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. Last Updated: 07/27/2016

Duma Approves VAT Exemptions

The State Duma has passed in a second reading amendments to a value-added tax law, introducing a list of products enjoying tax breaks despite government concern over the budget.

Deputy Finance Minister Mikhail Motorin urged deputies to vote against amendments that he said would unbalance the 2000 budget, which sees revenues of 797 billion rubles ($25 billion at a projected rate of 32 rubles per dollar).

"The federal budget losses caused by this law will amount to 10 billion rubles," Motorin said before the vote. The 333 deputies present in the lower house of parliament passed it unanimously.

It still needs one more reading, plus approval by the upper house of parliament and president to become law.

The bill writes into law a list of products, including basic foods, baby products and basic medicines, with reduced VAT of 10 percent instead of the usual 20 percent.

The amendment effectively deprives the government of its current right to change the list.