27 Sep 2021 17:10

Russian Industry & Trade Ministry suggests extending tax free experiment to end-2022 with inclusion of 5 new regions

MOSCOW. Sept 27 (Interfax) - Russia's Industry and Trade Ministry, which is coordinating a pilot project to implement a tax free system in Russia, has suggested extending it until the end of 2022 and simultaneously increasing the number of regions where the experiment is conducted.

The ministry has developed a draft government decree on introducing corresponding changes to the procedure for provision of the tax free service in Russia, it said in a statement.

"In order to stimulate consumer activity of foreign tourists, we suggest expanding the list of regions where the tax free regime operates by including in it the Amur, Vladimir, Irkutsk, and Pskov regions and the Kamchatka Territory," Industry and Trade Minister Denis Manturov was quoted as saying in the statement.

At present, the project for compensation of VAT to foreigners when exporting goods outside of the customs territory of the Eurasian Economic Union (EAEU) applies in 16 regions: Moscow, St. Petersburg, the Moscow, Leningrad, Kaliningrad, Novgorod, Nizhny Novgorod, Rostov, Volgograd, Samara, and Sverdlovsk regions, the Krasnodar, Khabarovsk, and Primorye Territories, and the republics of Tatarstan and Mordovia.

The experiment for provision of the tax free service was launched in Russia in 2018 and has been extended each year that followed. At the start of the year, the government extended the pilot's application until the end of 2021.

It follows from the ministry's data that purchases of foreign tourists amounted to around 38 billion rubles in 2018-2020, while tax free receipts provided for compensation of VAT amounted to over 20 billion rubles. The greatest number of purchases was made by citizens of China at 70%, Ukraine - 2.6%, the United States - 1.9%, Israel - 1.8%, Vietnam - 1.7%, Azerbaijan - 1.6%, Uzbekistan - 1.3%, Qatar - 1.3%, Germany - 1%, the United Arab Emirates - 1%, and Thailand - 1%.

The amount of tax free purchases made by foreign tourists in H1 2021 was 6.9 billion rubles, up 9.5% from the same period of last year, according to the ministry's data.