VAT is an indirect tax or a direct one. How do direct taxes differ from indirect taxes?

19.10.2019

The division of taxes into direct and indirect is a variant of their classification depending on the method of collection. What are direct and indirect taxes? Why is such a division necessary? Which taxes are direct and which are indirect? How to differentiate them? We will consider the answers to these and other questions in the material below, and also provide a single table with a list of taxes broken down into direct and indirect.

Introduction to direct and indirect taxes

Taxes levied on taxpayers can be divided into the following types:

at the place of receipt (Article 12 of the Tax Code of the Russian Federation):
- federal (clause 2);
- regional (clause 3);
- local (clause 4);

by applicability:
- general;
- special;
for withdrawal of funds (collection method):
- straight;
- indirect;
by subject of collection:
- With individuals;
- from legal entities.

3. Property tax is levied on companies and individuals.

Property is divided into movable and immovable. The concept of movable and immovable property is given in Art. 130 Civil Code of the Russian Federation. Real estate everything that is connected with the earth is considered (subsoil, the earth itself, buildings and structures that are located on it). For a building to be considered real estate, it must be impossible to move it from its location without destruction. Communications must be connected to it. Movable property is considered to be everything that does not fall under the concept of real estate: money, shares, deposits, collections, cars, weapons, etc.

Since 2019, movable property is exempt from taxation.

The base for calculating the tax is its average annual value, with the exception of objects whose value is calculated according to cadastral value(Clause 2 of Article 375 of the Tax Code of the Russian Federation). Tax rates are specified in Art. 380 Tax Code of the Russian Federation. This is a regional tax.

For current information on changes in property tax, see the materials in the special section “Organizational property tax - rates, period, etc.” .

Property tax for individuals provides for the withdrawal of tax on real estate objects specified in Art. 401 of the Tax Code of the Russian Federation. It applies to local taxes. The provisions on the cadastral value of real estate objects also apply here (Article 403 of the Tax Code of the Russian Federation). Tax rates and tax benefits are provided for in Art. 406 and 407 respectively. Tax calculation is carried out tax service by sending receipts for payment.

Land tax is levied on organizations and individuals who own land plots, taking into account their cadastral value. This is also a local tax. There are land plots in respect of which tax is not levied (clause 2 of Article 389 of the Tax Code of the Russian Federation). The tax rate is established by Art. 394 Tax Code of the Russian Federation. Organizations carry out tax calculation and payment independently. For individuals, the Federal Tax Service calculates the tax by sending them receipts for payment.

For information on the specifics of collecting land tax, see the material “Object of taxation of land tax” .

Transport tax is classified as regional. It is paid by the owners of cars, airplanes and other vehicles listed in paragraph 1 of Art. 358 Tax Code of the Russian Federation. Tax rates are given in Art. 361 Tax Code of the Russian Federation. Increasing coefficients are provided (clause 2 of Article 362 of the Tax Code of the Russian Federation) for cars costing more than 3,000,000 rubles. The Code allows for a 10-fold increase in the tax rate, subject to the adoption of a corresponding law by the regional authorities. In relation to car owners, it is envisaged to accept different tax rates depending on the year of manufacture of the car and its environmental class. The calculation and payment of transport tax by legal entities is carried out independently, and by individuals - on the basis of notifications from the Federal Tax Service.

What are indirect taxes?

Indirect taxes are classified as such because they are levied not on the manufacturer, but on the final buyer. Indirect tax is included in the price of a product or service. The use of these taxes allows us to collect significant funds for government spending. Indirect taxes are used to tax goods in high demand.

Indirect taxes include:

Indirect taxes in the form of VAT provide more than 35% of all revenues to the country's budget. This is a federal tax, the essence of which is that it does not tax the entire cost of a produced good or service, but only the added value that appears at different stages of production.

This tax applies to the sale of most goods and services. The tax is not levied on the following categories of goods and services (Article 149 of the Tax Code of the Russian Federation):

from certain goods and services for medical purposes (subclause 1, clause 2);
when providing premises for rent to foreign organizations (clause 1);
from medical care services for a citizen who has an appropriate medical certificate (subclause 3, clause 2);
from the services of organizations providing preschool education of children (subclause 4, clause 2);
from food products from canteens in medical and educational organizations (subclause 5, clause 2);
from the services provided archival institutions(subclause 6 clause 2);
when transporting passengers in a city or other settlement (subclause 7, clause 2);
when providing funeral services (subclause 8, clause 2);
from other types of services (subclause 9-34 clause 2).

