Russia may scrap VAT and reinstate Sales Tax

The Russian Prime Minister, Dmitry Medvedev, has confirmed that the government is reviewing a proposal to withdraw VAT, and reintroduce a Sales Tax.

This is seen as a split with the Russian Finance Ministry, which is backed by the OECD in wishing to retain the globally accepted consumption tax, Value Added Tax.  The Russian VAT rate is currently 18%.

Russia operated a Sales Tax regime throughout most of the former Soviet era, and finally withdrew it in 2004.  Any resumption of the tax would probably be introduced to bolster regional revenues.  There will be further discussions on the plan later this month.