Modeling the introduction of a VAT deduction mechanism for individuals as a measure to support financially vulnerable groups of the population

The subject of the study is the targeted mechanism of "VAT refund" (reimbursement of part of the paid VAT) for individuals as a measure of support for financially vulnerable groups in Russia amid a standard VAT rate of 22% starting in 2026. The object of the study is the distribution of the VAT tax burden and the budgetary implications of its targeted compensation through digital fiscal data. The author thoroughly examines aspects of the topic such as the criteria for classifying citizens as vulnerable groups, the procedure for confirming purchases via fiscal receipts, the calculation of the refund amount based on VAT rates and limits, and the interrelation of this measure with the abolition of personal income tax deductions. Special attention is given to comparing targeted refunds with reduced VAT rates and direct transfers, as well as the risks of administration and abuse. The methodology is based on an approach to tax expenditures and a static VAT incidence model: the "VAT in price" is calculated for the aggregate final consumption, followed by budget expenses under coverage scenarios, return shares, and limits. The scientific novelty lies in the adaptation of tax-free logic to internal targeted VAT refunds based on digital receipts and in the evaluation of tax expenditures at the current 22% rate, taking into account the cancellation of personal income tax deductions. The modeling results show that with coverage of the bottom 40% of the population and a 100% VAT refund on taxable consumption, tax expenditures would amount to about 3.15 trillion rubles per year (≈1.6% of GDP in 2024); with a 50% refund, it would be about 1.58 trillion rubles. It is concluded that a budget-neutral design requires more precise targeting, partial refunds and/or strict limits, as well as the exclusion of high-risk categories. The measure is more targeted than reduced VAT rates, but its macro-fiscal sustainability depends on parameters and risk control.