Ministry of Finance submitted a draft law introducing sales tax to the Government

20th August 2014

According to RBC, regions will be able to apply it since January 1, 2015, but they will have the right to opt out of this tax

The draft law supplementing the Tax Code of the Russian Federation with “Sales Tax” section was submitted to the government. This was reported by RBC today, citing a source in the Ministry of Finance. Regions will be able to introduce it since January 1, 2015, but the government believes that not all governors will decide on it at the same time.

Draft law is almost identical to the sales tax rule, which was in force in Russia until its cancellation in 2004, said RBC’s source in the Ministry of Finance. Regions themselves can determine the tax rate in the range of 3%. According to the draft law it is not allowed to differentiate rates for different types of goods, or, depending on who is the payer. RBC’s source in the government said that the document has not yet been received by the government.

If the law is adopted, Russia will become the second country in the world with two indirect taxes – VAT and sales tax. The tax base will be determined as the value of the goods or services sold including VAT and excise duties, and tax period will be one month.

“We will try to pass the law in such a way that the regions will able to introduce the tax on January 1, 2015, –told RBC’s source in the Ministry of Finance. – If the region does not want to or do not have time to do it, due to a one month tax period stipulated by the project, the region will be able to introduce it on February 1, March 1, April 1, and so on, or do not introduce it at all – the draft law assumed that it is the region’s right”.

Thus, at the end of each month, organizations and individual entrepreneurs who have taxable subject (operations involving the sale of goods and services), will determine the tax basis, apply the tax rate to it and pay tax to the budget. Not all the products will be subject to the sales tax, a number of products are except from the tax.

For example, bakery products, dairy products, sugar, salt, potatoes, vegetable oil, eggs, cereals, baby food, baby clothes and shoes according to the list to be established by the regions, medication will not be subject to the sales tax. Real estate and securities sale, housing services and services for the rental of premises, sanitary and spa services, services in the field of culture and art, carriage of passengers will also not be subject to sales tax. Educational, scientific literature, periodicals do not fall into the scope of the sales tax along with funeral services funeral homes, cemeteries and crematoria, sale of religious objects. In addition, attorney services and some financial institutions will be exempt from the tax.



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