Facebook will start charging 20% ​​VAT on advertisers from January 2019

In January 2019, when crediting funds for advertising on Facebook or Instagram in Russia, a value added tax (VAT) of 20% will be deducted. This update will affect all advertising accounts for which Russia is specified as the country of the company.

You will have to spend more on advertising on Facebook and Instagram.

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How it will work

VAT will be charged regardless of the purpose for which you use advertising – in personal or commercial… To continue advertising on Facebook, go to your account settings and check your business name, address and TIN.

Note. It is not necessary to provide a VAT number, but if you are registered for VAT and have indicated a VAT number, it will be displayed on your receipts for advertising payment, which is useful when refunding VAT with the help of Russian tax authorities. Facebook does not provide advice on tax law, so check with your country’s tax authorities for more information on sizing yourself.

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Let’s say you were recently charged $ 100 because you have reached the $ 100 billing threshold. The subtotal for the write-off is $ 100 per ad, and then in addition, VAT will be charged at the rate of 20%, so in total you will pay $ 120 ($ 100 + $ 20 = $ 120). VAT is added to the total amount charged, so you will not reach the billing threshold faster, but you will be charged an amount that exceeds the billing threshold.

If you have prepaid account and to display advertising, you must first top up the balance, then VAT will be charged when crediting $ 100 – 20% = $ 80.

Related article: How to set up an ad account on Facebook

How will the introduction of VAT affect advertisers

To a greater extent, the innovation will be reflected in companies with a large advertising budget.

  1. Growth of budgets. Of course, this will immediately increase the advertising budget by 20%. With the same budget, you will get less results and fewer clients. Not all companies will be ready to do this, so most likely budgets will grow.
  2. Registration of new accounts. Of course, there will be those who want to get away from extra payments and will register accounts in other countries where this tax is not present or it is less. Or order registration from citizens of another country. True, most likely Facebook will block such accounts, or you have to be cunning – work through a proxy and make payments through foreign cards.

What do you think about this?

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