Russia's increase in value added tax will not affect grain or raw sugar, trade official says

by Teresa Acklin
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   MOSCOW — The Russian government's recent decision to raise its value added tax to a base level of 20% from 10% beginning July 1 will not affect grain or raw sugar, according to a senior trade ministry official.

   Those foodstuffs will remain liable to the 10% V.A.T. adopted in 1995, said Andrei Kushnirenko, head of the tariff policy department at the Trade Ministry. The 20% level will apply to white sugar and other foodstuffs, he added.

   A government resolution published in late May excluded several foodstuffs liable to the preferential 10% V.A.T., including feed grain, white and raw sugar, meat and meat products, fish and seafood, eggs and egg products and feed grain. But government resolutions cannot overrule laws adopted by the parliament, Mr. Kushnirenko said.

   Last October, the Russian government set the lower tax rate on certain foodstuffs until June 1 to stimulate production after the 1998 financial crisis. The list included bread and bread products; pasta products; groats and grain flour; oilseeds and oilseed by-products; animal feed, including feed grain; livestock and poultry; meat, meat products, fish and seafood; milk and milk products; eggs and egg products; white and raw sugar; salt; vegetable oil and margarine; and vegetables and potatoes.