VAT will bankrupt the dairy industry
According to Head of the Rosselkhoznadzor Sergey Dankvert, the reluctance of many dairy enterprises to participate in the EVC system is a consequence of fraudulent tax schemes. Money is involved in the rejection of EVC, said the official confidently to "Rossiyskaya gazeta", forgetting what taxes the dairy industry pays annually. According to Dankvert, budget losses from tax fraud of dairy companies from 10 to 17 billion rubles per year.
Meanwhile, while the Rosselkhoznadzor officially declares dairy TNCs to be a fraud, the FTS is tightening the screws and successfully bankruptingregional dairy plants.
SWINDLERS IN MILK
According to Dankvert, after the final introduction of the system “Mercury”, the Rosselkhoznadzor learned about fraudulent schemes in dairy industry.
- Traders buy milk from peasants, who as farmers are exempt from paying VAT (value added tax – editor’s note). Then these batches of milk are resold several times, including through shell companies, and in one of the links the goods already enter the market with VAT. One-day firms can be legally reimbursed for fictitious VAT. Thus, funds from the Federal budget are stolen. This is the first scenario of fraud, - said Dankvert in an interview with"RG", quoted by The DairyNews.
The second option is based on the difference in the amount of VAT.
- Manufacturers of products containing natural milk fat pay 10 percent VAT, and with vegetable substitutes - 18 percent (since January 1, 2019 - 20% - ed.). It turns out that if you give out products with a substitute for milk fat for natural, you can illegally save 8 percent of VAT, not to mention the billions earned additionally due to consumer fraud. Such scenarios seem to be used by large companies with international participation in the dairy market.
In this case, there is one question. Doesn’t the state with the increase in VAT make producers of milk-containing products go into the shadows, masquerading as preferential categories? The tax system should be aimed as much as possible at making it unprofitable for business not to pay taxes. Today, however, in order to develop, to be competitive, and sometimes just to stay afloat, the company has to find different ways. Increased tax pressure in any form does not help to solve these problems.
Last year, The DairyNews already raised the topic of schemes of evasion from VAT in the industry and measures to combat this phenomenon by the authorities. Only in the last few years due to the decisions of the state to clear the market a lot of promising enterprises left the market and even more had to abandon development plans. The Federal tax service of Russia commented to The DairyNews the presence of the practice of using for tax evasion in the procurement of agricultural products of the chain of one-day organizations in the agricultural sector. After all, trading organizations often become such companies.
WHO NEEDS TRADERS?
This problem is controversial. While the Federal tax service and now the Rosselkhoznadzor are fighting with industrial dairy enterprises for VAT, in many regions with poorly developed milk production in the sector of agricultural enterprises, traders are encouraged to develop as support for the activities of smallholders. Although isn’t it easier to develop small, medium and large agricultural enterprises that can pay decent wages to rural residents, to provide them with the opportunity to create infrastructure?
A similar situation is developing in many regions with a large official share of milk production in the smallholders, including Tatarstan, Bashkiria and Tyumen region.
It often happens that the trader, pouring milk from many small vendors into the same machine, sells it for recycling. The quality of such raw material to put it mildly leaves much to be desired, but the volumes are accounted for in the statistics. For traders to work and fulfill their goals of supporting “life in the countryside", it is also necessary to create conditions, believe the market participants interviewed by The DairyNews.
- In many regions that declare a large production of raw milk in the smallholders, the authorities support traders. At the same time, they do not pay attention to how traders pay to people’s private farms. In what format does this happen? The trader pays the alleged supplier with money. How do these calculations occur? Of course, it is easier for the tax service to take several dozens of millions of rubles from an industrial plant than to run and collect money from people in villages. Why does the state condone this? Today, traders are often used by the state for a fictitious increase in milk production. This milk supposedly produced in smallholders is taken into account in the statistics. Traders in this case often supply milk to the plant as farmers and production figures are doubled, - said the Director of the Russian Dairy Research Center Mikhail Mishchenko.
There are situations in which we cannot do without traders.
- Dairy processing enterprises should not put on their balances a lot of vehicles and concentrate on the purchase of raw milk, they have other task – processing. If the enterprise is able to afford it - it is the leader, but the majority of plants try to "survive" in the current economic situation therefore traders are a real important segment of the market, – told earlier Head of the Dairy Union of Russia Lyudmila Manitskaya.
Many milk processors emphasize that they worked with traders during the period of lack of milk. At the same time, all suppliers were registered in the Unified State Register of Legal Entities, filed reports. Unofficially, market participants admit that many large companies have tried and successfully saved on VAT, using the services of traders. The majority of respondents refused direct comments.
In addition to open trials against dairy enterprises, there are cases in which the results of the on-site inspection made a decision to prosecute for a tax offense. However, the solution did not have time to enter into force, the company paid further assessed by results of check payments in full, in the end, the relevant materials were not sent to the investigating authorities.
Last year, because of the additional taxes the large Samara dairy company “Alev” went bankrupt. Part of the assets of “Alev” came into the possession of the company “Rusagro”. Officially, the joint-stock company “Alev” has been assessed 30.6 million rubles in taxes. Unofficially - it is unknown, but whatever the amount was, the company was finished off by the banks, the court recovered from "Alev" more than 700 million rubles in favor of VTB and Rosselkhozbank.
At the Voronezh enterprise “Kamenkamoloko” the situation was difficult even in 2014, in 2017 the accounts payable exceeded 63 million. In 2018, at the enterprise there was introduced the management by the claim of tax service. At that time, the company's debt to the tax service was 3.2 million rubles. In January the company was declared bankrupt.
