Recent changes to Russia’s Tax Code set a VAT rate of 0% on hotel services. The new rate becomes effective on 1 July 2022 for the following:
- services for the lease or other use of tourism industry facilities commissioned after 1 January 2022 and listed in the register of tourist industry facilities. The reduced rate will continue for 20 consecutive tax periods (i.e., 5 years) following the tax period in which the tourist industry facility was commissioned;
- services for the provision of temporary accommodation in existing hotels and other hosting facilities until 30 June 2027.
We remind readers that Russia’s tourism and hospitality industry VAT rate is currently 20%. Rostourism has said this tax burden makes the industry less competitive than other sectors of the economy and not attractive enough for investors. Along with other measures in the “Tourism and hospitality industry” national project, cutting the VAT rate to 0% will make the hotel industry in Russia more competitive and solve the problem of lack of modern high-quality hotels.