Customizing for Purchases from Foreign Vendors
To withhold VAT from payments to foreign vendors not registered with the Russian tax authorities (see Purchases from Foreign Vendors), you must choose either of the following Customizing options:
For such vendor, copy the tax codes P2 and PC provided with the standard system.
P2 is the standard tax code provided for posting deferred input VAT on vendor invoices, and PC is the corresponding target tax code.
For each foreign vendor, create a separate accounting document type for transferring deferred taxes (see the Deferred Tax Transfer program).
This enables you to prepare separate VAT returns for the VAT that you have withheld from each foreign vendor (see step 1 in Preparation of VAT Returns for VAT Withheld from Foreign Vendors).