Putin signed a law on VAT to 20 percent

Russian President Vladimir Putin signed a law on increasing value added tax (VAT) from 18 to 20 percent. The corresponding document is published on the official portal of legal information. The law will enter into force on January 1, 2019.

The government officially nominated the proposal to increase VAT to 20% in June. According to relevant departments, this change in the structure of tax collection should give the budget an additional 600 billion rubles per year. This money should go to finance the instructions that Vladimir Putin transferred in the new May decree.

VAT is an indirect tax that the consumer of goods, work or services pays the seller. Thus, tax increase can lead to price growth. The law on an increase in VAT, as well as the preparing pension reform, led to mass protests in Russia.