Russian Finance Ministry estimates impact of VAT increase on inflation at 1 p.p

MOSCOW. Oct 6 (Interfax) - The Russian Finance Ministry estimates the contribution of the increase in the value-added tax (VAT) rate to inflation at 1 percentage point.

The ministry previously proposed increasing the VAT rate from 20% to 22% starting January 1, 2026.

"We estimate the total amount of tax changes which will allow for an increase in budget revenues at 2.3 trillion rubles for the next year. These tax innovations overall do not affect the revenue base of Russian constituent territories. VAT may affect the financial results of companies; we estimate the impact on inflation at approximately 1%, which we are taking into account in our forecasts for the indexation of wages and social payments to the population," Finance Minister Anton Siluanov said at parliamentary hearings in the Federation Council.

At the same time, a balanced budget will contribute to the Central Bank's opportunities for easing monetary policy due to higher economic growth rates and consequently additional revenues to budgets of all levels and growth in the population's incomes, Siluanov said.