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

. Last Updated: 07/27/2016

Tax Chief to Target Foreigners

Under pressure to haul in tax revenues and help pay a huge government debt, state tax chief Boris Fyodorov said Tuesday that his agency will target expatriate tax offenders, dismiss corrupt officials, and create an umbrella collection agency to boost efficiency.

His remarks follow an announcement last week that Russia would go after the richest residents -- many of whom are avoiding paying tax -- and would boost tax collections in the country, where only one-fifth of the workers pay tax. Collection procedures have been increasingly scrutinized since a financial crisis erupted in Russia just over two weeks ago.

To improve the collection rate, no stone will remain unturned. For example, Fyodorov estimates that missed revenue from expatriate tax payments could be several billion dollars and that many financial executives are delinquent in paying taxes. "Our big friends who advise us to improve tax collection do not pay these taxes in this country," he said. "I think [the lesson will be learned] after a couple of leading bankers are stopped by customs officers and told that they have to stay here for a couple of years because they have to pay taxes."

He also promised to improve the efficiency of the tax collection system, going beyond reforms proposed in new tax legislation being considered by the state Duma. Fyodorov would put tax collection agencies such as the tax inspection unit, the tax police, currency export and import control and the alcohol inspectorate, under one umbrella organization, a so-called revenue ministry.

"We have too many agencies going around and making checks," he said. "Naturally, this breeds lack of coordination because different agencies have different interests."

This would put Fyodorov at the helm of all revenue-collecting services, improving his personal authority, said Rory McFarquhar, an economics analyst and tax specialist with the Russian-European Center for Economic Reform. "If you have one minister in charge of it all, there's a lot more authority to make life very unpleasant for those who don't pay."

Fyodorov also called for the creation of a special tax inspectorate based in Moscow to follow the accounts of the country's repeat tax evaders.

Fyodorov reiterated his plans to fire tax officials suspected of corruption. "I have to shake up the whole service," he said.

"There will be serious changes, and we cannot do without this," he added.

Fyodorov's fighting words on Tuesday coincided with the arrest of the head of the government's statistics service, Yury Yurkov, and other senior data workers on charges of helping tax dodgers by doctoring statistical data and of selling confidential data.

However, Fyodorov said he did not know anything about the arrest. "I am responsible for my agency, and no member of my agency was arrested as of this morning," he said.

Last week the tax chief said he would set up a database of over 1,000 well-known earners to monitor their tax-paying practices. The database would grow yearly and eventually include balance sheets on everyone in Russia, he said.

The figures for collection in May under the previous head of the State Tax Service were "not very comforting," Fyodorov said, although he was not prepared to give exact figures.