On the arbitrage practice of applying a 0% VAT rate in shipbuilding projects

On July 25, 2018, the Fifteenth Arbitration Appeals Court in case No. A32-37113 / 2017 made a landmark decision, confirming the lawfulness of applying a zero VAT rate for the construction of vessels registered in the Russian International Register. This decision confirms the real application of the provisions of the tax legislation introduced by the law on measures of state support for shipbuilding and navigation, which allows shipowners to save significantly on VAT.

Formed earlier, the practice of disputes on the application of the zero VAT rate was negative because of the disparity of the subject composition. Thus, in the case previously considered by the Supreme Court of Russia A56-26374 / 2016, the applicant was an agent who was not a contractor.

With the law on measures of state support for shipbuilding and navigation adopted in 2011, as well as subsequent acts providing subsidies for reimbursement of costs for financing for the construction of vessels, a ship's recycling grant, state leasing programs, a register of a convenient flag, a set of measures to develop shipbuilding on domestic shipyards.

Since 2000, more than 200 merchant ships have been built at Russian shipyards. Now we can say that the course laid by the legislature to create effective legal measures to update the Russian fleet begins to find support in judicial practice.

The full text of the judicial act is available on the link.