The Federation Council approved an important law that changes the rules of the game for businesses in tax matters. Now buyers can breathe a sigh of relief: when VAT rates change, the increased tax will not be collected from them if the contract was concluded before the rate change. This innovation shifts the financial burden onto sellers, eliminating a gap in regulation.

The problem arose when sellers demanded that buyers pay tax on top of the contract price, especially if the latter could not deduct it. Now, if the parties have not provided for the procedure in case of a tax increase and have not changed the contract price, the VAT amount will be calculated using the calculation method based on the price specified in the contract.

Article 168 of the Tax Code was amended following Constitutional Court ruling No. 41-P, which declared unconstitutional the provisions that allowed sellers to recover from buyers an additional amount to compensate for the consequences of the tax increase. This legal dispute concerned a license agreement for foreign software concluded in 2019, when two years later such transactions were subject to VAT.

If the law is signed by the president, it will enter into force one month after its official publication, but no earlier than the 1st day of the next VAT tax period. This decision is important for businesses as it protects the interests of buyers and eliminates unjust enrichment of sellers. Businesses should carefully review their contracts and ensure they comply with the new requirements.

Thus, the law not only corrects gaps in regulation but also establishes a fairer balance between the parties to the contract. This is a step forward in protecting buyers' rights and an important benchmark for businesses in tax matters.

Legiscan