Zero VAT for Russian hotels continues until 2030's end.
Russian Prime Minister Announces Extended Zero VAT Rate for Hotels and Tourist Accommodations
Russian Prime Minister Mikhail Mishustin has announced that the zero rate of Value Added Tax (VAT) for hotels and other tourist accommodations will be extended until the end of 2030. This initiative is intended to help hoteliers reduce costs, with the freed-up funds to be used for service improvement, business expansion, or modernization.
According to the press service of the Russian Ministry of Economic Development, investors are expected to invest 856 billion rubles in the construction of hotels and tourist infrastructure in Russia by 2030 under a program of preferential lending. This program, expanded in spring 2025, will support an additional 170 projects located in special economic zones of a tourist-recreational type. By 2030, 78,000 hotel rooms will be introduced in 51 regions of the country.
As the international travel becomes increasingly inaccessible, Russians are turning to their own country's historical, cultural, and natural attractions. DK.RU's project "What haven't I seen yet?" provides a wealth of reading material for exploration. The Russian Ministry of Finance anticipates collecting 40 billion rubles from tourists in tourist tax in 2025.
Meanwhile, hotel room prices in Russia have risen by 19% over the year, as reported by DK.RU. The extended zero VAT rate is expected to further impact both hoteliers and the tourism industry as a whole.
The extended zero VAT rate for hotels and tourist accommodations offers a fiscal incentive, improving cash flows and reducing upfront tax costs for hoteliers. This can stimulate expansion and modernization efforts within the sector. However, the new tourist tax and other tax increases may create complexity for some investors, potentially moderating the pace and scale of investment expansion in Russia's hospitality sector over 2025-2030.
This mixed picture of fiscal incentives and constraints presents both opportunities and challenges for hoteliers and investors in Russia's tourism sector. Balancing profitability with increased fiscal obligations will be crucial for businesses navigating this complex environment over the coming years.
The extended zero VAT rate for hotels and tourist accommodations could lead businesses to allocate the savings towards improving their offerings, contributing to an upgraded lifestyle for guests. With the government's program of preferential lending, there's potential for a surge in finance for hotel construction and infrastructure development in Russia.
