Russian VAT Rebates To Come Into Force For Foreign Transactions From 1st January 2021

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Good news for foreign traders and visitors to Russia has come in the form of Russia’s Ministry of Industry and Trade drafting a bill extending a tax free system throughout Russia commencing 1st January 2021. The document has been published on the official Russia website of draft laws and regulations.

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The legislation allows citizens of countries outside the Eurasian Economic Union (Armenia, Belarus, Kazakhstan, Kyrgyzstan & Russia) to receive compensation for value-added tax (VAT) paid in Russia. The threshold for VAT claims has also been reduced to Rs 8,000 (€113) from Rs.10,000. The move will affect visitors and tourists purchasing goods in Russia, who will be able to make claims and receive VAT repayments at all major ports and airports. VAT in Russia usually applies to the value of goods, work, services, or property rights supplied within the country. The standard VAT rate is 20%, with a lower rate of 10% applicable to certain basic foodstuffs, children’s clothing, medicines and medical products, printed publications and so on.

The move will also benefit foreign traders with Russia who will also be able to receive VAT claims upon export from Russia.

The bill also permits VAT refunds for excised goods including alcohol and tobacco products.

Item Duty Free Price In Russia (Euros) Average Price in EU (Euros)
1 litre Beluga Vodka 27 33
100 Marlboro Cigarettes 11 25

Russia has been running a pilot project from September this year to test feasibility, being laid out a few weeks ago in 79 districts across 13 of Russia’s Provinces.

The bill is expected to be passed unopposed, as in November 2017, President Vladimir Putin signed a bill introducing tax free system in Russia into law. The move should help boost Russia’s economy and prove an additional bonus for the tourism industry.

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