13 May 2025 21:47

Russian Finance Ministry ready to consider reduced VAT rate for catering industry - minister

MOSCOW. May 13 (Interfax) - The Finance Ministry is prepared to discuss lowering the VAT rate for catering businesses, but additional calculations are needed to determine the appropriate rate, Finance Minister Anton Siluanov said.

A proposal to reduce the VAT rate to 3% for catering was put forward by Mikhail Goncharov, founder of the Teremok restaurant chain, during a meeting between President Vladimir Putin and members of Business Russia. Currently, businesses in the sector (which don't qualify for the VAT exemption introduced in 2022) pay VAT at the standard 20% rate but can claim deductions, resulting in most companies effectively paying 3% to 4%, Goncharov said. This configuration creates administrative complexities and tax disputes, and the rate reduction wouldn't significantly impact budget revenues, he said.

"You seem to be right. We constantly debate in the government - should we preserve VAT or completely switch to a turnover tax, whether sector-specific exceptions are ineffective. But I believe such targeted adjustments by industry [are preferable]. Overall, I consider your proposal reasonable, it would provide greater returns, in my view, to all levels of the budget system," Putin said.

An agreement has been reached with catering entrepreneurs to raise the revenue threshold for VAT exemption from 2 billion rubles to 3 billion rubles, Siluanov said. "We agreed on these amendments and prepared them for submission to the Duma. The bill is currently under consideration for second reading. We'll submit and pass it during the spring session," he said.

Siluanov acknowledged that reviewing a VAT rate reduction also makes sense.

"Colleagues suggest introducing a reduced VAT rate for catering (3% was mentioned here) to prevent business fragmentation, which we're seeing with large chains splitting up. We're ready to consider options around 3% without deductions, perhaps 3%-4%, though more detailed calculations are needed. We're prepared to develop such proposals together with catering industry representatives," he said, adding that a solution would be found.

Regarding proposals to transfer part of VAT revenues to regional and local budgets, Siluanov said that the Finance Ministry maintains a firm position - general approaches shouldn't be changed, as VAT is a federal tax.