Russia Proposes VAT Rate Hike to 22% in 2026, Threatening Businesses and Consumers
The Russian Ministry of Finance has proposed a VAT rate increase to 22% starting in 2026, which could lead to price hikes of 1.5-2 percentage points and potentially force some businesses to close. Meanwhile, the tourism industry enjoys a VAT exemption until 2027, saving tour operators 370 million rubles.
The proposed VAT rate increase aims to tackle the projected deficit of 5.73 trillion rubles. The current zero VAT rate for accommodation and tourist infrastructure rentals, introduced on July 1, 2022, is expected to collect 40 billion rubles in tourist tax alone in 2025, but costs the federal budget 36 billion rubles annually.
The tourism industry benefits from the exemption, allowing tour operators to reduce their tax burden and lower travel prices in Russia. However, with 84% of Russians planning their vacations independently, the impact on overall tourism spending remains to be seen. The state budget deficit for the first half of 2025 has already increased to 3.79 trillion rubles, highlighting the need for fiscal measures.
The Ministry of Finance's VAT rate increase proposal seeks to address the growing deficit. While the tourism industry enjoys VAT exemption until 2027, the potential extension of this relief until 2030 for tour operators is still under consideration. The ultimate impact on businesses, consumers, and the tourism sector remains to be seen.
Read also:
- Urgent investment: Province funds 5.3 million dollars for expanding primary care in Elgin-Middlesex-London area
- Federal Environmental Protection Agency under scrutiny for alleged manipulation of soil sample results following East Palestine catastrophe
- Colon Cancer Genetic Testing: Insights into its Function, Application, and Additional Details
- RFK Jr. Takes Bold Step in Vaccine Research Development, Possibly Poseing a Threat to Public Safety
