Russia has proposed a Value-Added Tax (VAT) reduction from 20% to 15%.
VAT increase in 2019 was accompanied with a mission to spend the additional forecasted revenue for national capital infrastructure. However, the expected revenue was not generated. It is estimated that the Russia VAT reduction of 5% points would result in a revenue cut but will be supported by a 5% rise in GDP.
VAT revenues will be split between the federal state and regions. The proposal is to divide it into rates of 60% and 40% for the federal budget and regions respectively.
The previous VAT rate increase was accompanied by some consequences, namely, the adjustments to ERP systems, price adjustments, etc.
