Get the latest updates as we post them — right on your browser

. Last Updated: 07/27/2016

Tax Bodies Urge Tax Streamline

Amid growing criticism over the complexity of Russia's tax system, the Federal Tax Service and the Finance Ministry have proposed that the government drop a number of minor local and federal taxes to simplify taxpaying, a senior tax official said on Wednesday.

Vladimir Zverkhovsky, deputy head of the Federal Tax Service, said that the government might revise some "secondary" federal taxes, while improving collection of major taxes, such as the corporate profits tax, value-added tax and personal income tax.

"Major taxes account for about 93 percent of all tax revenues, and it is questionable that we need all the other taxes we have," he said.

He said, for example, that a 3 percent tax introduced this year to support vital industries should have been added to the value-added tax, since it is calculated in the same manner.

"It has been levied as a separate tax, creating double work for tax officials," he said.

Other secondary taxes include a 0.4 percent road use tax and a tax on the use of the words "Rossiya" or "Rossiiskaya Federatsiya" in company names, which varies from 0.04 to 0.4 percent of revenues.

Zverkhovsky said that while local taxes represented just over 2 percent of Russia's total tax burden, they complicated tax collection and created fiscal chaos in the country.

"We do not really need a pet tax, do we?" Zverkhovsky said, referring to the Moscow tax on all pet dogs and cats.

He added that Russia did not need the majority of its other 21 local taxes either.

President Boris Yeltsin signed a decree last December giving local governments the right to impose a whole new range of new taxes.

Since then, Zverkhovsky said, local authorities have introduced an array of new taxes, mostly to support social programs like education or environmental protection.

The decree gave local governments the right to levy their own corporate profits tax at a rate of up to 25 percent, in addition to a 13 percent federal profits tax. According to Zverkhovsky, most Russian regions have chosen the top rate.

The Moscow City Duma last week hiked its own corporate profits tax to 25 percent, and to 30 percent for banks and insurance companies.

Zverkhovsky said that mutual debts among enterprises had cut tax revenues in January and February of this year, but added that he expected a rise in revenues this month.