Russia’s Government has submitted draft amendments to Article 168 of the Tax Code to establish how VAT is calculated under ongoing contracts when tax legislation changes and the buyer cannot claim a tax deduction.
The Government of the Russian Federation has submitted draft legislation to amend Article 168 of Part Two of the Tax Code of the Russian Federation, seeking to address how VAT should be treated under existing contracts when tax legislation changes.
The draft federal law was submitted on 10 April 2026 to implement Resolution No. 41-P of the Constitutional Court of the Russian Federation, dated 25 November 2025.
Proposed VAT calculation
Under the proposed amendments, where a change in tax legislation creates a VAT liability for a seller after a contract has been concluded, the VAT would be calculated using the calculation method based on the price already specified in the contract.
The provision would apply where the buyer does not have the right to claim a tax deduction for the VAT, the parties have not amended the contract price or terminated the contract, and the contract did not contain a mechanism for dealing with subsequent tax changes.
Under the calculation method, VAT would be treated as included in the agreed contract price rather than being charged in addition to that price.
The seller would also not be required to issue tax invoices (счета-фактуры) to the buyer in these circumstances.
Addressing the existing legal gap
The proposed changes are intended to address a situation under the current Article 168 rules where a supplier becomes subject to a new VAT obligation during an ongoing contract.
Although the supplier may seek payment of the additional VAT from the buyer, the buyer may not be entitled to a tax deduction for the additional amount. This can leave the buyer carrying the full cost of the tax change.
The draft legislation would instead provide a mechanism for determining the VAT liability within the contract price where the specified conditions are met.
Effective date and impact
The draft law is expected to take effect one month after its official publication, but not earlier than the first day of the next tax period for Value-Added Tax (VAT).
The Government states that the amendments would have no impact on the revenues or expenditures of the Russian Federation’s budget system.
The draft also does not introduce new regulatory requirements, licensing rules or compliance audits affecting economic or entrepreneurial activities.
It would not require the suspension, repeal or amendment of other federal laws or regulatory acts issued by the President, the Government or federal executive authorities.
Government representative
Under Government Decree No. 795-r, Alexey Valerievich Sazanov, State Secretary and Deputy Minister of Finance of the Russian Federation, has been designated as the Government’s official representative during parliamentary consideration of the bill.
