Russian authorities are discussing the possibility of expanding the list of goods which foreign tourists can enjoy Tax Free system, providing VAT refunds to foreigners who leave the country.
According to the newspaper “Kommersant”, the Ministry proposes to include in the Tax Free food.
“The Ministry considers it inappropriate to limit the assortment list of goods for which VAT is compensated, thus defining food and non-food products of Russian and foreign production, are in free circulation within the EEU”, – said in the letter Department in the Ministry of Finance and the government office.
Experiment on introduction of Tax Free in Russia will begin on 1 January 2017, despite the fact that such proposals were discussed in 2014. According to the Ministry, the implementation of the experiment in full has a positive impact on the dynamics of trade.
“Trade may rise by the amount from 33 million to 500 billion rubles a year”, – stated in the Ministry letter. In an example, Federal officials cite the experience of France and Latvia, where after the introduction of the Tax Free sales grew respectively by 6% and 95%.
In 2018 the VAT refund to tourists will be implemented across the country, but the first year the system will only work in some shops in Moscow, Moscow region, St. Petersburg and Sochi in Gum, the outlets of Bosco di Ciliegi, “Petrovsky passage”, Central Department store, Tretyakov passage, “Crocus city Mall”, DLT etc.
It is assumed that the minimum purchase amount of non-food products, with which foreign citizens will be able to get the VAT will amount to 10 thousand rubles.
Usually foreigners acquire “authentic Russian products” – the most popular black and red caviar, crab, Russian vodka, chocolate “Alenka”, honey, candy and marshmallows, told the newspaper in a press-service of Gum.
The General Director “globe GURME” Andrey Jakovlev says that little faith in the effectiveness of the system of Tax Free in relation to food.
“In our store in TSUM we do not see much demand for vodka and caviar among foreigners,” he says, explaining that these goods can be purchased in duty-free Duty-Free shops, and in other countries without worrying for their transportation.
The representative of the “Azbuka Vkusa” Andrew Golubkov considers that the introduction of Tax Free in the food group may have some influence on demand at the Central stores situated near tourist flows, however, a serious growth of sales in connection with this do not expect.
List of goods on which VAT is not refundable to non-residents, each country has its own, says Deloitte partner Andrey Silantyev, but according to this expert, the wider the range of products Tax Free, the more effective the system works and the greater benefit the business.
Today, foreign tourists spend on shopping in Russia, about 10% of their budget for the trip, indicates the industry and trade Ministry, citing data from the Russian Union of travel industry. Thus, Russia is on the 23rd place in the cost per visitor.