- Eugene Isaev
- September 12, 2012
Electronic Signatures, Electronic VAT invoices & Source Documents
Following changes in the law you can now take the leap into the modern world of electronic (digital) document flow in Russia. Now the Russian law and practices will allow: electronic signatures; electronic VAT invoices; electronic accounting sources documents; electronic contracting; electronic document flow between companies and with state organs (such as the tax authority).
Below we will give a short overview of the relevant laws.
Starting on 1 July 2012, the use of electronic signatures is regulated by the new law No. 63-FZ “On Electronic Signature,” dated 6 April 2011 (hereinafter the Law). The new law expands the types of electronic signatures while granting individuals and legal entities the opportunity to choose exactly the electronic signature that best suits them in the business environment.
Digital signatures can now be legally used for the following purposes:
- exchange of documents electronically between business entities and state organs
- signing off accounting documents and tax returns
- filing of reports to the pension and social funds
- filing of reports to the statistics authority
- filing of various kind of notifications and official reports to other authorities
The possibility of using an electronic signature (ES) in various fields of activity significantly simplifies many procedures and speeds up the process of document flow.
An ES can be used in the following cases:
- flow of documents between a client and a bank;
- submission of documents to supervisory bodies (tax authorities, state insurance funds, state statistical service);
- electronic document flow between organizations and state institutions (to ensure the possibility of engaging in electronic document flow, it is necessary that subjects transmitting data possess electronic signature keys);
- a company’s participation in electronic auctions and tenders for placement of state orders;
- a company’s access to the Russian register of real estate objects and registered rights to those objects;
- use of ES in relations with the customs authorities.
For the above-mentioned fields in which ES is used, there exist certain requirements which must be observed in order to obtain an electronic signature.
Electronic sources documents
The new law on accounting records, which enters into force in 2013 (hereinafter the new law), envisages the possibility of compiling accounting source documents in the form of an electronic document signed with an electronic signature.
The current law on accounting records contains no direct prohibition on the compiling of accounting source documents in electronic form, but none the less this uncertainty in the law, as often as not, has raised numerous questions to which the ministry of finance had to respond (Ministry of Finance letters of 24 July 2008 No. 03-02-07/1-314 and of 11 January 2012 No. 03-02-07/1-2).
The problem was also based in the fact that the provisions of the tax code dictated that all documents sent to the tax authorities during inspection must be put together according to certain established formats (Articles 93 and 93.1). No electronic unified forms of accounting source documents were developed, and therefore, use of them was problematic.
In order to resolve this problem, in March 2012, the FNS (Federal Tax Service) issued two orders, which establish the electronic formats for the most up-to-date and necessary primary documents (FNS Orders No. MMB-7-6/138@ of 5 March 2012 and No. MMB-7-6/172@ of 21 March 2012). These orders relate to the electronic formats of the invoice and bill of lading (TORG – 12).
With approval of electronic unified formats, the possibility arose to present them in electronic form via telecommunications channels with the use of electronic signatures to the tax authorities or their counterparties. It is obvious that, with the acceptance of the main source documents, the share of paper document flow will go down regarding exchange of invoices and bills of lading for VAT.
However, it yet remains unclear whether the tax authorities will demand the compilation of invoices and bills of lading in electronic form for unified formats or not.
On the one hand, the new law cancels the standardization of source documents, and bestows the powers to approve the forms of the source documents on the manager of the organization; these forms should contain a minimum number of mandatory requisites for those forms. Under the new accounting law the source documents must contain at least these mandatory requirements:
a) Title of the document;
b) Date on which the document is drawn up;
c) Name of the entity;
d) Nature of the business operation;
e) Volume and monetary indicators of the business operation (and other such descriptions);
f) Positions of officials responsible for the completion and proper documentation of the relevant transactions;
g) Personal signatures (and other needed identification) of these (above mentioned) officials.
For example, if one company provides services including consulting or legal services to another company in Russia, it must draw up a specific source document, including all the above reference details. In practice, such a document is called a ‘certificate of acceptance of services’. This certificate should be signed by both the service provider and the client.
On the other hand, the above-mentioned orders were issued in order to implement the provisions of Articles 93 and 93.1 of the Tax Code, which compel taxpayers to submit requested documents in electronic form and in certain established formats when an inspection is carried out. Hence, a contradiction exits between the new law on accounting and the tax code.
In one of its letters, the Ministry of Finance confirmed that to submit at the request of the tax authorities documents compiled according to the established formats, one must submit them in hard copy on which a note is inscribed stating that the document was signed using an electronic signature (letter of the Ministry of Finance dated 26 August 2011 No. 03-03-06/521).
In connection with this, we would like to point out that at present, use of electronic documents that do not match the formats set by the FNS may lead to a situation where the tax authorities, when carrying out an inspection, might have legal grounds to request analogues of the documents in hard copy.
Electronic VAT invoices
As a sizeable addition to the field of electronic document flow, in 2012 it has become possible to use electronic invoices approved by order of the FNS (No. MMВ-7-6/138@ dated 5 March 2012). However, it should be mentioned that in order to have the possibility of using electronic invoices, one must follow a certain procedure established by the Ministry of Finance (order No. 50n dated 25 April 2011).
In particular, this procedure stipulates the following features for organizing electronic document flow when exchanging invoices:
- Invoices may be compiled in electronic form solely upon the mutual consent of parties to a transaction, given their possession of the commensurate technical resources and possibilities for accepting and processing those invoices;
- Drawing up and receiving invoices in electronic form should be done through specialized operators in the field of electronic document flow. Exchange of invoices in electronic form is possible both through one and through several operators in electronic document flow;
- Invoices made out in electronic form must be signed with an electronic signature permitting identification of the owner of the signature key certificate, and also establishing the absence of any distortion of the information;
- Obtaining the electronic key certificate must be done from the specialized operator listed among the trusted centers of the RF FNS;
- Electronic document flow must be done for each invoice separately;
- Invoices may be both encrypted and non-encrypted;
- Participants in electronic exchange of invoices must ensure storage of all documents signed using an electronic signature jointly with the signature key certificate.
Applying electronic VAT invoicing will not be compulsory and it is up to the parties of the transaction to decide upon using the system based on mutual consent and availability of compatible technical means. That said, the method of expressing mutual consent of partners to compile invoices in electronic form is not regulated by tax legislation; therefore such consent can be documented via exchange of documents without drafting a special agreement (letter of the Ministry of Finance dated 1 August 2011 No. 03-07-09/26).
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