The Ministry of Finance proposed to exempt from VAT the transfer of property for protection against drones

The Russian Ministry of Finance has proposed a mechanism for tax incentives for business expenses for protection against drone attacks: not to impose VAT on the gratuitous transfer of property to law enforcement agencies for protection against drone attacks, in particular, the Ministry of Defense, the National Guard, the FSB and the Ministry of Emergency Situations, according to the explanatory note to the draft budget of the Russian Federation for 2027-2029.

“A comprehensive mechanism for tax incentives for protection against unmanned aerial vehicles (UAVs) is proposed. In terms of VAT, it is proposed not to recognize as an object of taxation: the transfer of goods (performance of work, provision of services), transfer of property rights free of charge to the Russian Ministry of Defense, the Russian Guard, the FSB of Russia and the Ministry of Emergency Situations of Russia for the purposes of protection against UAVs,” the document says.

In addition, it is also proposed not to impose VAT on “the transfer of food free of charge to citizens located in protective structures, basements, and other similar objects owned by the taxpayer by right of ownership or other legal basis, in order to protect them from the use (use) of non-propelled guns.”

At the same time, it is proposed to retain for taxpayers carrying out these operations the right to deduct “input” VAT, as indicated in the document.