The Federation Council approved the VAT increase to 20%

ECONOMY

MOSCOW, July 28. /Basereporter.com/. The Federation Council at the plenary session on Saturday approved a law that increased the value added tax (VAT) from 18% to 20% and the new rates of social security contributions.

The VAT exemption will still be present. We are talking about reduced rates of VAT of 10% for goods with social purpose: food (except gourmet), goods for children, printed periodicals and book products connected with education, science and culture, as well as medicines and medical products. Zero rate VAT will continue to apply to intra-regional air transport.

As noted earlier in the meeting of the Committee on budget and financial markets Deputy Vitaly Shuba, added new relief. In his words, “farmers have requested subsidies from the Federal budget not subject to VAT”, so “the government went to the meeting” – a proposal reflected in the law. The text also includes amendments to extend for 6 years – until January 1, 2025 – action of the zero rate of VAT on passenger traffic to the Crimea and back. The current preferential rate applicable up to the end of 2018.

A zero-rate of VAT is established in respect of services on domestic air transportations of passengers and Luggage provided that the point of departure or point of arrival situated in the territory of the far Eastern Federal district – this preferential rate will apply until 1 January 2025. In the years 2019-2024 are extended and reduced tariffs of insurance contributions for nonprofit organizations, applying the simplified taxation system and is engaged in social service of citizens, scientific research and development, education, health, culture, art and mass sports (except professional), and also for charitable organizations.

The law also provides for the reduction from 1 January 2019 the total rate of insurance contributions to state extra-budgetary funds from 34% to 30% and setting the rate of insurance contributions for the main categories of payers to Pension Fund at the rate of 22%. According to the feasibility study, the reduction of this rate to 22% instead of the standard 26% lead in 2021 to a decrease in the volume of receipts of insurance contributions for compulsory pension insurance in the amount of 948,22 billion in 2022 in the amount of 1 trillion 16,27 billion in 2023 – a $ 1 trillion 86,52 billion in 2024 in the amount of 1 trillion 171,41 billion. To cover the lack of funds will have from the budget.

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