The Russian Government has approved important changes to the Russian Tax Code, including increase of VAT and mineral extraction tax, as well as a number of benefits in relation to tax control and the abolishment of certain tax payments.

In particular, the following key modifications are proposed:

  • increase in the VAT base rate from 18% to 20%;
  • facilitation of the input VAT refund procedure, including decrease in the minimal threshold of the amount of tax paid for the 3 previous calendar years from RUB 7 bln to RUB 2 bln in order to qualify for the accelerated simplified input VAT refund procedure, as well as shortened time period for chamber tax audits;
  • gradual increase in the mineral extraction tax on oil and gas condensate in conjunction with the abolishment of export duties on oil and oil products, over a 6-year period starting in 2019;
  • preserving the 30% social security contributions rate after the end of the 2017-2020 transition period;
  • abolishment of transfer pricing control over domestic transactions, with simultaneous removal (until 2023) of the consolidated taxpayer group regime;
  • elimination of the corporate property tax for movable property;
  • fixation of the basic tax system parameters for a 6-year period.

The Russian Government already introduced the draft law on increasing the VAT base rate to 20% and preserving the 30% social security contributions rate and expects it to be adopted by the Russian State Duma by the end of the spring session (July 2018).

We recommend that all taxpayers consider the proposed changes in planning the tax burden for 2019 and going forward, especially concerning long-term investment projects.

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