The preferential 10 percent rate on palm oil and its fractions in Russia has been abolished through a new regulatory act approved at the highest level of government. The decree, signed by Prime Minister Mikhail Mishustin, marks a shift in how palm oil products are taxed at the national level and signals a broader recalibration of tariff and tax policy surrounding agricultural and food commodities.
Previously, palm oil derivatives carried a VAT of 10 percent in Russia. With the new framework, a standard VAT rate of 20 percent applies to these fractions. This change aligns palm oil products with the general VAT regime that covers most goods and services, effectively removing the previous preferential treatment specific to palm oil and its extracts.
The policy adjustments were part of a broader reform of the Tax Code that parliament and the government began to advance in 2019. As part of that reform, palm oil was removed from the catalog of excused or zero-rated items. Yet it remained listed among food products in the code, reflecting a transitional status that acknowledged its widespread use in the food industry while signaling the potential for future policy revisions aimed at reducing palm oil consumption in consumer goods.
Officials explained that the decision to standardize the tax treatment of palm oil fractions was driven by public policy objectives that include reducing the overall reliance on palm oil in manufacturing and promoting healthier or more sustainable ingredient choices. The aim, as stated by policymakers, is to encourage a shift toward alternative oils and to reduce the environmental and health concerns often associated with heavy palm oil usage in processed foods.
On a related note, government bodies have signaled a commitment to balance fiscal measures with industry realities. In a separate development on May 5, the Ministry of Industry and Trade supported a proposal from Russian Steel to cap the maximum tax payment at 131 billion rubles. This resolution, while not directly tied to the taxation of palm oil, reflects a broader approach to stabilizing tax obligations for large industrial players and mitigating volatility in sector-specific revenues. The decision underscores the government’s interest in maintaining predictable tax conditions for major manufacturers while pursuing strategic reforms that influence product composition and consumption patterns across industries.