You will find answers to questions regarding VAT taxation objects in this material.

The list of goods whose sales are exempt from VAT is given in clause 3 of Art. 149 of the Tax Code of the Russian Federation. If there are transactions subject to and not subject to VAT, the company is obliged to account for them separately. The same is necessary in the case of using different VAT rates. The rates used for VAT (Article 164 of the Tax Code of the Russian Federation) are as follows: 0, 10 and 18%.

A preferential rate of 0% is used for export operations, international transport, in the space industry, and when transporting oil and gas (clause 1).

The 10% rate is intended to tax the sale of goods and services:

for food purposes (subclause 1, clause 2);
for children (subparagraph 2, paragraph 2);
medical purposes (subclause 4, clause 2);
periodical press (subparagraph 3, paragraph 2);
when transported by plane and other air transport;
when purchasing breeding stock.

Sales of all other goods and services (except those mentioned above) are taxed at a rate of 18%.

With quarterly income below RUB 2,000,000. a company or individual entrepreneur has the right to apply and receive an exemption from VAT.

Read about how to obtain VAT exemption.

Indirect taxes in the form of VAT are the most complex and controversial to apply. Therefore, there are quite a lot of lawsuits regarding them.

Indirect taxes in the form of excise taxes were initially intended to be used only to tax goods, the demand for which negatively affects the health of the people purchasing them. This applies to tobacco products and alcohol. By introducing this tax they wanted to reduce the consumption of harmful products. Additionally, it was supposed to be extended to luxury goods.

Currently, excise taxes are included in the cost of the following goods (Article 181 of the Tax Code of the Russian Federation):

alcoholic drinks;
tobacco products;
passenger cars;
motorcycles;
gasoline and diesel fuel;
various engine oils;
kerosene for refueling aircraft;
natural gas;
fuel for stoves.

For methods and formulas for calculating the amount of excise taxes, see .

Tax rates for each type of excisable goods are set out in Art. 193 Tax Code of the Russian Federation. Currently, the rates in the Tax Code are indicated up to 2020 inclusive. Indirect taxes in the form of excise taxes are calculated based on the tax base of each excisable product. The amount of excise tax is calculated based on the results of each month of sales (Article 192 of the Tax Code of the Russian Federation).

Find out about excise tax rates on fuel.

What is included in direct and indirect taxes , Let's look at it in the table.

Table of direct and indirect taxes

All types of taxes can be summarized in a table:

Type of tax	Tax name
Type of tax	Tax name	federal	regional
Direct taxes	For individuals

	Property tax
	Transport tax
	Land tax
	Water tax
	For legal entities
	Income tax
	Personal income tax from employees
	Property tax
	Transport tax
	Land tax

	Gambling tax
	Water tax
	Trade fee
Indirect taxes
Indirect taxes

Results

The legislation of the Russian Federation provides for a gradation of taxes into direct and indirect. Direct taxes are paid by the taxpayer on his income. Indirect taxes are included in the price of a product or service and are paid by the final buyer. And it is the responsibility of the taxpayer to timely transfer received indirect taxes to the budget.

Since ancient times, there have been some fees from the people. Those fees cannot yet be called government fees. After all, the state machine, which exists at the expense of public contributions, did not yet exist. However, the role of the state, which collects royalties from citizens, was played by the king. During the transition from the Middle Ages to the present time, many revolutions took place in the system of government. Government bodies appeared that began to develop infrastructure and laws within the state. The number of such deductions began to increase. The fees were constantly changing. As a result, more modern version taxes began to appear less than 200 years ago.

It is known that throughout the history of mankind, when civilization developed to a certain level, there was no state that could further develop and exist without taxes. However, no matter how high the need for public funds may be, taxation should not worsen the interest of payers economic activity. This main principle taxation.

Taxes are obligatory payments by individuals and legal entities to the treasury to ensure its functions. Taxes play the most important role in the state. Firstly, they represent the main source of financing government needs. Secondly, taxes allow you to regulate the economy and stimulate its activities. This is achieved through tax incentives.

For example, the state wants to stimulate some type of economy or some enterprise, then it provides the enterprise with tax benefits.

Taxpayers, or individuals, are people, by whom we mean citizens of the Russian Federation, as well as people who have another citizenship, and persons who do not have citizenship.

Legal entities are organizations that have separate property and are liable with obligations and all their property. They can buy and sell property and personal non-property rights on their own behalf. And also bear responsibilities, act as an injured party or as a defendant in court.

What is the tax system?

