The State Duma approved in the second reading the extension of the exemption of breeding livestock from VAT

The draft law extends for two years - until December 31, 2022 inclusive - the term of VAT exemption for sales on the territory of the Russian Federation and when importing into the territory of the Russian Federation breeding cattle, breeding pigs, breeding sheep, breeding goats, breeding horses, breeding poultry (breeding eggs); semen (sperm) obtained from breeding bulls, breeding pigs, breeding rams, breeding goats, breeding stallions; embryos obtained from breeding cattle, breeding pigs, breeding sheep, breeding goats, breeding horses.

In the first reading, it was planned to extend the benefit for five years, but in the end, an amendment was made to the second reading on the two-year benefit.

‘There is an obvious positive effect of the preferential VAT rate on the import and sale of breeding cattle and semen received from them on the territory of the Russian Federation. Additional annual growth in commercial milk production due to higher milk productivity of breeding cows is about 235 thousand tons. At the same time, the effect of the preferential VAT rate of 0% on the import and sale of breeding cattle and semen received from them on the territory of the Russian Federation contributes to reducing the costs of agricultural producers for these purposes and freeing up funds for the development of agricultural production,’ the explanatory note says.

The abolition of preferential VAT rates in the current economic environment will lead to increasing the payback period of investment projects, reduced investment activity in the industry, the competitiveness of our products on the world market, slowing the rate of increase in milk production, which could have a negative impact on the achievement of increased food security Doctrine of the Russian Federation on the self-sufficiency of the country in milk and dairy products, specify the authors of the document.

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