Tourist facilities are exempt from VAT

On March 26, 2022, Russian President Vladimir Putin signed a law on tax measures to support the Russian economy. The document, initiated by the Government of Russia, also contains a measure proposed by Rostourism for tax incentives for the hotel business. In particular, the law introduces a zero VAT rate for companies that create hotels and other accommodation facilities.

Tourist facilities are exempt from VAT

This is the most long-awaited, breakthrough and important decision for the development of the tourism industry in recent decades. And very timely, given the current situation and the further growth in demand for holidays in Russia. This decision, along with the measures of the national tourism project, will make the tourism industry more competitive, attract new investors and solve one of the key problems of Russian tourism – an acute shortage of modern high-quality hotels. In addition, the measure will contribute to maintaining a comfortable price-quality ratio in the hotel industry on the market, as well as creating new jobs“, – said the head of Rostourism Zarina Doguzova.

The rate is reset to zero both for new objects and for existing or renovated ones. For already operating hotels, the zero VAT rate will be valid for five years – until June 30, 2027. For new facilities and for facilities that have undergone renovation, the zero VAT rate will be valid for five years from the date of commissioning. According to experts, it is during the first five years of operation that the hotel business can begin to become profitable.

«The tax relief established by law will significantly support the tourism sector in the current realities and, in combination with other measures, will create conditions for the preservation and development of the hospitality industry in our country, and therefore improve the quality of services for our guests. A significant part of the economy of St. Petersburg depends on tourism, about 400 thousand people are involved in this industry. The reduction in the tax burden is favorable for the implementation of many significant and popular city projects, including the continuation of investment activities in tourism, the retention and attraction of new personnel in various fields – from construction to public catering and consumer services”, commented the Chairman of the Committee St. Petersburg Tourism Development Sergey Korneev.

The zero VAT rate is valid for companies that invest in the creation of tourist facilities, as well as for those organizations that manage tourism industry facilities, including hotels and campsites. The adopted law also applies to companies that rent tourist infrastructure facilities or provide excursion services with them.

The draft federal law on zeroing VAT was developed jointly by the Russian Ministry of Finance, Rostourism and the Russian Ministry of Construction. It will be implemented as part of the Tourism and Hospitality Industry national project.

It should be noted that in 2020 and 2021 the Committee for Tourism Development of St. Petersburg applied to the Federal Tourism Agency with a proposal to introduce additional support measures for enterprises in the hospitality sector, in particular, to lower the rate of value added tax on certain types of services provided by enterprises in the industry.

Recall that, along with tax support, the Government of the Russian Federation provided the tourism industry with a “green corridor” that simplifies the procedure for investors approvals and reducing a number of costs when planning and implementing projects in this area.


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