Tax system - this is a combination of taxes, forms and methods of its construction and collection, which is determined by state legislation. The tax system must quickly adapt to new circumstances, that is, be flexible. It should easily adapt to the country's economic changes. It must ensure the redistribution of gross domestic product and play the role of an effective instrument in the hands of state economic policy.

There are a lot of taxes. How are they distinguished? There are several taxes. On the first basis there are: declaration, advance and cadastral.

Declaratory- when a person personally fills out a declaration and informs the authority about the amount of his income.
Advance- these are those that are charged in advance, in advance. For example, income tax levied on wages.
Cadastral- these are those objects that are registered with the state. They are taxed. For example, a person who owns a piece of land must regularly pay tax on the piece of land, and the owner of an apartment pays tax on the apartment.

IN Russian Federation A taxation system consisting of three levels was introduced. What does it mean? This means that our taxes can be divided into federal, regional and local taxes. The Western tax system is different in that it has two levels.

Taxes can also be divided into direct and indirect.

Direct- these are those that are levied by the state on the earnings or property of taxpayers directly.
Indirect- These are taxes on goods or services that are fixed in them in the form of an addition to the price.

Below we will consider these two groups of taxes in more detail.

Functions of taxes

They perform the following functions:

Social significance, as they contribute to redistribution from rich sections of society to poor ones, from one sector of the region to another. This is especially true for progressive taxation.

What are direct taxes?

One of them is the income tax - personal income tax. It is measured as a percentage of the total earnings of the individual who pays it. For citizens who live in Russia more than 180 days a year, these taxes are subject to a rate of 13% of income. In addition to direct income, this tax also applies to the sale of property that the seller owns for less than three years, rental of various property, as well as income from business located outside of Russia, and different types winnings. If you inherited property, then you are exempt from tax. An exception is the rewards paid to heirs, authors of works of science, literature, art, as well as discoveries and inventions. To receive the inheritance you will need to pay the state. fee for issuing a certificate of inheritance. The amount of duty paid will depend on the degree of relationship. There are a number of citizens who are exempt from the state. duties.

Another direct tax is property tax. The objects of taxation here will be shares in the ownership of the object and real estate: residential buildings, rooms, apartments, country houses, garages. There are also land and transport taxes.

What are indirect taxes (indirect)?

Indirect- they are also indirect taxes. These are taxes on goods and services that are extracted as an addition to the price of the product. It turns out that such a system of linking taxes to goods makes the end consumer the taxpayer. Moreover, the tax does not depend on the amount of income of the enterprise or individual entrepreneur who produced the goods.

There are several types of indirect taxes:

Excise taxes. These taxes take the form of an amount that is added to the price of the product. After the goods are paid for by the consumer, the excise tax is charged to the budget. In the Russian Federation, tobacco, fuel, and cars are considered excisable.

This tax is an indirect tax, which is levied on goods for mass consumption. The payers of excise tax are the final consumers. This tax is included in the price of the product. The percentage of excise tax in the final cost of this product may be higher than 60% of its price.

Excise taxes perform regulatory and fiscal functions. Thus, excise taxes create a balance between supply and demand. At the same time they are speaking important article budget.

This tax applies to luxury items and goods that may cause harm to society. The amount of excise tax and the reason why it is added depends on the specific product.

For example, there was an excise tax on alcohol for most of the existence of the state. On the one hand, for a certain part of society, this product forms cultural and personal traditions and is everyone’s personal choice. But when alcohol is consumed alone, this is an alarming symptom. To avoid increasing this problem, the government is trying to reduce alcohol production. Therefore, adding excise taxes is the only feasible method.

Cigarettes are taxed because they pose a health risk to their consumers. Illnesses and other health problems caused by smoking bring smokers to government health care facilities. This increases government costs for services in medical institutions and payment of benefits due to loss of ability to work for some time. Therefore, adding excise taxes on tobacco products is a source of financing for solving health problems caused by the consumption of tobacco products.

Cars are also subject to excise duty. Tax collection on this type of product occurs in the interests of the state treasury. This is explained by the fact that the vast majority of passenger cars that have large engine volumes are produced outside the Russian Federation. It turns out that the excise tax acts as a protection for passenger car manufacturers who operate in Russia and maintain their competitiveness.

Adding excise taxes to goods performs the following useful tasks:

impact on production volumes and consumption volumes of goods that are subject to excise taxes;
influence on the production structure, namely improving the quality of the structure and consumer qualities of products;
regulation of the volume of revenue from excisable products;
limiting the volume of production of goods that are harmful to society;

Excise taxes also have disadvantages. These include the controversial nature of some tax rates.

