Russia VAT cut to 15% July 2020

A proposal has been submitted to the Russian parliament to cut the standard VAT rate from 20% to 15% on 1 July 2020. The reduced VAT rate will also be cut from 16.67% to 13.04%. This applies to company vehicles and foreign providers of electronic services.

The rate was last changed from 18% to 20% on 1 January 2019. At the time, it was forecast that this would deliver an increase in revenues of 600 billion roubles for national capital infrastructure spend. However, the additional revenues have fallen short. The VAT bill estimates that cutting the VAT rate by 5 percentage points would generate a cut in tax revenues of 1 trillion roubles, but would be countered by a rise in GDP of 5%.

The VAT revenues are split by federal and state governments.