On 16 November 2017 the State Duma adopted in the final, third reading a law introducing a tax free system in Russia. Some of the provisions – and the main provisions – of the law will enter into force on 1 January 2018, and the tax free system will start working fully on 1 October 2018. Implementation of the tax free system will allow to return to non-Eurasian Economic Union residents the VAT paid for goods (other than excisable products) purchased during their stay in Russia.
According to press reports, the pilot stage of the tax free project will start already on 1 January 2018. During the pilot stage, a limited number of retail trade organizations (in particular, GUM and some other stores of Bosco group, TSUM and DLT of Mercury group, Concept Store 152 trade center, Butterfly Grand Hotel Europe gallery, Crocus City Mall, Morvokzal) in Moscow, Saint Petersburg and Sochi will take part in the project.
The current version of the draft law envisages a return of VAT in case of purchases made during a single calendar day of at least 10,000 rubles (approximately 140 euros at current exchange rates). Receipts for the tax refund will be issued by retailers included on a special list. An application form for inclusion on the list and the procedure for the application review are to be determined by the RF Ministry of Industry and Trade (“Minpromtorg”), which will maintain the list.
In order to be included on the list of retailers, a retailer or its separate subdivision must also be located at sites the list of which is approved by the Russian Federation Government. The application form for inclusion on the list, the procedure for the application review, as well as the sites list are to be determined after the law introducing a tax free system in Russia has been finally adopted and published, which is expected to happen before the end of November 2017.