MPs propose to abolish VAT on food products with expiring shelf life

According to the authors of the initiative, an effective solution in such a situation could be the free transfer of products to the population. However, this is not profitable for retail chains, since they have the right not to pay VAT only for discarded products with an expired shelf life. "According to the current legislation, it is easier for businesses to destroy these products in order to avoid paying taxes than to transfer them to the population free of charge. In order to prevent the continuation of such an absurd situation, we are making these changes to the Tax Code," Izvestia quotes one of the authors of the bill, Deputy Chairman of the LDPR Yaroslav Nilov.

It is specified that it is proposed to exclude baby and dietary food products from the list of goods to be transferred to the population, as well asalcohol . The LDPR press service told the publication that the bill has already been sent to the government for consideration . In addition, the State Duma's relevant committees are ready to support the initiative. According to Nilov, Russian retail chains have also long been offering exactly this solution to the problem.

Executive Director of ANO Foodsharing Alexandra Kumpan believes that the abolition of VAT on products transferred for foodsharing is appropriate and will allow scaling up the practice of rational use of food in Russia. Back in 2021, ANO Foodsharing came up with a similar initiative to the Ministry of Finance. “Under current conditions, the cost of disposal is 2-3.5 times lower than the cost of organizing foodsharing. Large companies that transfer products to foodsharing services free of charge are forced to pay up to 20% of the cost of the goods to the budget. If this food is sent for disposal, such an obligation does not arise,” she said.

In addition, by reducing the volume of food waste by working with food sharing services, the organization does not always save on disposal, Kumpan noted. Often, retail is forced to pay for the services of a regional waste removal operator according to the standard, and not based on the actual volume of waste generated. Thus, now companies have no market incentive to reduce waste generation, although food waste can make up to 40% of MSW, she says.

"Foodsharing is not charity, but an element of a closed-loop economy. These are services that help to use food rationally and prevent food waste," Kumpan emphasized. "The role of the state in this context is to provide positive economic incentives to those who implement such tools. Exemption from VAT for foodsharing products is one such incentive." According to her estimates, in the next four to five years, this measure will allow for the rational use of 1 million tons of food. This volume of products is equivalent to the annual diets of 1.8 million people.

Chairman of the Presidium of the Association of Retail Companies (AKORT) Igor Karavaev said that more than 15 million tons of food waste are generated in Russia every year, of which at least hundreds of thousands of tons are products that could have been given to those in need before their expiration date. Today, the lack of tax incentives is a serious obstacle to the development of projects such as food sharing, the expert believes.

From a social point of view, the destruction of food products fit for consumption is wasteful, especially in the situation with the current level of food inflation and declining real incomes of the population, said Dmitry Leonov, deputy chairman of the board of the Rusprodsoyuz association. 

Alternative methods of eliminating write-offs of expired products are also in line with global environmental trends, the expert noted. Some retail chains have solved the problem by offering additional discounts when the product approaches its expiration date: the closer it is, the higher the discount. "For the consumer, this is only a plus, because he will be able to buy a quality product at a lower price. With this approach, retail trade successfully solves the issue of "zero" write-offs of expired products," Leonov says.

He noted that the distribution of products to those in need, as well as transfer to charitable foundations, in our country is currently hampered by gaps in tax legislation. Initiatives to adjust it have not yet been implemented in practice, which leads to smaller financial losses for retailers when writing off than when distributing products free of charge, Leonov emphasized.

According to him, participation in food sharing is more expensive for producers and retailers than sending food to a landfill. "Low-income people in need of help, large families, lonely elderly people will be able to receive free assistance. And it is important that this will not require huge budget expenditures on cleaning up landfills or helping such citizens. In addition, the abolition of VAT can have a positive effect on the environment, because it will reduce the amount of waste in landfills," Leonov concluded.

The Magnit retail chain welcomes the deputies' initiative, the company's press service reported. "Exemption from VAT of goods with an expiring shelf life, donated free of charge to charity, will give a new impetus to the development of food sharing in Russia and will help save tens of thousands of tons of quality food products from disposal," the company believes.