Tax Free System: main information about tax free shopping in Russia

Tax Free electronic checks system will be launched in Russia on 1 January 2021. Members of the State Duma adopted the relevant bill on July 9. Foreign citizens will be able to use e-checks to request Tax Refund for goods purchased in Russia

Tax Free System: what is that?

This is a VAT refund system. The amount is refunded for goods purchased by foreign citizens when they leave the country where those goods were purchased. That means that only residents of the country should pay VAT, while foreign citizens are exempted from these payments. 

When was it introduced in Russia?

On November 28, 2017, Russian President Vladimir Putin signed a law on the introduction of VAT Refund System in the Russian Federation for tourists from countries outside the Eurasian Union (Russia, Belarus, Armenia, Kazakhstan and Kyrgyzstan). The law came into force on 1 January 2018. Tourists are able to receive 18% VAT refund. The minimum purchase amount is 10 000 RUB.

What does Tax Free System mean for Russia?

“This system will help to attract foreign tourists and increase their interest in purchasing goods in Russia,” said Irina Guseva Guseva Irina Mikhailovna Guseva
Irina Mikhailovna
, First Deputy Chairwoman of the Committee on Budget and Taxes.

She is convinced that the simplification of VAT refund services will attract more foreign tourists to the Russian Federation.

Foreigners will be interested in buying as much as possible, as they know that they will be able to receive a VAT refund when they leave Russia, as the parliamentarian said.

What changes will be introduced by the new law?

The document will help to simplify the tax refund procedure, as it allows retailers to create electronic receipts for purchased goods by a foreign citizen with overall amount over 10 000 RUB per day. Electronic document system will be established between all participants of the tax free system.

The Ministry of Finance of the Russian Federation had already explained that the receipts will be automatically sent to the information system of the customs authorities. A foreign citizen should present the exported goods to Customs and tell the receipt number, and customs officers will make all necessary marks. After that, the e-check will be sent to the operator, who will refund the amount to a foreign citizen.