Russian president proposes to introduce 16% flat vat

Vladimir Putin has proposed to introduce a flat 16 per cent value added tax, provided that the financial situation in the country continues to be favorable.

The proposal to introduce a single unified rate of the value added tax is contained in the President's budget address to the Federal Assembly, the text of which the presidential press service has made available to RIA Novosti.

Putin considers it possible to reduce the overall value added tax rate from 20 to 18 per cent.

Apart from that, in his address the President expresses the opinion that "along with measures in the field of pension, medical and social insurance, the effective rate of the single social tax can be noticeably reduced from 2005 to boost the legalization of wages currently concealed from taxation."