Value added tax- abbreviated as VAT. This is a consumption tax. Financial contributions to the budget from it will not dry up as long as trade exists. After all, from the manufacturer to the consumer, the product goes through several stages. At each stage, added value arises, which is charged to the budget.

This tax plays the role of one of the main items of government income. budget. In fact, the VAT payer is the final consumer who purchases goods and services for himself. Enterprises and people engaged in individual entrepreneurship who use common system taxation.

The collection of VAT is aimed at regular financing of the state so that its institutions exist permanently. Distinctive feature The added value is being charged with every movement from one person to another. This allows the state to influence at every stage of trade turnover. Thus, receive a source of income. The tax is well adjusted to most goods, so it plays the role of a universal tax. Height tax payments depends directly on the growth of consumption and inflation. Thus, an increase in the standard of living of the population, as well as investments in production located on the territory of this state, leads to an increase in the growth of consumption and production. This brings additional money to the state budget. This tax is neutral in nature. Because this tax is levied regardless of a person’s actual income. VAT amounts that have been paid provide for the right to receive these deductions back. The advantage of VAT for the state is that the buyer will pay it in any case. Since the price of goods, works and services each time increases by the amount of tax that the consumer pays when he makes a purchase of the good he needs.

All VAT taxpayers are divided into the following groups:

VAT payers who purchase goods or work and services from suppliers, the cost of which included this tax. These payers sold their own goods and services, therefore VAT was included in their prices. Since the amount of VAT received from buyers will be more than the amount VAT paid to suppliers. Therefore, the taxpayer has an obligation to transfer the difference in amounts to the budget.

There are payers in the state who sell goods, work and services while being exempt from VAT. These include educational institutions, banks and organizations that sell services without VAT in their final price. Such payers have no obligation to pay VAT.

Payers for whom the amount of VAT they paid turned out to be greater than the amount of VAT they received from the buyer. The state reimburses these payers for the resulting difference from the state. budget. That is, it returns the overpayment to the payer. This classification is based on the principle of mutual settlement with the state budget.

Members of each listed group have the right to purchase goods, works and services provided by any group.

The disadvantage of the VAT tax is the complexity of administrative work. This work includes organizing mutual settlements and preparing packages of documents that confirm the payment of this tax.

Customs duties. Mandatory charge if goods pass through customs borders between states.
Tax on transactions with securities- This is also one of the types of indirect taxes.

Direct and indirect taxes as an example

For example, when you buy a car, you are faced not only with one-time tax payments, but also repayment the same tax after a certain time. So, when buying a car, you pay 3% of the cost to the pension fee. Every year you pay 13% of the cost of the car. This is called transport tax. In most regions, the amount of this tax is not the same. This tax is calculated in different ways. In addition, such a tax has a progressive type of growth on the power of the car engine.

When you sell it, you will be charged a tax of 15% of the cost of the car.

When operating a vehicle, we fill it with fuel, the final cost of which includes VAT. It is 18%. Before this tax, the price of the goods includes the tax on the extraction of minerals from Russian subsoil, which is approximately 12%. There is also an excise tax. It is also 12%. In total, we get that 58% of the cost of fuel is the price of the fuel itself, and the rest is tax fees.

In addition to these taxes, you will pay import taxes on the vehicle if it is fully assembled overseas. This is one of the reasons why foreign cars are so expensive.

What is not taxed?

State benefits, pensions, scholarships, sports awards, as well as accruals from bank deposits located in the Russian Federation are not subject to taxes.

We can conclude that the state taxation system has a very developed network of fees. If you work, buy, sell, inherit or own something, or take a taxi, then you pay taxes.

A tax is a mandatory financial obligation payable to the government. The tax system is mainly divided into two broad categories direct tax and indirect tax, consisting of of various nature taxation.

Basis for comparison	Direct tax	Indirect tax
Meaning	Direct tax is referred to as a tax levied on a person's income and wealth and is paid directly to the government.	An indirect tax is referred to as a tax levied on a person who consumes goods and services and is paid indirectly to the government.
Overheads	A person who is subject to a tax burden.	The burden of the tax may be transferred to another person.
Types	Wealth tax, income tax, property tax. Import and export duties.	Sales tax, VAT, excise taxes, customs duties.
Payment evasion	Maybe	Hardly possible, since it is included in the price of goods and services.
Inflation	Direct tax helps in reducing inflation.	Indirect taxes contribute to inflation.
Charged from	Individuals, individual entrepreneurs, companies, firms	Consumers of goods and services.
Action	Progressive	Regressive

Definition of direct tax

A direct tax is levied on a person's income and wealth, and is paid directly to the government; the burden of such a tax cannot be shifted. The tax is progressive in nature, i.e. increases with income or wealth and vice versa. It taxes according to a person's ability to pay - the tax is levied on richer people. The tax is levied and collected either by the central government or local authorities.

