Russian VAT reform discussed

Wed 23rd Nov 2011

There are now proposals for Russian VAT to be replaced by sales tax to support regions.

Plans to support the Russian federal states with a new sales / consumption tax were discussed this week in Moscow.  A member of the Kremlin government raised the plan as a way to provide local finances for the regions as increasing levels of powers are devolved from the Kremlin.

At present, Russian VAT is levied at 18%.  The introduction of a new sales tax would have to be matched by a similar cut in the state-wide VAT to prevent an increase in the tax burden.  This is a key area for future discussion as the Russian Federation has an over reliance on oil duties, which are vulnerable to volatile movements with the world oil price.

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