According to the files of Arbitration cases there was introduced the management at the enterprise “Tyumenmoloko” at the end of November 2018 on the claim of tax service. The amount of tax debts is 29.5 million rubles.
In September last year the bankrupt owner of the GC “Lipetskaya maslosyrbaza” Mikhail Budarin in Voronezh was added 33.5 million rubles debt to the FTS.
The Tulsky dairy plant officially paid almost 100 million rubles of additional taxes; similar situations have developed with enterprises in Leningrad and Chelyabinsk regions.
The biggest negative in the whole situation is the nature of inspections. As noted by a number of market participants, they often had an aggressive attitude with threats.
ATTENTION TO ALL
Unofficially, in the last three years TNCs, paying large amounts of additional taxes, were under scrutiny of the FTS. We will remind that companies such as PepsiCo and Danone over the past three years have closed a number of enterprises across the country, citing the optimization of production.
The information on the amount of taxes is not provided on the Internet, according to the law, the FTS can provide such data only with the consent of the companies. The service refrains from commenting, however, in the file of arbitration cases for 2016 there is a number of claims of “DANONE RUSSIA" to the tax service.
In particular, the Kemerovo tax service decided to charge additional taxes to Danone in the amount of more than 14 million rubles. Danone asked the court to admit the decision of the inspection invalid in terms of refusal to apply VAT deductions in the amount of 8.3 million rubles for business transactions with LLC “MolSib". The tax service stated that the documents provided by Danone do not confirm the business relations between the company and contractors.
By courts it is established that the goods have been delivered to the society directly from milk producers, LLC Agricultural production cooperative "MolSib” was not involved in the reception and supplying milk from producer to carrier and from the carrier to the consignee; the only purpose of making the disputed deals is the creation of visibility in the presence of disputable business operations aimed at realization by society of the right to receive tax deductions for VAT.
Dairy companies are not the only ones in Russia that have disputes with the FTS. The structure of LLC "Lebedyansky" owned by PepsiCo reached the Supreme Court in a dispute with the tax service. The dispute began with the fact that by results of control inspections the service added to “Lebedyansky” 223.4 million rubles in profit taxes and 190.5 million rubles of value added taxes, 85 million rubles of penalties and also imposed payment of penalty for failure to pay 80 million rubles. The basis of the claims of the tax authorities was the non-representation of more than 1 billion rubles of the company's costs for advertising and marketing services (they were provided through the management company LLC "PepsiCo holdings") in the tax base and the illegal inclusion of bonuses to buyers for the purchase of a certain volume of products in the cost.
At the beginning of the year, the court reduced the amount of claims to the Nizhny Novgorod agricultural holding “Russkoye pole". According to the investigation, the managers of the head organization of the agricultural holding - LLC MC "Russkoye pole" - created a scheme of tax evasion as a result of "separation of a single business structure into controlled and interdependent organizations in order to minimize tax liabilities".
For the grain market tests, which the dairy market is taking now, have already been passed.
- Earlier, the grain market was one of the most untraceable, purchases were made by the emissary with a bag of cash on his shoulders – today this practice has disappeared. We have been talking about traceability of supplies for a long time. In the dairy market, all this is tied to the standards and accompanying documents, and for grain supplies it was achieved as a result of the implementation of the Charter (Charter in the sphere of turnover of agricultural products - ed). I can say that the traceability has been achieved de facto due to to the tax service. The Charter has been working for a year and a half; it has led to the "whitewashing" of the market. At the moment it is already a passed stage for us. It is clear that it is impossible to speak about absolute transparency, but we move to it very actively, - noted the President of the Russian grain union Arkady Zlochevsky in the comment to The DairyNews.
THE BOTTOM LINE
At the end of 2017 the Federal tax service stated in the Public chamber that it is necessary to regulate the market of dairy traders, as many of them are only a chain of fraudulent schemes for tax evasion and damage the state budget.
Representatives of the industry then stressed that first of all it is necessary to remove the reason for the possibility of fraud with taxes. If we now fight against traders, we may throw the dairy industry a decade ago in its development, because only large dairy companies are able to not use the services of traders, and not all of them.
The cause of the problem was called a unified agricultural tax.
- If we optimize the tax base for agricultural producers and remove the conditions for VAT from the current chain with the purchase from producers using the unified agricultural tax, it will make it impossible for dishonest traders to carry out fraud with VAT, stressed earlier Lyudmila Manitskaya.
Meanwhile, according to the new rules of the Tax code of the Russian Federation since January 1, 2019, all payers of the unified agricultural tax (UAT) in Russia become VAT payers.
In Russia, the Charter in the sphere of turnover of agricultural products aimed at eliminating tax gaps and restoring fair competition has started its work. Will it help? As they say, if there was someone to help, it would...
It is estimated that Russia has one of the world's highest tax burden on GNP - about 40%. For reference - the tax burden in China is about 20% of GNP, in Kazakhstan - 22%, in the US – 27%. At the same time in Russia for investment remains about 20% of GNP.
The current stage of development of the industry requires significant investment. Meanwhile, only few enterprises are actively developing. However, all the authorities do is declare the milk producers to be scammers, tighten the requirements and remotely promise a "regulatory guillotine". By the time when the excess requirements can come to naught, the new ones will appear in Russia, and milk processing in the regions will die out.
However, according to the Federal tax service, the number of tax audits in Russia is declining... As well as the number of companies in the “gray trading schemes", according to market participants. And “Mercury” has nothing to do with it.
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