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Consequences of Applying Incorrect Value-Added Tax Rate by Parties
Osina Dina

Lecturer of Chair of Legal Theory and Comparative Law, Moscow State Institute of International relations (MGIMO-University) of the Ministry of Foreign Affairs of the Russian Federation

119454, Russia, g. Moscow, ul. Prospekt Vernadskogo, 76
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Basaed on the analysis of the position of the Supreme Court of Russia regarding a relevant case, the author of this article analyzes consequences of applying incorrect value-added tax rate by parties. In particular, the author focuses on the following issues: 1) the scope of the contractual judgement made by parties when concluding a treaty; 2) whether presentment of VAT payable can be considered to be an alteration of a treaty; and 3) consequences of applying the zero tax rate instead of a 18 % rate, and vice versa. Osina bases her research on a detailed analysis of tax and civil laws as well as positions of supreme judicial authorities. Based on the results of the research, the author concludes that in fact the position of the Supreme Court of Russia regarding the matter creates contradictions in VAT taxation regimes under the same treaty. Moreover, related issues regarding a buyer's opportunity to apply for VAT to be deducted from a sum payable is left uncovered by the Supreme Court and so is the question about the actual amount of tax liability of a seller. This creates gaps in the tax law and may provoke judicial disputes. 

Keywords: Scope of discretion of parties, Change of price, Civil code of Russia, Tax Code of Russia, Peremptory rules, VAT recovery from counterparty, Supreme Court of Russia, Incorrect rate, Value-added tax, Indirect nature of VAT



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