Increase of VAT rate up to 20%

On July 18, 2018, the second reading in the State Duma of the Russian Federation was passed by the Draft Law No. 489169-7, aimed at raising the standard VAT rate from 18% to 20%.

Taking into account that the VAT increase neither cause serious discussions in the Duma nor the business community, most likely that the Draft Law will be adopted in the nearest future.

Change of VAT rate will not affect some types of groceries, goods for children, printed products and textbooks, medical products and medicines, for them the reduced VAT rate will continue to be 10%.

Increase of VAT rate may lead a negative effect in the economy, due to the growth of final price of goods, work or services, the consumer purchasing power can potentially decrease, which can subsequently affect the output of products.