Russia to introduce tax-free shopping for foreigners

A tax-free system helping foreigners recover part of the tax from goods purchased in Russia will go into operation later this year, writes the Kommersant business daily. 

Russia's largest luxury retailers are ready to participate in the pilot project and talks are being held with the main-tax free operators, Global Blue and Tax Free (Fintrax).

The minimum purchase amount of non-food goods from which foreign citizens can recover VAT (value-added tax) is 10,000 rubles ($155). 

The tax-free pilot project may be launched in large Moscow department stores: GUM, Petrovsky Passage, TsUM, Barvikhe Luxury Village and others. After the experiment other - smaller - retailers will be able to join the system. However, in order to join the initiative they will have to obtain special certification from the Ministry of Industry and Trade.

Foreigners hit Russian stores in search of a good deal

The tax-free system is expected to provide additional development for trade. The Russian economy may gain hundreds of millions of euros, according to TsUM's General Manager Alexander Pavlov. 

But the Finance Ministry and the Russian tourist industry believe that returning VAT to non-residents is a useless measure: It will not attract new tourists and will only create losses for the budget.

There are two VAT rates in Russia: 10 percent (for food products and children's goods) and 18 percent.

The Deloitte consulting firm estimates that with the introduction of the tax-free regime the collection of import duties will increase and in three years these sums will compensate for the budget's losses created by VAT returns. But this will happen only if the VAT returned is limited to 10 percent.

Subscribe to get the hand picked best stories every week

All rights reserved by Rossiyskaya Gazeta.