Draft law on reducing the VAT rate for certain categories of goods

On September 8, 2025, a bill was submitted to the State Duma for consideration, proposing amendments to Article 164, Part II of the Tax Code of the Russian Federation regarding a reduction in the value-added tax rate for certain types of socially significant goods.

The draft federal law proposes to reduce the value-added tax from 10 to 5 percent for certain groups of goods that are socially significant for broad groups of citizens. At the same time, if the inflation rate for a group of socially significant goods for the previous calendar year exceeds the inflation rate for all groups of goods, the value added tax rate for this group of goods in the next tax period shall be set at 0 percent.

It is proposed to establish this taxation system for the following groups of goods:

1) certain food products;

2) goods for children (clothing, school supplies, etc.);

3) periodicals;

4) the following domestic and foreign medical goods: medicines, including pharmaceutical substances, medicines intended for clinical trials of medicinal products, and medicines manufactured by pharmacy organizations; medical devices, except for medical devices whose sale is exempt from taxation in accordance with subparagraph 1 of paragraph 2 of Article 149 of the Tax Code of the Russian Federation.

The procedure remains in place whereby the codes for the above-mentioned products are determined in accordance with the All-Russian Classifier of Products by Economic Activity, and the Commodity Nomenclature for Foreign Economic Activity is determined by the Government of the Russian Federation.

It should also be noted that this bill establishes a floating VAT rate in cases where the inflation rate for a group of socially significant goods for the previous calendar year exceeds the inflation rate for other groups of goods, the value-added tax rate for this group of goods in the next tax period is set at 0 percent.

The authors of the bill propose a floating VAT rate as a tool for adjusting the tax burden to account for inflation. The introduction of such a system will make it possible to automatically reduce the VAT rate for socially significant goods to 0% if inflation for this group of goods exceeds the average inflation rate for other goods.

As noted in the explanatory note to the draft law, the proposed system is based on a comparison of the inflation rate for socially significant goods and the overall inflation rate for other groups of goods. The base rate for socially significant goods is set at 5% by default. Every year, the Federal State Statistics Service (Rosstat) calculates the inflation rate for socially significant goods based on data from the All-Russian Classifier of Products by Economic Activity. If the inflation rate for socially significant goods for the year exceeds the general inflation rate for other goods, the VAT rate for these goods is reduced to 0% for the next tax period. If inflation for socially significant goods does not exceed the average inflation rate, the VAT rate remains at 5%. Thus, this mechanism allows for a flexible response to price fluctuations and prevents an increase in the tax burden on socially significant goods in conditions of high inflation.

Link: https://sozd.duma.gov.ru/bill/1011590-8

Draft law № 1011590-8