NATALIA KORNIENKO: “THERE WAS A PROPOSAL TO NULIFY VAT FOR FOOD PRODUCTS”

Natalia Kornienko, Head of Tax System Development Department of the Gaidar Institute, commented to radio “Sputnik” on the initiative of Vasily Vlasov, the Duma MP, to introduce a zero VAT rate when ordering food online during the pandemic.

According to MP, this will reduce the cost of food products by 10-20% when purchased online.

Natalia Kornienko commented: “The government can introduce it on a temporary basis, however, there is no guarantee that delivery and food costs bought via internet shops will decrease.”

“Probably, this measure could be introduced on a temporary basis, because turnovers anyway drop in the economy and the VAT revenues fall. No doubt, there were no calculations made, but I assume that this is such an insignificant share of the VAT that it can be realized aiming to invite people to actively use internet shops and delivery. However, nullifying the VAT rate does not provide any guarantees for reduction in prices for goods and delivery by 10–20%, as spoken by stakeholders. In accordance with a general principle, any amendments in tax legislation should be introduced as from January 1st. Essentially, this improves the position of taxpayers, as it reduces the tax burden”, – the expert of the Gaidar Institute concluded.