods. The work makes extensive use of the analysis of subject literature and legal documentation. Also, the research analyzes data on foreign experience regarding the VAT consolidation regime as well as VAT performance and collection indicators in the Russian Federation. The research provides comparative description of legal systems and federal forms of state system of Russia and Germany and on this basis the authors demonstrate the possibility of use of the foreign experience to introduce the VAT consolidation regime in Russia for the consolidated group of taxpayers. The paper describes the technique of interaction within the group which pays the aggregate VAT. The interaction should provide the aggregation within VAT of all elements of taxation, and the group will be treated as a single taxpayer. For illustration purposes, the paper shows the schemes of VAT calculation for CGT, distribution of the input and output VAT, the VAT aggregate formation for the group of consolidated taxpayers. The paper gives comparative examples of VAT calculations for CGT and independent organizations. Among the advantages of the VAT consolidated regime are simplification of the tax calculation and reduced volume of paperwork. It is concluded that for Russia the VAT consolidated regime can be very efficient in tax administration and collection.

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