State Duma approves bill to exempt certain banking services from VAT
On 14 October, the State Duma approved at first reading a government bill amending Article 149 of the Russian Tax Code to exempt interest on deposits in precious metals (held in the form of bullion) from VAT. Under current practice, banks return bullion of the same type and weight – or a cash equivalent – together with interest; however, the interest component has been subject to VAT.
The initiative eliminates the discrepancy between the tax treatment of “metal” deposits and conventional bank deposits, whose interest is not subject to VAT. According to the sponsors, this should enhance the transparency and attractiveness of such products for clients.
For banks, the bill will reduce tax uncertainty and compliance costs; for depositors, it will provide greater clarity on returns. The bill has passed only the first reading; refinements and transitional provisions may be introduced before the second reading. We will continue to monitor the bill’s progress and the Ministry of Finance’s position.
