The Supreme Court clarified that the 10% preferential VAT does not apply to foodstuffs that have not passed the phyto-control.
The Supreme Court of the Russian Federation has put an end to the dispute over the application of a reduced rate of "import" VAT of 10% to food products that were refused release due to failure to pass phytosanitary control. The SCES of the Supreme Court of the Russian Federation reviewed the case of the Matrix company and came to the conclusion that the benefit can only be applied to products approved for food use, and not to those whose sale in Russia is explicitly prohibited by regulatory requirements.
The company imported condensed milk from Iran to Russia under HS code 0402 91 590 0, which is included in the list of food products subject to VAT at a rate of 10%. However, the products did not pass phytosanitary control, which ruled out the possibility of their release to the domestic market. The goods were supposed to be shipped in the reimport mode, but the transit period was violated.
The customs authorities calculated the payments, considering that the goods had actually been released, and charged VAT at a total rate of 20%. The company insisted that the rate should remain preferential, since the product code is included in the government list.
The appellate and cassation instances supported the declarant, but the Supreme Court took the opposite position. The court explained that the list of codes for preferential taxation is focused on the actual use of goods for socially significant purposes — that is, as food or feed. If the product does not meet phytosanitary requirements and is not allowed for circulation, this excludes the possibility of applying a 10% rate.
Thus, the court linked the use of the tax benefit not only to the classification of goods according to HS, but also to their compliance with industry rules and safety requirements.
Experts note that this decision strengthens the link between the application of tax benefits and actual compliance with regulatory standards. This creates a tougher approach for importers in situations where goods do not pass mandatory controls, even if they formally fall under preferential lists.