There are several types of direct taxes, such as:

Income tax.
Wealth tax.
Property tax.
Import and export duties.

Definition of indirect tax

Indirect tax is referred to as a tax levied on a person consuming goods and services, paid indirectly to the government. The burden of the tax can easily be shifted to another person. A tax is regressive, increasing the demand for goods and services and vice versa. It is imposed on every person, whether he is equally rich or poor. Administration of the tax is carried out either through the central government or the regional administration.

There are several types of indirect taxes:

Sales tax.
VAT (value added tax).
Excise tax
Customs duty.
Agricultural income tax.

How do direct taxes differ from indirect taxes?

The tax paid by the person on whom it is imposed is known as direct tax. A tax that is paid indirectly by the taxpayer is an indirect tax. A direct tax is levied on a person's income and wealth, while an indirect tax is levied on a person consuming goods and services.
The main difference between direct and indirect tax is the burden of direct taxes, it cannot be transferred to another person, while the liability of indirect taxes can be shifted.
Tax evasion is possible in case of direct tax if proper imposition of levy is not made but in case of indirect tax, tax evasion is not possible as the amount of tax is charged on goods and services.
Direct tax is levied on individuals, firms, and organizations. On the other hand, indirect tax is levied on the consumer of goods and services.
The nature of direct tax is progressive, indirect tax is regressive.
Direct tax helps in reducing inflation, but indirect tax sometimes helps in promoting inflation.

From an economic point of view

Direct tax refers to any level simultaneously imposed and collected from a specific group of people or organizations. An example of direct taxation is income tax.

Indirect taxes collected from someone or some entity other than the person or entity that is usually responsible for taxes.

A sales tax, for example, would not be considered a direct tax because the money is collected from merchants rather than consumers. In this economic context, the law may actually determine the person or persons from whom the tax will be collected, but has nothing to do with how the tax burden is distributed in the market. Who bears the economic burden of the tax itself will be determined by market forces and can be calculated by comparing the price of the product.

From a legal point of view

In a legal sense, the meaning of direct and indirect taxes changes:

Direct tax applies only to property.
Indirect taxes overlap with a wide range of rights, privileges and activities.

In this sense, the tax on the sale of property will be considered an indirect tax, and the tax on the property actually due will be a direct tax.

Similarities

Paid to the state.
Fine for non-payment.
Interest (penalty) on late payment.
Improper use may result in tax evasion and penalties.

Direct and indirect taxes have their own advantages and disadvantages. If we are talking about direct taxes, they are fair because they depend on a person’s ability to pay. Direct tax is economical as its cost of collection is less, but still it does not apply to all sections of the society.

The effect of indirect tax is easy to understand as it is included in the cost of products and services and along with this it has excellent coverage in every part of the society. One of the main advantages of indirect tax is the high rate for harmful products compared to other goods necessary for life.

Having citizenship of any state and being in constant interaction with various government agencies, we receive various benefits: education, medicine, we are protected, we solve any problems in administrative institutions, we receive various benefits, etc. Formation of the state budget for these purposes is possible when the regions in full direct and indirect taxes are received.

Direct and indirect taxes - what is the difference?

Taxes are mandatory payments established by law that are withheld from citizens and legal entities (various types of enterprises) to the budgets different levels in order to generate their income. There are different classifications of taxes, including in this case, we will consider direct and indirect taxes.
Direct taxes depend on the income of all categories of taxpayers and are withheld when income or other material benefits are generated. These include: income tax, property taxes, profit tax and others.
Indirect taxes are usually included in the price of the goods we purchase, and we pay them simply by making the purchase. Customs duties, excise taxes, VAT are all types of indirect taxes.

Thus, the significant difference between direct and indirect taxes is that the former depend on income and are levied when it is formed, while the latter do not depend on income and are included in the cost of goods and services.
To put it simply, direct taxes are taxes on income and property, and indirect taxes are taxes on goods and services. Therefore, if you, for example, do not buy imported or excise goods, then you will not be subject to these types of indirect taxes.

