Soft VAT for freshwater trout passes second reading at Lower House

The State Duma has successfully completed the second reading of a bill that will set the same 10% VAT rate for live freshwater trout as already charged on sea trout, reports Megafishent.com.

As the head of the Committee on Agrarian Issues Vladimir Kashin noted in an interview with Duma TV, the adoption of the bill will allow the implementation of the food security goals.

According to the results of 2020, the production of salmonids in Russia amounted to 116.2 thousand tons. The volume of trout production for 2020 was 65 thousand tons. The rapid pace of development has occurred since 2014 when retaliatory measures were introduced against anti-Russian sanction, the bill’s explanatory note says.

At the same time, the tax legislation uses a different approach when determining VAT rates for certain types of aquatic biological resources.

Thus, the taxation of fish producers is divided into two groups: at the rate of 10% for the sale of live fish of non-valuable species and sea trout, and at the rate of 20% for the sale of fish of valuable species, as well as trout with the exception of sea trout. Thus, sea trout is currently taxed at the rate of 10% VAT, and the freshwater trout is taxed at 20% VAT.

This creates an additional financial burden on fish farms that breed freshwater trout and negatively affects the development of commercial freshwater trout farming.

Besides, the VAT rate of 20% on live trout is not in line with international practices reducing the capability of the freshwater trout producers to compete with their foreign counterparts, the authors of the bill point out.

Tax exemption

The Committee on Budget and Taxes supports the establishment of the soft VAT for freshwater trout and a complete tax exemption for breeding products.

The list of breeding products, the sale of which is not to be subject to taxation, should include fish eggs, young fish and live fish, which are “products of fish farming used for breeding purposes, for the reproduction of aquaculture species with high breeding and productive qualities, and for the conservation of aquatic biological resources”.