Tax free in Russia and the VAT refund rules

CG experts explain

Under Federal Law No. 341-FZ of 27 November 2017, citizens of foreign states that are not members of the Eurasian Economic Union (EAEU) receive a right to compensation of the VAT they paid when buying goods in Russian retail shops, provided the goods are then taken out of the customs territory of the EAEU. The compensation equals the VAT paid on the goods in the shops, less the cost of the service of compensating the tax.

Compensation of VAT is available where goods are bought from a single retailer for at least 10,000 rubles, including tax, within one calendar day, on the basis of one or more cash receipts. The list of retailers that can issue tax-free documents is approved by a resolution of the Government of the Russian Federation. The Government has already prepared a draft of that document.

The tax is not compensated on a purchase of excisable goods. The Government is also given the right to determine a list of other goods to which tax free will not apply.

The document confirming the right to compensation of the tax paid on the goods is a tax-compensation receipt bearing a mark of the Russian customs authority. The retail shop issues it in a single copy.

The VAT paid on the purchase can be compensated within one year of the day the goods were bought, provided they are taken out of the customs territory of the EAEU through checkpoints on the state border of the Russian Federation within three months of the day they were bought.

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