The Federation Council intends to consider the law on the VAT increase on 28 July

© RIA Novosti / Vladimir Fedorenkova in fotoreceptori at the meeting of the Council of the Federation. Archival photoThe Federation Council intends to consider the law on the VAT increase on 28 July© RIA Novosti / Vladimir Fedorenkova the image Bank

The Federation Council plans at its meeting on 28 July to consider a law raising the rate of value added tax (VAT) from 1 January 2019 to 20% from current 18% and at the same time retaining on a permanent basis, the rate of insurance contributions to the social extra-budgetary state Fund at 30%, told RIA Novosti on Wednesday the Deputy head of the budget Committee Elena Perminova.

«The law on the VAT increase to 20% the Federation Council plans to consider on July 28,» said the Senator.

According to her, preliminary document will be discussed at the Committee meeting on Thursday with the participation of the Ministry of Finance.

The act provides for the preservation of all existing preferential rates of VAT, as well as the rights of manufacturers to deductions for VAT amounts paid in the acquisition of goods, works and services, even if they were acquired at the expense of budget subsidies or public investment.

At the same time by 2025 to extend the validity of the zero rate of VAT to air transportation of passengers and cargo in the Republic of Crimea and Sevastopol, and also sets the same rate for such air transportation in the far Eastern Federal district. The validity of the zero rate VAT on air travel in the Kaliningrad region is also set to 2025.

At present, the domestic air transportation in Russia are subject to VAT at a concessional rate of 10%. An exception is made for the Republic of Crimea, Sevastopol and Kaliningrad region, which set a zero VAT (for the Crimea and Sevastopol till January 1, 2019, for the Kaliningrad region — on a permanent basis).

The law also retains on a permanent basis, the current contribution rate for compulsory pension insurance in the amount of 22%.