Two trillion in three years

The government expects to receive more than two trillion rubles in three years from the increase in the VAT rate

An increase in the VAT rate from 18% to 20% will allow the federal budget to receive more than two trillion rubles in three years: 633.5 billion rubles in 2019, 678.2 billion in 2020 and 728.3 billion in 2021.

“In 2019, a significant increase in federal budget revenues relative to GDP is expected, which is associated with expected changes in tax legislation (primarily, an increase in the VAT rate from 18 to 20%), an increase in oil and gas revenues against the background of a higher oil price compared to included in the budget for the current year and a change in a number of other macroeconomic indicators,” reads the draft of the main directions of the budget, tax and customs tariff policy for 2019-2021 prepared by the Ministry of Finance.

On July 3, the State Duma adopted in the first reading a bill to increase VAT from 18% to 20% from January 1, 2019. The document was submitted to parliament by the government on 16 June.

In May, Prime Minister Dmitry Medvedev valued a new May presidential decree on developing the economy and raising living standards over the next six years at an additional 8 trillion rubles. In addition to raising VAT, the authorities intend to raise the retirement age, which is opposed by the vast majority of the country's residents.