Russia might launch tax free system towards the end of this year

The Industry and Trade Ministry, Finance Ministry, Federal Customs Service and Federal Tax Service are working out the details on orders from Shuvalov, the paper said. The minimum amount of purchases of non-food goods on which foreign citizens would be able to get a VAT refund will be 10,000 rubles, the presentation cited by Kommersant states. A pilot tax free project might be launched at Moscow shopping centers GUM, Petrovsky Passazh, Vesna (part of Bosco group), TsUM, Barvikha Luxury Village (part of Mercury), Crocus City Mall and others, the paper said. Following the pilot project, the system will be opened up to retailers with sales of at least 100 million rubles which do not have any tax debts and operate retail outlets in cities with international airports. Companies that want to join the tax free system will have to undergo certification at the Industry and Trade Ministry. Shuvalov's office and the Finance Ministry did not respond to questions, the paper said. The press service of the Federal Customs Service said it did not have any information about work on the issue of introducing a tax free system. Tax Service officials were not available for comment. One of the developers of the project and partner Deloitte, Andrey Silantyev explained, that there are two ways, how to implement the system of VAT refund to foreign citizens — with the participation of Tax refund agents and without them. "The first option is most common and preferable for the Russian market", — he said. This option implies that the Tax refund agents support the retailers and non-residents in VAT refund. Now there are negotiations with the largest Tax refund companies — Global Blue and Premier Tax Free (Fintrax). However, when working through agents indemnity payments to non-residents will be less than the amount they paid VAT (VAT in Russia for today is 18% and 10%), as agent services for compensation paid in the form of a percentage of the amount of returned taxes, said A. Silantyev