Central Bank of Russia opposes reinstatement of VAT on bank card transactions - source
MOSCOW. Nov 5 (Interfax) - The Central Bank of Russia, as part of the revision of the bill on tax changes coming into force in 2026, has proposed excluding the norm on introducing VAT on bank card transactions, pointing to the risks of increased cost of banking services, a source familiar with the regulator's position told Interfax.
The corresponding remarks are contained in the Central Bank's review sent to the State Duma Budget and Taxes Committee, the source said.
"We believe it is necessary to exclude the provisions of subparagraph 'b' of paragraph 4, article 2 of the bill concerning the abolition of the exemption from value-added tax (hereinafter - VAT) for banking operations and services related to the servicing of bank cards, as well as operations carried out by organizations ensuring information and technical interaction between settlement participants, including the provision of services for the collection, processing and provision to settlement participants of information on bank card transactions," the Central Bank said.
The regulator warned that imposing VAT on the aforementioned operations will lead to an increase in the cost of banking services in general, including an increase in tariffs for acquiring and processing, which will increase the cost of transactions, making non-cash payments less attractive for consumers.
The increased tax burden will affect banks' profitability and limit opportunities for developing bonus programs, cashback and favorable card servicing conditions, the CBR said. "Instead of expanding the range of available financial services, banks will be forced to compensate for losses by increasing fees and rates on other products," it said.
The Central Bank also draws attention to the risks from introducing VAT on processing services (article 149.3.4 of the Tax Code). The review emphasizes that the change in the tax regime will affect all major socially significant payment services including the Mir payment system, the Fast Payments System, the digital ruble platform, and the Central Bank's Financial Messaging System, which will create an undesirable burden on these services amid sanctions pressure.
The Central Bank proposes that parliamentarians consider this remark when preparing the bill for its second reading, which is scheduled in the State Duma for November 18.
As reported, on October 23, the State Duma approved at its first reading a package of amendments to the Russian Tax Code (N1026190-8) aimed at increasing budget revenues for 2026-2028. In particular, the bill abolished the VAT exemption, in effect since 2006, for operations and services related to the servicing of bank cards, as well as for services of companies ensuring the transmission and processing of data between settlement participants (processing and acquiring).
In its review of this bill, the Accounts Chamber previously said that neither the Tax Code nor the draft federal budget for 2026-2028 contains calculations confirming the validity of abolishing the VAT exemption for bank card servicing and processing. An accurate assessment of the budget effect from the VAT abolition can only be formed after the final version of the corresponding changes to the Tax Code is adopted, the Finance Ministry's press service told Interfax.
At the end of October, Sberbank Deputy Board Chairman and Chief Financial Officer Taras Skvortsov said that the abolition of VAT exemptions for bank card servicing in the most severe scenario could cost the banking sector more than 200 billion rubles.
Acquiring and processing are key links in the non-cash payment infrastructure in Russia. Acquiring ensures the acceptance of payments by stores and services, while processing is responsible for the transmission and processing of data between banks and payment systems.
The VAT exemption for bank card servicing operations was introduced on January 1, 2006, to stimulate non-cash payments. Thanks to this exemption, the expenses of market participants (banks, payment systems and processing centers) were not taxed, which reduced the cost of servicing transactions. Processing operators in Russia are banks and specialized centers, including the National Payment Card System (NPCS).
