The Russian Finance Ministry has suggested cutting profits tax instead of VAT with raising gas extraction tax. The measure, which will not affect the federal budget, will only boost the economy, the ministry says. The Russian president’s administration reports, though, that the decision to cut VAT will be taken in any case.
Finance Minister Alexey Kudrin said mid-February that the ministry may agree to lower VAT from 18 to 15 percent in exchange for an equivalent rise in mining operations tax for the gas industry.
Deputy Finance Minister Sergey Shatalov on Thursday expressed the ministry’s reviewed position. Gas production tax should be raised in any case, he said. But if the government wants to use the revenues from it to lower other taxes, it should choose profits tax, Sergey Shatalov said, adding that the ministry is considering a cut in profits tax from 24 to 20 percent. The step will be more effective for business, the official told Kommersant.
Businessmen, however, said they are not considering lower profits tax as an alternative for lower VAT rates. Anton Danilov-Danilyan, head of the expert council at the Delovaya Rossiya business association, says his organization thinks current rate for profits tax is quite reasonable.
Russian regions are also likely to be dissatisfied with the Financial Ministry’s idea as gas production tax revenues go to the federal budget and only three-fourths from profit tax collection is left in regions.
The Russian president’s administration sees no point in lowering profits tax, according to a Kommersant source. What is more, the Kremlin may take a political decision to cut VAT before the end of the year, despite the Finance Ministry’s opposition. A source in the administration says the issue may be included in the president’s budget address.
Finance Minister Alexey Kudrin said mid-February that the ministry may agree to lower VAT from 18 to 15 percent in exchange for an equivalent rise in mining operations tax for the gas industry.Deputy Finance Minister Sergey Shatalov on Thursday expressed the ministry’s reviewed position. Gas production tax should be raised in any case, he said. But if the government wants to use the revenues from it to lower other taxes, it should choose profits tax, Sergey Shatalov said, adding that the ministry is considering a cut in profits tax from 24 to 20 percent. The step will be more effective for business, the official told Kommersant.
Businessmen, however, said they are not considering lower profits tax as an alternative for lower VAT rates. Anton Danilov-Danilyan, head of the expert council at the Delovaya Rossiya business association, says his organization thinks current rate for profits tax is quite reasonable.
Russian regions are also likely to be dissatisfied with the Financial Ministry’s idea as gas production tax revenues go to the federal budget and only three-fourths from profit tax collection is left in regions.
The Russian president’s administration sees no point in lowering profits tax, according to a Kommersant source. What is more, the Kremlin may take a political decision to cut VAT before the end of the year, despite the Finance Ministry’s opposition. A source in the administration says the issue may be included in the president’s budget address.
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