The Central Bank of Russia proposed excluding the provision for introducing value-added tax (VAT) on bank card transactions when amending the draft law on tax changes that will come into effect next year. On November 1, the news agency Interfax reported, citing a source familiar with the Central Bank’s position. According to the source, the regulator warned of the threat of increased costs for banking services as a whole due to the VAT imposition on these transactions. The Central Bank pointed out that raising fees for acquiring and processing would increase transaction costs and could make non-cash payments less attractive for consumers.
Increasing the tax burden, as noted by the Central Bank, could also affect the profitability of banks, limiting the development of bonus programs and cashbacks. In early October, the government submitted to the State Duma a draft law canceling the VAT exemption for operations related to banking card servicing, processing, and acquiring services. They are currently exempt from VAT according to the existing Tax Code norms. The document was published in the parliament’s electronic database as part of the budget package. Sberbank estimated potential bank expenses from introducing VAT on card payments at over 200 billion rubles.
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