The Russian parliament has approved a draft bill which, once signed into law by President Vladimir Putin, will abolish Value-Added Tax (VAT) on all domestic flights bypassing Moscow, Russian Aviation Insider has reported.

The measure is promoted as a way to boost direct connectivity between the country's regions, an idea which has been repeatedly supported by Putin and other high-ranking politicians. Currently, the bulk of Russian domestic air traffic is routed through Moscow which is not conveniently located to serve as a domestic hub.

Under current rules, domestic flights in Russia are subject to a preferential 10% VAT rate whose mandate is due to expire at the end of 2019. The standard rate of VAT in Russia was recently increased to 20%.

Flights to and from the occupied Crimea, Kaliningrad, and the Far East are already exempted from VAT.

The Ministry of Transport has separately put forward a draft bill which would abolish VAT on all domestic flights, including these routed through Moscow.