Zero-rated VAT for hotels extended until 2030 by the government.
In a government meeting on May 22, Prime Minister Mikhail Mishustin announced an extension on the zero Value-Added Tax (VAT) rate for hotels and tourist accommodations in Russia. This support measure is slated to continue until the end of 2030, with the goal of encouraging both domestic and foreign tourists to travel within the country.
The decision to extend the zero VAT rate is part of an ongoing adjustment to the Tax Code. This amendment aims to help hotel owners reduce costs, enabling them to improve services or expand their businesses. According to the prime minister, this move will optimize the expense of their product, leading to enhanced services and additional facilities for tourists.
The zero VAT rate for hotels and other tourist facilities has been in effect in Russia since July 2022. Previously, on November 18, 2024, President Vladimir Putin had issued instructions to extend the zero VAT rate for hotels until December 31, 2030. The prime minister and State Duma Speaker Vyacheslav Volodin were appointed to oversee the implementation of this extension.
The zero VAT rate on hotels serves to decrease the overall cost of lodging, making travel and tourism more affordable within the country. By doing so, the government hopes to encourage increased hotel occupancy and stimulate recovery and growth in the hospitality sector, which has been impacted by the COVID-19 pandemic. Additionally, this policy is intended to foster economic activity in related sectors such as transportation, food services, and cultural attractions.
This extended zero VAT rate on accommodation is part of a broader strategy to create a favorable tax environment in the travel sector, benefiting both consumers and providers. By lowering prices for tourists, the government seeks to drive demand for domestic destinations and hotels, potentially leading to increased tourism revenue and employment opportunities in the hospitality industry. The 2030 end date represents a long-term commitment by Russia to support and grow its tourism sector through tax incentives[1].
The government's strategy aligns with typical policies in various countries, which use tax breaks to stimulate domestic tourism by making travel more affordable.
- The extension of the zero Value-Added Tax (VAT) rate for hotels in Russia, as announced by Prime Minister Mikhail Mishustin, is a part of the ongoing finance adjustments aiming to decrease costs for hotel owners, thus encouraging business growth in the hospitality sector.
- The prime minister's decision to continue the zero VAT rate until the end of 2030 is a strategic move in corporate finance, as it aims to make travel and tourism more affordable, stimulate economic activity in related sectors, and ultimately boost Russia's tourism industry, leading to increased revenue and employment opportunities.
