Install

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

. Last Updated: 07/27/2016

Deputies Support Bid to Simplify Taxes

The State Duma passed in a crucial second reading a series amendments Wednesday aimed at streamlining tax laws and promoting business, Interfax reported.

Among the changes, a measure was introduced to promote the development of new technology by voiding the value added tax on research and design work.

Amendments passed Wednesday also stipulate the type and number of documents required for businesses to gain exemption from paying VAT.

Debate on adjustments to the Tax Code to encourage holding companies to register in Russia rather than in offshore tax havens was deferred, however.

Russian holding companies currently have to pay a 9 percent tax on dividends if they originate from a Russia-based subsidiary and 15 percent if the dividends come from a subsidiary based offshore.

But if the changes were to come into effect, holding companies would have to pay taxes on dividends only if they hold at least a 50 percent stake in their own subsidiaries.

The Finance Ministry has calculated that the federal budget could stand to lose 30 billion rubles ($1.2 billion) annually if the bill becomes law, but the hope is that holding companies will invest more heavily in their subsidiaries.

Deputies also reviewed in a second reading a bill to assign market value to all real estate.

The implication of the legislation would be that tax authorities could use the value to calculate property taxes on companies and individuals.

Property is currently valued at significantly lower levels, but experts say the re-evaluation could take until 2014.

To become law, amendments must be passed in a third reading and then be approved by the Federation Council and the president.

In a separate development, Duma deputies ratified an agreement to avoid double taxation among Russian and Belarussian citizens.

If the changes are enacted, Belarussian citizens resident in Russia for more than 183 calendar days will be required by law to pay a 13 percent rate of income tax only in their country of residence. They will still be required to hold work permits to enjoy the status, however.