Putin signed a law on the exemption of tour operators from VAT when selling tours in the Russian Federation

Russian President Vladimir Putin signed a law that, among other things, exempts tour operators from value added tax when selling tours in Russia, reported on the Kremlin website.

“From July 1, 2023, operations for the sale by an organization carrying out tour operator activities of a tourist product in the field of domestic tourism and (or) inbound tourism are exempted from value added tax,” the report says.

The measure will last until June 30, 2027.

The law, adopted by the State Duma on July 21 and approved by the Federation Council on July 28, is aimed at implementing the provisions of the main directions of Russia’s budget, tax, customs and tariff policy. The document also establishes excise rates for 2024, 2025 and 2026, and makes it possible to receive social tax deductions for education and medical expenses in a simplified manner, etc.

Putin instructed to prepare a law on the exemption of tour operators for domestic and inbound tourism from paying VAT earlier this year following the results of a January meeting with the government. Then the head of the Ministry of Economic Development Maxim Reshetnikov made such a proposal, recalling that in July 2022 a similar support measure was adopted for hotels. According to him, the decision turned out to be “landmark” and increased investment in the industry. The minister noted that system operators began to lose competition either to small companies on a simplified tax system, or to platforms that work according to other schemes.

As Deputy Prime Minister Dmitry Chernyshenko noted at the end of June, the zeroing of VAT for tour operators will lead to the fact that the industry will receive an additional 4.2 billion rubles, which it will be able to direct to the development of tourism products, new destinations and infrastructure.