On 17 October 2012, the Federal Commercial Court of the Moscow District (the "FCC") reviewed a case on the possibility of deducting VAT beyond the tax period in which the right of the taxpayer to such deduction arose.

The company included VAT invoices issued in October 2010 to the purchase ledger for the first quarter of 2011. In the first quarter of 2011, the company declared VAT for deduction for the first quarter of 2011 and received a refusal from the tax inspectorate. The company applied to court as it did not agree with the position of the tax inspectorate.

The FCC upheld the decisions of the lower courts which supported the position of the company. The FCC specified that the only VAT that can be deducted are sums presented to the taxpayer when acquiring goods and supported by primary accounting documents. That said, the provisions of the Tax Code of the Russian Federation (the "Tax Code") do not exclude the possibility of a deduction for VAT beyond the period in which the right of the company to such deduction arose.

Based on the above, taxpayers may declare VAT for deduction beyond the period in which the right to the deduction arose, but only within 3 years from that date (article 173 of the Tax Code) and provided all requirements for deduction are fulfilled.

[Ruling No. А40-21091/12-115-64 of the Federal Commercial Court of the Russian Federation, dated 17 October 2012]