VAT: Content, Features of Accounting and Audit

The study explores the value added tax (VAT). The tax is one of the main sources of government income, it accounts about 30% of the Russian federal budget’s income. VAT is of particular interest for both, the government and business. More than a half of companies are VAT taxpayers. What is more, VAT is one of the most “expensive” taxes paid by companies. The study explores value added tax legislation and it is provided a comparative characteristic of the VAT elements in Russia and European countries. The features of each tax system are noted and a proposal of improving Russian VAT legislation is formulated. In connection with business and economists’ negative opinion about increasing the standard VAT rate, the European countries’ experience in VAT reforming is studied. Also, the rules of VAT accounting is studied. The second part of the study analyses the VAT accounting method applied in the company. Trading company, applied traditional taxation system, is chosen as analyzed company. The features of company’s VAT accounting method are highlighted and recommendations on developing VAT accounting method are provided. The third part of the study is about VAT audit. The efficiency of VAT internal control system was assessed at the stage of audit planning. Inefficient ICS can cause mistakes in accounting and VAT return. As a result of VAT audit, it is noted, that there are no mistakes in VAT accounting and the VAT report is reliable, recommendations on developing VAT internal control system are provided.