en
Is there a tax liability due to the free transfer of property to public and social funds?
Is there a tax liability due to the free transfer of property to public and social funds?
In recent years, the transfer of funds and property to funds created for public and social purposes has become relevant. Are VAT-paying individuals or legal entities subject to VAT when they give their movable and immovable fixed assets to state institutions or funds created for public and social purposes free of charge? tax experts clarify the question.
Pursuant to Article 160.4 of the Tax Code, it is transferred by legal and natural persons and transferred to state bodies (institutions) of immovable properties, intangible assets, as well as enterprises in the form of a property complex, as well as the list of which is approved by the body (institution) determined by the relevant executive authority. and gratuitous giving to funds created for social purposes is not considered a taxable transaction.
Example: "X" LLC is a VAT payer. He bought a vehicle worth AZN 30,000 (without VAT) from another VAT taxpayer and gave it to the Karabakh Revival Fund free of charge. "X" MMC paid 30,000 manats to another taxpayer's bank account for the vehicle, and 5,400 manats (30,000 x 18%) of VAT was paid to the taxpayer's deposit account. At this time, LLC "X" will not be liable for VAT as it provided the vehicle free of charge according to Article 160.4 of the Tax Code. Thus, the enterprise will declare it to the state budget by registering it in the non-value added tax line of Appendix 3 section of the VAT declaration.
But in this case, will "X" LLC be able to offset the VAT paid to the other party in the October VAT declaration?
According to Article 175.6 of the Tax Code, the amount of VAT paid for fixed assets provided free of charge to state bodies or funds created for public and social purposes is offset. It is clear from this that "X" MMC will be able to easily replace the 5,400 manats it paid for VAT in box 308 of the October VAT declaration.
In recent years, the transfer of funds and property to funds created for public and social purposes has become relevant. Are VAT-paying individuals or legal entities subject to VAT when they give their movable and immovable fixed assets to state institutions or funds created for public and social purposes free of charge? tax experts clarify the question.
Pursuant to Article 160.4 of the Tax Code, it is transferred by legal and natural persons and transferred to state bodies (institutions) of immovable properties, intangible assets, as well as enterprises in the form of a property complex, as well as the list of which is approved by the body (institution) determined by the relevant executive authority. and gratuitous giving to funds created for social purposes is not considered a taxable transaction.
Example: "X" LLC is a VAT payer. He bought a vehicle worth AZN 30,000 (without VAT) from another VAT taxpayer and gave it to the Karabakh Revival Fund free of charge. "X" MMC paid 30,000 manats to another taxpayer's bank account for the vehicle, and 5,400 manats (30,000 x 18%) of VAT was paid to the taxpayer's deposit account. At this time, LLC "X" will not be liable for VAT as it provided the vehicle free of charge according to Article 160.4 of the Tax Code. Thus, the enterprise will declare it to the state budget by registering it in the non-value added tax line of Appendix 3 section of the VAT declaration.
But in this case, will "X" LLC be able to offset the VAT paid to the other party in the October VAT declaration?
According to Article 175.6 of the Tax Code, the amount of VAT paid for fixed assets provided free of charge to state bodies or funds created for public and social purposes is offset. It is clear from this that "X" MMC will be able to easily replace the 5,400 manats it paid for VAT in box 308 of the October VAT declaration.