Taxation in Russia

B. DIALOGUE

Foreigner: I hear that many Russians complain that taxes are too high in Russia, personal income tax, for example.

Russian: I can't agree with you here. The existing 12% income tax on personal income under 20 thousand roubles a year is not too heavy.

F.: There are many rich people in Russia now. How are higher incomes taxed?

R.: Progressive income tax is applicable in such cases. The larger the income, the bigger proportion of it is paid as tax.³ The upper limit of the tax rate is 35% at the moment.

F.: Oh, I must say that in many countries personal income taxes are also rather high. Can the same be said about taxes levied on businesses?

R.: The tax rate depends, first of all, on the form of business, on what each particular business is involved in. Juridical persons involved in entrepreneurial activities pay 13% to the federal budget and up to 25% to the regional budget.

F.: Do businesses involved in intermediary activities, including stock exchange activities, banking and insurance pay similar taxes?

R.: No, such businesses pay taxes on profit at a rate of 43%.

F.: Well, your profit tax is also comparable to other countries' taxes, isn't it?

R.: Yes, but the tax burden on businesses is too high, because along with the profit tax, enterprises pay VAT, excise tax, property tax and other local taxes. They also pay charges to the Pension Fund, Employment Fund, and Social Insurance and Medical Insurance Funds.

F.: VAT and excise are indirect taxes which are levied on transactions and are included into the selling price. They are paid by consumers and not by producers.

R.: Yes, you are absolutely right, but higher prices often cause sales problems.

F.: As to the VAT, do you use a flat rate for all goods?

R.: No, a reduced rate of 10% is applicable to foodstuffs and goods for children.

F.: In this connection, are there many tax allowances in Russia now?

R.: Quite a lot, but in the situation of growing tax evasion the government plans to do away with many tax breaks.

F.: Besides, as far as I know, there is a good deal of anxiety because the existing privileges for small businesses are under a big question mark.⁴

R.: Right. The majority of tax allowances have already been eliminated. Now small businesses have two alternatives. They either pay an imputed tax on income or pay taxes in the established order under which they have some tax deferments.

F.: These privileges deprive the state budget of some amount of revenue, don't they?

R.: Yes, but they are insignificant compared with the enormous sums that the industrial giants owe in taxes.

F.: The government must provide a clear-cut and stable legislative base for small businesses, I think.

R.: Not only for small businesses. All people suffer from hasty, ill-considered decisions which adversely affect millions of people.

F.: Is there any discrimination against foreign companies in Russia?

R.: No, Russian business legislation provides that a company should pay tax at the same rate whether it is foreign or Russian.

F.: And what about foreign companies that earn income from renting equipment or making loans to Russian companies?

R.: Lower rates are applicable in such cases. Taxes are a powerful instrument. They must be used to support not to stifle business.

F.: Foreign experience can be of help here.

R.: No doubt. The Taxation Ministry of Russia is cooperating closely with its Western counterparts to borrow Western experience.

Notes

¹ the body of tax legislation being increased by each year's Finance Act – причем налоговое законодательство расширяется за счет новых налогов, вводимых ежегодно при принятии финансового акта (самостоятельный причастный оборот – см. Note 3 в Unit 1)

² The United Kingdom operates a "scheduler" system... – В Великобритании существует система «шедул»... (т.е. частей, на которые поделены доходы в зависимости от их источника)

³ The larger the income, the bigger proportion of it is paid as tax. – Чем выше доход, тем большая доля его выплачивается в качестве налога.

Конструкция со сравнительной степенью прилагательных используется для того, чтобы сравнить действия, происходящие одновременно.

⁴ are under a big question mark – находятся под большим вопросом

Дата добавления: 2014-11-29