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According to Art. 53 of the Tax Code of the Russian Federation, the tax base represents the cost, physical or other characteristics of the object of taxation . The tax base for value added tax is determined depending on the object of taxation, as well as other amounts associated with payments for goods (work, services). In Art. 146 of the Tax Code of the Russian Federation states that the following operations are recognized as the object of taxation for value added tax:
Carrying out construction and installation work for own consumption
It is worth noting that the concept of “ construction and installation work for one’s own needs ” is not included in the legislation. This concept is mentioned only in the Procedure for filling out Form N P-1 “Information on the production and shipment of goods and services”, approved by Rosstat Order No. 278 of November 12, 2008 (hereinafter referred to as the Procedure). Clause 19 of section of the Procedure states that construction and installation work performed in an economic way includes work carried out for its own needs by the organization’s own resources. These also include work for which the organization allocates workers for the construction of the main activity and pays them wages according to construction orders, as well as work performed by construction organizations for their own construction. Thus, construction and installation work includes the cost of such work performed for one’s own consumption in an economic way. The exceptions in this case are: - the cost of work performed by contractors; — the cost of work taken into account as part of production costs. The cost of construction and installation work is reflected in line 07 of form N P-1. If the cost of such work falls under the above restrictions, then, accordingly, they are not included in line 07.
Transactions that are not subject to VAT taxation
Article 146 of the Code establishes a list of transactions that are not recognized as subject to VAT taxation. This list primarily includes the operations specified in paragraph 3 of Article 39 of the Code.
Thus, the transfer of property, including property rights, is not subject to VAT if such transfer is of an investment nature, for example, as a contribution to the authorized capital of a subsidiary.
See letter of the Ministry of Finance of Russia dated June 28, 2010 No. 03-07-07/42
The transfer of social, cultural and housing and communal services, as well as roads, electrical networks, substations, gas networks, water intake structures and other similar objects to state authorities and local governments, on a gratuitous basis, is not recognized as an object of VAT taxation. If such a transfer is carried out by decision of the specified bodies to specialized organizations that use or operate objects for their intended purpose, then this operation is also not subject to taxation.
