Russia to Increase Value Added Tax Rate

A new law approved by the Russian Parliament and the Federation Council will increase the Value Added Tax (VAT) rate in Russia from 18% to 20% beginning in 2019.

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

How This Impacts Mobility

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.

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