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. Last Updated: 07/27/2016

April 1 No Joke for Some Taxpayers

Moscow Tax Inspectorate No. 15 was swamped Monday as people lined up to file income declarations by the April 1 deadline, a sign that the government's campaign to make Russia a country of taxpayers is starting to work.


Though only about 4,000 forms have been filed so far from among 700,000 adults in the northeastern Moscow district covered by the inspectorate, that is about 1,000 more than last year.


But in a country where tax evasion is something of a national pastime, it remains to be seen who are the bigger April fools -- those who file, or those who don't.


Lidia Suslova wasn't taking any chances. A spate of television and newspaper advertising warning about the perils of nonpayment brought her to the local inspectorate for the first time.


"If they check on me, I don't want to have to pay [fines of] 450,000 rubles ($79) for not paying 100,000 rubles now," the accountant said.


Across Moscow, all 37 tax offices have been working nonstop, including weekends, receiving declarations from registered entrepreneurs and private citizens.


Nationwide, the Federal Tax Service expects more than 5 million individuals to file declarations this year, about twice last year's total, said Alexander Yegorov of the service's information department.


Yegorov said the tax service "did not pay a kopek" for the advertising campaign, which was produced by the country's major advertising agencies free of charge as "social advertising."


"We have very good relations with [Premier SV President Sergei] Lisovsky and with Video International," said Yegorov, referring to Russia's largest advertising production and media sales agencies.


Anybody with more than one source of income and a total taxable income of more than 12 million rubles is required to report. The only exemptions are for people who work for only one company that withholds their taxes.


Foreigners working in Russia must file declarations if they were in the country for 183 days or more during the tax year.


Penalties for not declaring can range from a modest late-filing fine to much harsher punishment for people caught trying to hide income from tax officials.


Some companies prompt their employees to file by issuing them income statements and telling them to file declarations. But Alexander Bakherkin, a electrician filling out his declaration in the corridor at Inspectorate No. 15, said he believes that only about 1 percent of the people at his factory would file -- even though they all are supposed to because they are paid by two separate firms.


The deputy director at Inspectorate No. 15, Olga Krutskikh, said taxpaying won't become a normal part of life until people see that they are getting something in return from the government.


"If people lived in normal apartments, rode in good public transportation, if their children of the people filing declarations at her office are citizens of "moderate means," meaning their incomes are less than 50 million rubles a year. Her office has seen only a few taxpayers declaring incomes of 1 billion rubles or more.


But the only way for the authorities to enforce tax collection is to track people down on the basis of records provided by employers. At the same time, many people in today's Russia live off levye zarabotki, or informal unreported cash payments for goods and services.


Yelena Dorovskikh, a lawyer, said that she declared all her income because all of it was received formally with tax withheld at the source. But she said she is not sure she wouldn't hide other income if she had any.


Most people waiting in lines at tax offices these days are "private entrepreneurs" -- shuttle traders, stall holders at markets, private truck drivers and the like who were registered with the tax office in order to receive licenses or permits. Because it is impossible to verify their true incomes, tax inspectors have to take these filers at their word.


Georgy Konotop, who buys and sells luggage and clothing at a Moscow market, said that his tax payment is based on a "deal you make with an inspector."


"If I say that I made, let's say, 500,000 a month, the inspector would say, 'Shame on you! Write down some more. Otherwise you are even below the minimal standard of living.' So I write 600,000," Konotop grinned.


He said that overall, he pays to the government about 40 percent of his profits, but most of that is for fees, licenses and rental on his place at the market. Only 2 to 3 percent goes through the tax office.


"That's a formality," said Konotop. But in a sign of gradual formalization of Russia's grassroots private economy, he said he plans to declare his paid employees and sign formal contracts with them.