Russia cuts VAT for tourism services and investment for five years in acknowledgement of surplus in industry following Ukraine invasion
The Russian government has cut the Value Added Tax rate for investors in tourist and hospitality facilities to zero. This will apply from the opening of relevant facilities, and be valid for twenty years. Existing facilities are also entitled to the reduced rate from now until 30 June 2027.
The reduced rates apply for investors who build, lease and manage tourist facilities – hotels and other accommodation facilities. However, additional services (laundry, sauna, fitness, parking, transfer, conference room, business center, etc.) provided in hotels and other accommodation facilities are excluded from the reduction.
Hotel accommodation and other short term accommodation will also be subject to zero-rating from 1 July 2022 for five years. Currently, these services are subject to the standard VAT rate of 20%
According to the Federal Tourism Agency, with the introduction of zero VAT, tax expenses in Russia will approximately amount to 16-19 billion rubles for the provision of services for the provision of places for temporary accommodation in hotels and campsites.
