Overview: Import traceability system in 2021
On 1 July, a two-year experiment in organising the traceability of imported goods came to an end. The system is now operating on a permanent basis and concerns not only traders in FEA, but also all businesses that in one way or another have to do with imports. Working under the new rules involves several important changes.
Why goods traceability is needed and who it concerns
The traceability system for imported goods is needed to combat grey imports and illegal trafficking. It differs from marking in that it does not track each item, but the entire batch at once.
The traceability system will affect everyone who deals with imported goods: both importers and their partners in the country who buy batches of goods from them, resell them, dispose of them, seize, transfer them or take them out of the country. The form of business registration or taxation system does not matter: the requirements apply to both legal entities and sole traders.
In order to track goods, new forms of documents have been introduced, details of registers have been supplemented and a VAT return has been changed. So the arrangements for traceable imports are still to be learnt.
The regulatory framework governing the operation of the system of traceability of goods has been defined. It consists of Federal Law 371-FZ, basic government regulations Nos. 1108, 1109 and 1110, as well as several by-laws. All these documents are already in force.
Which goods are subject to traceability from 2021
The list of goods that are included in the traceable list is not too extensive yet. They are:
- household refrigerators and freezers as well as refrigeration and freezer equipment;
- heat pumps;
- fork-lift trucks and other forklifts;
- bulldozers, excavators and other special equipment;
- washing machines;
- monitors, projectors, televisions;
- integrated circuits;
- metal furniture and wooden furniture for retailers.
This list can both shrink and be supplemented by new categories. And, if it doesn't include the types of goods you work with, you shouldn't ignore the new order.
It is true that traceability does not apply to several categories of goods at once. The list of these exemptions is extensive. They are listed in the letter of the Ministry of Finance of Russia dated 30.03.2021 No 27-01-24/23047 (point 6 of the draft Procedure of functioning of the national system of goods traceability).
No penalties so far
The good news is that taxpayers will not be liable for violation of the goods traceability requirements. But amendments to the CAO, which will regulate penalties, have already been prepared and are under public discussion. They should come into force on July 1, 2022. And this is an opportunity to prepare for working under the new rules for all market participants involved in foreign trade.
But it is not a good idea to postpone fulfilling the obligation to record goods subject to traceability. The fact is that this could lead to errors in the recording of information about those that entered the country after 1 July this year and by the time the changes to the CAO come into force the necessary information could be lost. As a result, the fine could "catch up" with your company even a year later.
How import traffic will be monitored
The main tool for tracking goods will be the goods lot registration number - the RNPT. It has to be included in the invoices, UDP, Traceable Goods Transaction Report and VAT declaration. The procedure for obtaining RNPT is different for different categories of imports.
If the goods are imported from the EEU countries, then the taxpayer must send a special notification to his tax office. This notification will then assign the goods to the tax inspectorate and they will then enter the goods into the tax documents.
It is possible that by the time traceability was introduced, the company already had goods subject to the new rules in its inventories. In this case, it is necessary to notify the tax authorities. This can be done at any time, but it must be done before the goods are sold.
In addition to the RNPT other new details will have to be entered in the documents: measurement units and quantity of traceable goods. These can be found in the All-Russian Classification of Units of Measurement (OKEI).
All these data must be indicated in the invoices (including registers of received and issued invoices), UPDs and VAT declarations.
What you need to do now
In order not to be "caught" in a year's time because of import accounting errors, you need to act today.
- Switch to electronic document management (if you have not already done so) with your counterparties.
- Compare the list of goods subject to traceability (this can be found in Government Decree No. 1110 of 01.07.2021 "On Approval of the List of Traceable Goods") with your own nomenclature using the TN VED classification.
- Obtain RNPTs and enter them in your accounting system.
- Do not forget to check the status of the warehouse. If it has traceable goods in it as of 1 July that have not yet been sold - send a notification to your FIRS.
- Finally, group the goods in the 'HS Nomenclature' directory and fill in all required details, including 'traceable goods' and 'country of origin'.
Changes in accounting and reporting always cause problems. It is possible that issues will also arise for those companies that now need to bring their accounting systems and paperwork in line with the regulations on the traceability requirements for imported goods. Here are some of them.
Is it true that the exchange of invoices needs to be done through EDI only?
Yes, it is. As of July 1, 2021, invoices, including corrective invoices when selling traceable goods, are only prepared electronically, and organisations and sole proprietors must ensure that they are received through Russian EDI operators.
Is it possible to terminate the traceability of any imported goods included in the List defined by the Government Decree?
Termination of traceability is possible in several cases:
- If the Government removes a product category from the list of goods subject to traceability;
- In the event of the disposal of goods subject to traceability not related to sale, as a result of which the title of the trafficker ceases, as well as in the event of their burial, neutralization, confiscation, disposal or destruction, irretrievable loss due to force majeure;
- if the goods have been used in the production of other goods on the territory of Russia (e.g. as components, the traceability of such goods ceases at the Russian manufacturer);
- upon sale or donation to natural persons (e.g. the traceability of a fridge ceases upon its sale to the purchaser in a shop);
- In connection with the exportation of goods outside Russia;
- Upon sale of goods to diplomatic missions and consular offices and similar institutions;
- In case of shortage of traceable goods which is detected by a participant in their turnover during the inventory.
What about fixed assets commissioned before 1 July 2021 if they are recorded in off-balance sheet accounts as low-value items?
They are subject to traceability but can be notified to the tax authorities before transactions with them, on receipt of RNPT.
Will a company lose the right to a VAT deduction if it makes a mistake in accounting for traceable goods?
No. There are no sanctions for this in the Tax Code at all. Moreover, clause 2 of Article 169 of the Tax Code states explicitly that the taxpayer does not lose the right to deduct the VAT if the accounting of traceable goods is mistaken.
If you still have questions about the tax implications of the new system, write to us and we will help you find a solution.