Tax Reform In Russia To Take Another 2-3 Years

The government of Russia assumes possible lowering of the maximum rate of a single social tax. Deputy minister for economic development and trade Arkady Dvorkovich stated that the maximum rate of a single social tax could be lowered from 35 to 25 percent. Speaking at the conference of the Russian Union of Industrialists and Entrepreneurs devoted to tax reform issues Dvorkovich noted that one of the key tasks of the tax reform was the lowering of the tax burden. Before the adoption of the new tax laws the average tax burden was equal to 45-55 percent of the earnings and it will be lowered to 40 percent by 2002, he said. At the same time, according to Dvorkovich, an optimal tax burden should be equal to 35 percent of the earnings. At the current stage of the tax reform the Russian government has to lower taxes only there where it may result in expanding the taxation base owing to legalisation of incomes. Therefore, a single social tax is a very perspective direction since currently about one-third of the Russian wage fund avoids declaration. The government also considers possible lowering of VAT rate, while it has already passed decisions on abrogation of the turnover and sale taxes. Speaking about the tax reform prospects Dvorkovich noted that it would take another 2-3 years to be completed. He singled out several directions of government activities, i.e. introduction of property taxes, development of small business taxation system and Tax Code chapter on state duty.

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