Russia introduces zero VAT for hotels as of July 1

MOSCOW. July 1 (Interfax) - Russia is introducing a new measure to support the hotel industry as of July 1, reducing the value-added tax rate for hotels to zero, the Federal Tourism Agency said on Friday.

"The zero VAT rate applies to provision of temporary accommodation of guests, as well as rental of tourist infrastructure facilities. Both already operating facilities and new ones can receive the tax break. The duration of the tax break for all such facilities is the same - five years. But the arrangement for receiving the tax break differs for already operating and new facilities," the agency said.

For existing hotels, the zero VAT rate will be in effect until June 30, 2027, the agency's press service said. In order to receive the tax break, hotels will need to apply to the tax authorities with the relevant tax declarations at the end of the third quarter of 2022.

Hotels that open after January 1, 2022, including after renovation, will first have to apply for inclusion in a special registry at the Tourism Agency and then apply to the tax authorities. "After this, the VAT rate for guest accommodation services and rental of tourist facilities for them will be 0% for five years from the date they launch operations," the agency said.

The agency said that "this is a historic decision for the industry, particularly in the current conditions, when businesses need additional support from the state." The tax break should boost the investment appeal of the industry, which will lead to an increase in the amount of high quality accommodation, the agency said.