On July 16, a bill will be submitted to the State Duma to abolish VAT and income tax for those representatives of Russian business who will donate products to charity, Izvestia writes.
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In addition to the abolition of VAT and income tax, for businesses engaged in free food distribution, it is also planned to increase the limit on expenses for donating products to charity without paying income tax from 1 to 5%.
“Due to the tax regulation in force in the Russian Federation regarding property donated free of charge to non-profit organizations, including food products (food sharing), for a long time preferential or free distribution of products turned out to be more costly for businesses than disposal,” the explanatory note clarifies.
In addition, according to the consulting company TIAR-Center, if all the products that are simply thrown away in Russia were sent to people, this would make it possible to feed approximately 30 million people. According to the authors of the bill, one of the most important steps for the development of food sharing in the Russian Federation was the adoption of a law according to which, starting from 2020, organizations have the right to donate goods to charity without income tax. But currently this measure has a limited threshold of no more than 1% of revenue.
“In order to prevent inefficient sales of food, as well as to support vulnerable segments of the population, the bill proposes to increase this limit to 5%,” the document explains.
Currently, donating goods to charity can result in additional tax costs for the company of up to 20% of the value of the donated products. In this regard, it was proposed to provide for the absence of an obligation to recover VAT on the cost of goods that were donated to charity, including goods transferred using a mechanism called “social shelves”.
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