Russia Proposes VAT Hike on Imported Goods to Balance Budget
The Ministry of Finance has proposed significant changes to Russia's Value Added Tax (VAT) regime. The plans, submitted for public discussion until October 23, include progressive increases to the VAT rate for certain imported goods, aiming to intuitively balance the budget and strengthen the country's protection and defense.
Currently, these goods enter the Eurasian Economic Union (EAEU) without customs duties. The new measures, if approved, will see the VAT rate rise to 10% in 2028, 15% in 2029, and cap at 20% from 2030 onwards. This is part of a broader tax reform proposal for 2026-2028, which also includes a 5% VAT rate for specific imported goods in 2027.
Earlier in September, the Ministry suggested increasing the standard VAT rate from 20% to 22% and reducing the threshold for the simplified tax system from 60 million rubles to 10 million rubles. These changes follow the approval of the budget declaration for 2026–2028, which outlines budget priorities, security scenarios, and international obligations.
The proposed VAT increases for imported goods without customs duties could lead to price hikes in Russia. The Ministry of Finance aims to use these measures to balance the budget and bolster the country's protection and defense. The public has until October 23 to discuss and provide feedback on these proposals.
