Russia Clarifies VAT Rules for Payment Market

The Ministry of Finance has officially addressed the payment sector's tax inquiries by sending a detailed letter to the Central Bank. This correspondence outlines the specific VAT obligations for various payment market operations starting from January 1.

The guidance provides a clear distinction between which services are taxable and which remain exempt. While the letter resolves some immediate concerns regarding the Fast Payment System (SBP) and acquiring services, it also highlights gaps that industry players must monitor closely.

According to market participants, the Ministry of Finance's letter provides a definitive answer regarding the tax status of the Fast Payment System (SBP). Operations conducted through the SBP will not be subject to VAT, a decision that is expected to encourage the continued growth of instant peer-to-peer transfers.

However, the tax exemption does not extend to all payment services. The guidelines confirm that acquiring services—processing card payments for merchants—and the issuance and maintenance of payment cards do fall under the scope of VAT taxation. This distinction places a heavier tax burden on traditional card-based infrastructure compared to instant transfer systems.

The core distinctions established by the letter are:

• SBP Operations: Exempt from VAT
• Card Acquiring: Subject to VAT
• Card Issuance & Servicing: Subject to VAT

While the letter clarifies the status of major services like SBP and acquiring, experts warn that the regulatory landscape is not yet fully settled. A number of specific scenarios remain ambiguous, particularly concerning alternative payment methods that have gained traction in recent years.

Industry analysts suggest that these ambiguities are not minor. The lack of explicit guidance on non-traditional payment channels creates uncertainty for fintech companies and banks developing new products. Market participants are now anticipating a wave of follow-up requests for clarification to ensure full compliance with the new tax regime.

Experts note that a series of unresolved questions remains, including those concerning alternative types of payments, which will require new explanations.

The immediate impact of these guidelines is a clearer cost structure for financial institutions operating in the region. By explicitly stating that SBP transactions are tax-exempt, the regulators are effectively subsidizing the use of this infrastructure over traditional card networks.

For consumers, this regulatory clarity is largely positive. It ensures that the zero-fee nature of SBP transfers remains viable for banks, preventing potential pass-through costs. Conversely, services related to card acquiring may see adjusted pricing structures as businesses factor in the VAT requirements.

The distinction signals a strategic preference for instant, account-to-account transfer technologies while maintaining standard tax protocols for established card-based financial products.

The payment sector now enters a period of adjustment and observation. Financial institutions must update their internal accounting systems to reflect the VAT exemptions for SBP and the taxation of acquiring services.

However, the industry is watching closely for the next round of clarifications. The alternative payment methods mentioned by experts represent the next frontier of regulatory guidance. Until these specific cases are addressed, a degree of caution will remain in the market as stakeholders await further correspondence from the regulators.