Let's take a closer look at what direct and indirect taxes are.

Direct taxes - from the taxpayer to the budget!

The most important direct taxes for citizens are personal income tax and property tax.
The name “property tax” speaks for itself - it is a tax that is levied on the property of citizens: houses, apartments, land plots, vehicles, antiques. Property received as a gift or inherited is also subject to taxation.

Personal income tax, or income tax, is taken from all types of income available to citizens: from wages, from rental property, from interest on shares and other securities, and so on. Even if a miracle happens and you win money in the lottery, you will have to pay income tax on that amount.
Pensions and various social benefits are not taxed.

The interest rate on income tax depends on the type of income, for example, 13% is withheld from wages, and dividends received from shares are taxed at a 15% rate.

For individual entrepreneurs and organizations carrying out certain types activities, the tax legislation of the Russian Federation provides for several special regimes that allow a single tax to replace several types of tax payments at once.

Many enterprises and individual entrepreneurs choose for their activities such a type of income tax as UTII - single tax on imputed income.
The essence of UTII is that this tax does not depend on the actual profit that an individual entrepreneur or organization receives, but on the estimated income established (or imputed) by the tax office.
The types of activities falling under the UTII regime are determined by law at the level local authorities. Tax on imputed income must be paid quarterly.

For small business good option is a simplified taxation system. It, like UTII, involves replacing several taxes with one. The objects of taxation under the simplified tax system are the income of the organization, and then the rate is 6%, or income minus expenses, in which case a rate of 15% is applied. Individual entrepreneurs and organizations working under the simplified tax system have the right to choose for themselves which indicator will be the object of taxation. For a report on the simplified tax system in tax authorities a declaration is submitted once a year.

The main direct tax for legal entities is income tax. Here the object of taxation is balance sheet profit. The tax rate is 32%, and the tax on profits from intermediary services reaches 45%.

As property taxes legal entities are required to pay corporate property tax based on its average annual book value, land tax, etc. Property tax rates depend on the type of activity of the enterprise (but not for each specific enterprise).
Taxpayers independently calculate taxes in accordance with established tax periods.

Indirect taxes - learning the specifics!

So, we have already found out that the main types of indirect taxes are value added tax, various types of customs duties, and excise taxes. The importance of indirect taxes is very great, since they bring almost half of the income to the state treasury.
What are the features of this type of tax? It lies in the fact that formally their payers are producers of certain goods and services, but in fact they are consumers of these same goods and services.

For example, no matter how long the chain from the manufacturer to the final consumer, each person involved in it at its stage is a VAT payer, including the consumer himself. Thus, all business participants who create added value are subjects of this type of taxation.
Currently interest rate VAT is 18%. For some licensed types of activities, the law provides for tax benefits.

Customs duties are levied on the import of goods from abroad, and their calculation depends on many factors, including political ones.
Excise taxes are levied only in the sphere of production, on services this type tax does not apply. There is a list of excise goods, in particular, these include alcohol and tobacco products.

And yet, in order to avoid serious problems, we advise you to respect not only the criminal code, but also the tax code. As they say, pay your taxes and sleep well...

The tax systems operating in our country are periodically subject to reform. Conditions, rates, coefficients, and types of reporting forms are changing, so for those for whom the topic of direct and indirect taxes is relevant, it is important to be aware of these changes.

Income tax rate 2015: how much of the profit will the state take from business? Income tax rate 2015-2016: it’s a pity that money cannot be invested in taxes!

Direct taxes: definition

The term “direct tax” is more economic than legal. IN Russian system it does not have a clear definition of law.

Among the rare legal acts in which the term “direct tax” is present, we can highlight the letter of the Ministry of Finance of Russia dated December 21, 1994 No. 03-10-0. In it, the department, classifying budget revenues, identifies a group with the index 10100 (“Direct taxes on profits, income, capital gains”). This group includes taxes that are levied “on the net income (existing or implied) of an individual or legal entity.”

This definition of the Ministry of Finance as a whole does not contradict the interpretation widespread among economists, according to which “direct” is considered a tax that is levied directly from the subject of the economic process (individual, legal entity) and cannot, in general, be presented to any other person.

What are direct taxes paid for?

In practice, an individual or legal entity can become a direct tax payer if it:

Owns (disposes) of any taxable object, despite the fact that such ownership (disposal) arose as a result of one or another legal action, which can conditionally be called a “transaction”.

Such taxable objects may be:

real estate (appeared in possession or disposal as a result of a transaction - the conclusion of a purchase and sale agreement);
income from the sale of goods and services (as a result of transactions - transactions for the supply of goods or services).

