Economy
11:01, 02-Jan-2019
Russia rises VAT to 20%, eyes $8.9bln in budget revenues
Updated
10:46, 05-Jan-2019
["other","Russia"]
Share
Copied
Russia increased the value-added tax (VAT) from 18 percent to 20 percent on Tuesday, according to a law signed by Russian President Vladimir Putin in the autumn of 2018.
The move will boost the government's budget revenues by 620 billion rubles (8.9 billion U.S. dollars) per annum, according to calculations by the Russian Finance Ministry.
The VAT hike can speed up inflation from expected 3 percent to 4-4.5 percent, according to First Deputy Prime Minister, Finance Minister Anton Siluanov. Experts believe that will hinder the country's economic growth in 2019.
However, the VAT increase to 20 percent is the least painful way for the people and economy compared with other solutions to raise budget revenues, according to Russian Prime Minister Dmitry Medvedev.
Certain products with preferential rates of 10 percent, such as essential foods, children's items and medical goods will be exempted from the VAT rate hike.
The previous VAT rate of 18 percent took effect on January 1, 2004.