Signed into effect by President
Putin on 3 August, the law’s new 20% rate applies to goods, works, and
services, as well as property rights sold or transferred. Therefore, it will
apply to services provided by relocation businesses in Russia, and to property
transactions undertaken by foreign workers in Russia.
There is a reduced rate of 10%
applicable to some categories such as food and domestic air transportation.
There is also a zero rate applicable to domestic air transportation services,
passengers, and luggage if the point of departure or destination is in the Far
Eastern Federal District.
In addition, sale of a company
will be subject to a VAT rate of 16.67%, up from 15.25%.
Related: Russia Rules Sale of Immovable Property by Non-resident is Taxable
As noted, relocation services
provided in Russia will be subject to the higher tax rate, thereby increasing
the cost of doing business in that country for companies moving employees there
or providing other relocation services.