Russian Duma passes bill on VAT increase

MOSCOW - Russia's State Duma, or lower house of parliament, passed a bill on Tuesday to raise the value-added tax (VAT) to 20 percent from the current level of 18 percent.

It is expected that the new VAT rate starting next year will result in additional government revenues of 620 billion rubles (about $9.9 billion) a year, according to a State Duma statement.

The bill kept low a VAT rate of 10 percent on foodstuffs, children's goods, medicines and other socially important items and basic services.

To become effective the bill has to be endorsed by the Federation Council, the upper house of the parliament and then signed into law by President Vladimir Putin.

An increase in the VAT is meant to provide additional funding for the implementation of Putin's June 7 decree that outlines the country's strategic development targets up to 2024.