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Medvedev Suggests Sales Tax May Replace VAT

By Ulrika Lomas, Tax-News.com, Brussels

06 December 2012


Dmitry Medvedev, the Prime Minister of Russia, has again raised the prospect of replacing VAT with a sales tax during a meeting with representatives of the business community.

Speaking at a meeting with the Russian Union of Industrialists and Entrepreneurs, Medvedev explained that this had always been a matter of debate within government, but that the time had come to discuss the issue once again.

However, he reiterated that the government would not raise taxes.

Arkady Dvorkovich, who is currently Deputy Prime Minister, put forward arguments in favor of a sales tax in Russia in 2006. He suggested that the VAT system was becoming increasingly complex to administer, particularly with regard to export operations. He further argued that a sales tax would be more suited to Russia's natural resource-based economy.

The standard VAT rate in Russia remains 18%, with a reduced rate of 10% in place for "socially important" goods.

Plans to unify VAT rates into a single 13% standard rate were under consideration by the Russian government for a number of years, but have now been shelved.

TAGS: Russia | tax | business | value added tax (VAT) | sales tax

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