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Frequently Asked Questions About Air Freight

Questions & Answers

Under the current tax and accounting regulations, advances issued in foreign currency, as well as advances paid in RUB under contracts denominated in conventional units, are not subject to revaluation for accounting or tax purposes (Clause 10 of PBU 3/2006 and Clause 10 of Article 272 of the Tax Code of the Russian Federation).
Therefore, if the Customer makes a 100% prepayment, the RUB equivalent stated in the closing documents — such as the Service Acceptance Certificate, Goods Delivery Note, and Invoice — will fully correspond to the amount actually paid in RUB, regardless of the date of the closing accounting documents.
If the contract provides for partial prepayment, then in the closing documents, the RUB equivalent of the portion of the foreign-currency amount paid in advance will fully correspond to the RUB amount actually paid, regardless of the date of the closing accounting documents.
The remaining portion of the foreign-currency amount, for which deferred payment is provided — in other words, the outstanding balance — will be calculated using the Central Bank exchange rate applicable on the date the documents are issued, plus any surcharge provided for in the contract, for example: the Central Bank of Russia exchange rate + RUB 2.5.
In addition, please note the following specific features of contracts denominated in conventional units.
Under Clause 1 of Article 167 of the Tax Code of the Russian Federation, the VAT tax base is determined on the earliest of the following dates:

the date of shipment or transfer of goods, works, services, or property rights;
the date of payment or partial payment received against future supplies of goods, works, services, or transfer of property rights.

If the contract provides for an advance payment by the customer/buyer, then upon receipt of partial payment, the contractor/seller calculates the VAT payable using the applicable calculation rate based on the amount of payment received, including VAT, in accordance with Subclause 2 of Clause 1 of Article 167, Paragraph 2 of Clause 1 of Article 154, and Clause 4 of Article 164 of the Tax Code of the Russian Federation.
Thus, when a prepayment is received, the VAT tax base is determined based on the RUB amount actually received by the seller. In turn, the RUB amount of the advance payable by the buyer is determined using the agreed exchange rate of the conventional unit, corresponding to the USD exchange rate established by the Central Bank of the Russian Federation on the payment date, plus any surcharge if specified in the contract.
On the date of shipment of goods against previously received full or partial payment, another moment for determining the tax base also arises in accordance with Clause 14 of Article 167 of the Tax Code of the Russian Federation.
The tax base on the shipment date is determined as the contractual value of the goods excluding VAT, in accordance with Paragraph 6 of Clause 1 of Article 154 of the Tax Code of the Russian Federation.
According to Clause 4 of Article 153 of the Tax Code of the Russian Federation, if goods are sold under contracts where payment obligations are expressed in RUB in an amount equivalent to a certain amount in foreign currency or conventional monetary units, and the tax base is determined on the shipment date, the foreign currency or conventional monetary units are converted into RUB at the Central Bank of the Russian Federation exchange rate applicable on the shipment date.
If payment is subsequently made, the tax base is not adjusted. Any tax differences arising for the seller upon subsequent payment are recognized as non-operating income or expenses in accordance with Articles 250 and 265 of the Tax Code of the Russian Federation.
However, if the contract denominated in conventional units provides for an exchange rate different from the official rate, this agreed contractual rate must be used in accordance with Clause 10 of Article 272 of the Tax Code of the Russian Federation.
Clause 10 states that expenses expressed in foreign currency are converted into RUB for tax purposes at the official exchange rate established by the Central Bank of the Russian Federation on the date the relevant expense is recognized, unless otherwise provided by that clause.
If another foreign exchange rate established by law or by agreement of the parties is used when recalculating claims or obligations expressed in foreign currency or conventional monetary units and payable in RUB, then such expenses, claims, or obligations must be recalculated using that agreed rate.
In addition, under Clause 5 of PBU 3/2006, if a contract denominated in conventional units establishes a different exchange rate, the recalculation must be made using that contractual rate on the relevant dates.