Thus, typical examples direct taxes - income tax or property tax.

Has a status that entails the formation of a taxable object.

For example, such an object could be imputed income. It is formed as soon as the company receives the status of a tax payer under UTII, acquired as a result of a transaction - submitting documents for the right to work under UTII to the Federal Tax Service.

Uses (has the opportunity to use) certain resources.

For example, minerals, biological resources.

The actual and legal payer of any direct tax is the individual or legal entity itself. It is solely responsible for the results of the transactions it initiates. It bears a direct tax burden that cannot be shifted to anyone, and this is the main criterion for classifying the taxes it pays as “direct”.

What are indirect taxes?

In turn, indirect taxes are those that the taxpayer can established by law order:

present for actual payment to other persons (while remaining de jure the payer of the relevant taxes);
performing the functions of a payer, apply various legal methods to reduce to zero or minimize the tax burden for indirect taxes.

Historically it developed this way (and this was enshrined in the Russian legal system), that the main indirect taxes were (clause 2 of Appendix No. 18 to the Treaty on the EAEU dated May 29, 2014):

The object of taxation under it is the sale of goods and services (in the general case).

VAT is paid if a Russian business entity is not exempted by law from the need to accrue it - for example, if it does not work on the simplified tax system or the same UTII.

VAT is calculated as a percentage of the cost of the goods. The specific tax amount depends on the type of product sold. VAT values in Russia: 18%, 10% and 0%.

Excise taxes.

An excise tax is, as a rule, a fixed tax, the amount of which is established by law based on the specific type of product. There is one excise tax for alcoholic beverages, another for gasoline and tobacco.

Thus, indirect taxes are levied not on the result of the transaction (profit, taking ownership of something, obtaining status), but in fact on the transaction itself. More precisely, they are charged on the tax base represented by one or another element of the transaction. In this case, the cost of the product (when VAT is paid) or the fact of its sale (when excise duty is paid).

What makes a tax indirect?

The only thing that makes a tax indirect is that the business entity does not pay it itself, but actually presents it to other persons in the manner prescribed by law.

The legal payer of indirect tax - a legal entity or an individual - is also responsible for collecting indirect tax, since the actual payer, as a rule, does not have to calculate and pay anything from his own funds in this case.

But, as we noted above, an indirect tax payer can use mechanisms to limit the tax burden. Such mechanisms that are well-established in the Russian legal system include:

The inclusion by a business entity of VAT and excise tax in the selling price of goods and, as a result, shifting the actual tax burden to the buyer of the goods.

Indirect tax may also be “paid additionally” by the buyer. For example, this is how the tax on transactions with securities works in some Western countries. Let us also note that in US retail stores the price is indicated without VAT, and then, after paying, the client will learn from the receipt about the actual surcharge of tax.

Inclusion of VAT and excise taxes paid when purchasing goods from other suppliers (that is, when the entity itself becomes the buyer) in the deduction for VAT and excise taxes that the entity itself must pay on the cost of goods sold.

That is, the amount of VAT and excise taxes on goods sold is reduced by the amount of VAT and excise taxes on goods purchased.

Let's look at how this scheme works using a simple example.

Financial burden with indirect tax: example

Trading-Consulting LLC carries out wholesale supplies of apples at a price of 70 rubles per 1 kg. Vending-Lending LLC buys them including 18% VAT, that is, paying 82.6 rubles per 1 kg for apples.

Then Vending-Lending LLC sells apples at retail at a price of 94.4 rubles per kilogram. At the same time, the selling price includes: the cost of apples - 80 rubles per 1 kg and 18% VAT in the amount of 14.4 rubles.

VAT received from buyers is 14.4 rubles for each kilogram of apples, Vending-Lending LLC must pay to the state. At the same time, the company has the right to reduce VAT by the amount that was included in the price of apples from Trading-Consulting LLC - that is, by 12.6 rubles.

It turns out that in its “pure” form, Vending-Lending LLC owes the state VAT on each kilogram of apples in the amount of 1.80 rubles (we subtract 12.6 from 14.4).

But the company’s own tax burden for VAT is zero. The actual cash receipt - 94.4 rubles per 1 kg of apples - exceeds the actual cash expenditure - 84.4 rubles (82.6 rubles per 1 kg of apples + net VAT payable in the amount of 1.80 rubles) by exactly 10 rubles. That is, this is how much the company would have earned if it had not paid VAT (and if its supplier had not paid) - buying apples for 70 rubles and selling them for 80 rubles per 1 kg.

