The Central Bank proposes to abolish the introduction of VAT on transactions with bank cards.

The bill, passed by the State Duma in its first reading on October 23, abolishes the VAT exemption for card servicing. The exemption allowed banks, payment systems, and processing centers to pay no taxes on expenses. The Central Bank opposed its abolition.

Updated at 4:47 PM

The Bank of Russia has proposed excluding the provision introducing VAT on bank card transactions, including acquiring and processing services, from the draft tax changes coming into effect next year, Interfax reports, citing a source.

The Central Bank sent its comments to the State Duma, where the bill's second reading is scheduled for November 18. Among the risks noted are increased service costs and higher fees for acquiring and processing. According to the regulator, the increased tax burden will also impact banks' profitability and limit opportunities for developing bonus programs and cashback. Furthermore, the change in the tax regime will affect socially significant payment services: the Fast Payment System (SBP), the digital ruble platform, and the Mir payment system, creating an additional burden in the context of sanctions.

Vyacheslav Putilovsky, Director of Bank Ratings at Expert RA, comments:

Sberbank estimates that the most severe version of the tax break could cost the banking sector more than 200 billion rubles.

The proposal to introduce a 22% VAT on bank card transactions seems odd, as all banking transactions are exempt from value-added tax, except for cash collection, according to fintech expert and author of the CardReview Telegram channel, Andrey Chirkov:

Andrey Chirkov , fintech expert and author of the CardReview Telegram channel "SberPayT-Pay Alfa Pay"

The bill, passed by the State Duma in its first reading on October 23, abolished the VAT exemption on card servicing, which had been in effect since 2006. This exemption allowed market participants—banks, payment systems, and processing centers—to pay taxes and reduced transaction costs. Processing operators in Russia are banks and specialized centers, including the National Payment Card System (NSPK). The Accounts Chamber previously reported that the bill lacked calculations justifying the abolition of this exemption.