Bazhenov, A. A. Value-Added Tax: Separate Accounting When Granting Loans

Abstract: The article concerns and analyzes a practical situation that is often faced by enterprises when they grant or issue a loan to other enterprises or physical entities. Noteworthy that performing transactions on granting cash loans, enterprises do not take into account that such transactions, first of all, are related to ‘tax transactions’ but the Tax Code of the Russian Federation releases them from value-added taxes, and secondly, these transactions require a separate accounting of general business expenses and ‘input’ VAT. The research methodology is based on the dialectic method of knowledge that means that economic relations and phenomena are studied from the point of view of their development and relation, methods of systems and comparative analysis, mathematical economic methods of data research, methods of synthesis, graphic modeling and methodology of the theory of statistics. In the course of the analysis the author has established that transactions on granting cash loans including interest are ‘tax transactions’ but pursuant to Sub-clause 15 of Clause 3 of Article 149 of the Tax Code of the Russian Federation, these transactions are not taxable (i.e. exempt from taxation) in the territory of the Russian Federation. General economic expenses and ‘input’ VAT that relate to granted loans should be divided between taxable and non-taxable transactions. In such a case part of the general economic expenses as well as ‘input’ VAT will be considered to be ‘other expenses’ according to the Russian Accounting Standards 19/02 and 10/99. For the purposes of profit taxation, other expenses can be taken into account towards decreasing the tax base pursuant to Sub-clause 49 of Clause 1 of Article 264 of the Tax Code of the Russian Federation as other expenses related to production or sale if the granted loan is an interest loan. If this is a non-interest loan, then according to Clause 16 of Article 270 of the Tax Code of the Russian Federation expenses related to such transactions will not decrease the tax base of profit taxes.

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