Thus, the subject pays VAT indirectly - fulfilling the obligations of calculating it and transferring it to the budget, but without bearing a real financial burden.

Having considered examples of direct and indirect taxes, we will familiarize ourselves in more detail with the list of budget payments established by Russian legislation and try to determine what type of taxes they can legally be classified as. For convenience, we display the information in a table.

Federal taxes: direct and indirect

Tax name	What is he like? *	Why is he like this?
	Indirect	Actually paid by the buyer of the goods (included in the price). In fact, it does not create a tax burden on the business entity due to deductions
	Indirect

On the profits of organizations		Paid by the recipient of the income
		Paid by the entity extracting minerals from the subsoil
		Paid by the entity using water resources
Fee for the use of fauna and aquatic biological resources		Paid by the subject for obtaining the opportunity to hunt and fish
State duty	Direct/indirect	Direct - when in receipt public services the business entity itself is interested and pays the fee for itself (for example, when it is a fee for registering an LLC, which cannot be taken into account in the expenses of the LLC). Indirect - when the costs of paying state duties, paying for licenses and similar needs are included with the cost of goods (work) and form the selling price of the goods, which the buyer pays. Example - payments to the state for licensing are included in the cost of the licensed product (in this case, the buyer will actually pay for the license)
		Paid by the recipient of the income
		Paid by an entity that has the status of a UTII payer
		Paid by an entity that has the status of a PSN payer
		Paid by the recipient of the income
Tax upon concluding production sharing agreements	Direct/indirect	Direct - in terms of payment of income tax and mineral extraction tax on preferential terms. Indirect - in terms of VAT payment

* What is it like based on economic characteristics?

Payments to regional and local budgets: are there indirect taxes among them?

Tax name	What is he like?
Regional
For property of legal entities		Paid by the property owner
For the gambling business		Paid by the owner of objects in the playing area
Transport		The owner of the vehicle pays

Land		Paid by the owner of the plot
For the property of individuals		Paid by the property owner
Trade fee		Paid by a business entity as a user of a retail facility

You can find out about the deadlines for paying the taxes and fees discussed in the article in the article “Tax calendar for paying taxes for 2018”.

Thus, most taxes established by Russian legislation are direct.

However, having considered the definition of direct and indirect taxes - and an example showing how indirect taxation works - we have the right to identify one important nuance.

The fact is that an economic entity forced to bear a direct financial burden as a result of taxation can take actions aimed at actually compensating for such a burden at the expense of other persons. For example, if this retail store, then if the property tax or UTII increases, it may increase the prices of goods. It turns out that the buyer ultimately pays for the increase in one or another direct tax paid by the store.

As a result, the line between direct and indirect taxes becomes somewhat blurred in practice. This blurriness can also be observed in the example of insurance premiums. Strictly speaking, they are not considered “taxes”, but are an integral part of the actual tax burden on the enterprise.

Are insurance premiums direct or indirect taxes?

Indeed, classifying insurance premiums as direct or indirect taxes is a controversial point. It should be borne in mind that such contributions come in several varieties:

Fixed contributions of an individual entrepreneur, which he pays for himself.

This classic version direct tax as a result of an individual obtaining status as a result of a transaction - registration as an individual entrepreneur. An entrepreneur does not have the right to transfer the obligation to pay contributions for himself to someone else.

Contributions - pension, social, medical, from employee salaries.

Here the situation is more complicated. On the one hand, contributions are charged to the tax base in the form of wages as a result of a transaction - conclusion employment contract, for which the employer pays the corresponding contributions.

On the other hand, the employer one way or another contributes these contributions to the wage fund. And if the contributions were not provided for by law, then they would probably “turn” into the employee’s salary, which is given to him in his own hands. At least, this is the logic economists tend to adhere to.

Thus, it is legitimate to say that the insurance premium paid by the employer from the employee’s salary is an example of an indirect de facto tax. This is the employee’s lost income, and it is he who can be considered the actual payer of the contribution.

You can learn more about the procedure for paying indirect taxes - VAT and excise tax - in the article “Time limits and procedure for paying indirect taxes”.

Direct taxes are those that are paid by an individual or business entity without the possibility of actually presenting them to other persons. Indirect ones are characterized by the presence of such a possibility (and other mechanisms that allow minimizing the tax burden on the payer). The bulk of Russian taxes are direct. There are only two indirect ones - VAT and excise taxes, but many payments to the budget have actual signs of indirect taxes.