Russian currency, rouble: banknotes and coins close up

The Russian government has approved a VAT increase from 18% to 20%

It has been announced that the proposed amendments will come into power from 1 January 2019. The new VAT rate will apply to goods, work, services, and property rights supplied on or after 1 January 2019.

The extra two-per-cent will provide the federal budget with 620 billion rubles a year.

Russia’s Finance department previously confirmed that it intended to increase VAT from 18% to 22% on May 10th 2017. The reason is that the rise will help finance a cut to the employee’s tax rate to 22% from 30%

The Russian government shortage has widened over the last few years with the decrease of oil income taxes associated with the sharp drop in crude oil prices.

In his May decree, Vladimir Putin suggested that in the next six years, the country’s priorities would be: demography, health, and education, development of the urban environment, ecology, roads, digital economy, and social sphere.

There will be no change to the decreased VAT rate of 10% on basic foodstuffs, medicines, child’s clothing and newspapers & journals.

Also, the pension age will rise for men and women. The VAT and pensions measures are being launched to help meet the state deficit.

The government has already submitted a new national project – “Demography.” The authorities will support families at the birth of a child, build new nurseries and with an increase in spending on sports programs. This measure will be until 2023, with a projected spend of 3.5 trillion Rubles.

Before that, it was promised to spend 11 trillion. Rubles – this will bring the main routes of the country into the normative state.

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