Russian VAT reform discussed

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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