The mechanism of VAT exemption for bankrupts will be clarified
December 22, 2020

Draft Law No. 987383-7 "On Amendments to Article 146, Part II of the Tax Code of the Russian Federation (in order to clarify transactions that are not subject to VAT taxation when carrying out economic activities by debtors recognized as insolvent or a bankrupt)" has been submitted to the State Duma.

The bill clarifies that not only the sale of property and property rights of debtors who are declared bankrupt, but also the sale of goods, works, services and property rights in the course of current economic activities after their recognition as bankrupt are exempted from VAT. The wording of this clause stipulated by the draft law eliminates the uncertainty of its normative content.

The new version of the draft law establishes that VAT is not levied on all transactions for the sale of goods (works, services) or property rights of debtors, including transactions for the sale of goods (works, services) manufactured and or purchased (performed, rendered) after the debtors were declared bankrupt.

Alexander Mishchenko
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