New foreign product suppliers are actively entering the Russian market, delegating warranty repair functions to Russian companies. Reimbursement for warranty repairs may not be subject to VAT provided certain conditions are met. At the same time, if no VAT exemption is applied, such Russian VAT will be a non-deductible expense for a foreign company.
When applying the VAT exemption in practice, it may be difficult both to calculate the cost of warranty repairs that is not subject to VAT and to document the legitimacy of the exemption. For more information on VAT exemption issues and Kept services to minimize disputes with the tax authorities on VAT exemption legitimacy, see the brochure.
