Russia’s Finance Ministry Proposes New VAT Calculation Mechanism for Contracts Signed Before Legal Changes

The Russian government has approved and submitted to the State Duma a bill clarifying how value-added tax (VAT) should be calculated under existing contracts when the obligation to pay the tax arises from changes in legislation. The draft law, prepared by the Ministry of Finance, implements ruling No. 41-P of the Constitutional Court of Russia dated November 25, 2025.

Core of the Amendments

The bill proposes to add a special procedure to Article 168 of the Russian Tax Code for situations where:

• the contract was concluded before legislative changes came into force;
• the parties did not include terms addressing such circumstances and did not amend the contract price;
• the buyer cannot deduct the VAT charged to them.

How the Tax Will Be Calculated

In such cases, the supplier (seller) will calculate the VAT amount using the estimated method – based on the value of goods, works, services or property rights explicitly stated in the contract.

This means the tax will not increase the contract price but will remain within the amount already agreed upon by the parties.

No Invoice Required

An important relief: under this estimated calculation method, issuing an invoice will not be required.

Effective Date

The amendments will take effect one month after the official publication of the law, but no earlier than the next VAT tax period.

Background

Draft Law No. 1203640-8 was prepared to implement the decision of the Constitutional Court, which pointed out the need to address situations where, due to legislative changes, a seller is forced to charge VAT to a buyer who has no right to deduct it. The proposed mechanism helps avoid an unreasonable tax burden on the parties to an existing contract.