Currently, the organizations and sole proprietors applying the simplified taxation system (STS) are VAT exempt (except for import and agent VAT). However, many things will change from the next year due to amendments introduced by the Federal Law No.176-FZ dated 12/07/2024. Some STS taxpayers will start paying VAT. But not all. All depends on the income gained in 2024.
For instance, if the income of an organization or sole proprietor in 2024 does not exceed RUB 60 mln, in 2025 they will not pay VAT as STS taxpayers (until the income for 2025 exceeds RUB 60 mln). This rule applies both to those who used STS in 2024 and those who will decide to switch to that special tax treatment from the following year. The only difference for them is the method of determining the income for the purpose of its comparison with the threshold value. For example, if a company applies STS in 2024, it should take account of the income gained using the cash method. However, if a company applies general taxation system in 2024, for the purpose of comparing with the threshold amount, it will have to take the income determined by accrual method.
If the income in 2024 exceeds RUB 60 mln, the STS taxpayer will have to pay VAT from 01/01/2025 and, consequently, issue tax invoices with VAT to its buyers and customers. Here it will have to chose the VAT rate to be applied: generally established (20%) or reduced (5% or 7% – depending on the amount of its income in 2024). If an STS taxpayer decides to apply the generally established VAT, it shall be entitled to VAT credit, if all the necessary conditions are fulfilled. If it decides to apply the reduced rate, VAT credit is not granted.
As regards the reduced VAT rate, there are threshold amounts as well: for the income of up to RUB 250 mln, the rate will be 5%; for the income from RUB 250 to RUB 450 mln in 2024, the VAT rate will be 7%.
In this case, no application for VAT rate selection shall be submitted; the selected method will be determined by a tax office based on VAT return.
From 2025, the persons cooperating with STS taxpayers will get from some of them the tax invoices with specified VAT (including the tax stated at reduced rates). This VAT may be subject to rebate as in case of purchase from contractors within the general taxation system.
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