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. Last Updated: 07/27/2016

EU Offers $2M for Taxpayer Database

The Tax Ministry and EU-funded Tacis are making first steps toward creating a nationwide online database designed to help taxpayers better understand the taxes they have to pay.

The European Union will shell out $2 million to finance the pilot project in two regions, the Tax Ministry said at a news conference Monday. International financial institutions including the World Bank may contribute hundreds of millions of dollars to the project if it takes off, tax officials said.

One of the regions is Tula, and the other has yet to be selected.

The database will spell out the tax laws so that all the taxpayers in Russia regardless of regional authorities' whims will know exactly how much they are supposed to pay in taxes. It is also intended for the local tax authorities, which may not know some of the laws or pretend not to, officials said. There are hundreds of local tax agencies in the regions that are now free to interpret laws in their own way. "[The database] would be one source and provide uniform interpretation of the law both for the taxpayers and the tax collectors," said Yelena Tolgskaya of the Tax Ministry foreign relations department.

Down the road, officials and Tacis hope, legislation itself may become uniform and binding for every regional tax agency.

Another task of the project is to provide the tax authority with more information about taxpayers with the help of several government agencies to help it prevent tax evasion, Tax Ministry officials said. These include the Justice Ministry, the State Customs Committee and FAPSI, the government's communications intelligence agency.

Tax authorities on the ground do cooperate with other state agencies but they have to talk to each of them separately, which is why they need a common database, the officials explained.

"We are unable to look into every taxpayer's pocket at the moment," said Sergei Dunayev, head of the ministry's foreign relations department.

He suggested that the project may allow tax authorities to be more lenient by making relations between themselves and taxpayers more amicable.

The participants in the project are still not quite clear on how they are going to make the investors feel comfortable with the new project given that several government agencies will have a finger in the pie.

FAPSI, for one, is a KGB successor that has forced most Internet providers to give it access to all client communications, and the masterminds of the project view the Internet as one of the main carriers of the database.

"We are very respectful of the Tax Code and especially of the clause providing for confidentiality of information," Dunayev said.

Officials said that FAPSI participated only as technical assistant or a consultant in the project.