The Russian Finance Ministry has suggested cutting profits tax instead of VAT withraising gas extraction tax. The measure, which will not affect thefederal budget, will only boost the economy, the ministry says. TheRussian president’s administration reports, though, that the decisionto cut VAT will be taken in any case.
Finance Minister Alexey Kudrin said mid-February that the ministry mayagree to lower VAT from 18 to 15 percent in exchange for an equivalentrise in mining operations tax for the gas industry.
Deputy Finance MinisterSergey Shatalov on Thursday expressed the ministry’s reviewed position.Gas production tax should be raised in any case, he said. But if thegovernment wants to use the revenues from it to lower other taxes, itshould choose profits tax, Sergey Shatalov said, adding that theministry is considering a cut in profits tax from 24 to 20 percent. Thestep will be more effective for business, the official told Kommersant.
Businessmen, however, said they are not considering lower profits taxas an alternative for lower VAT rates. Anton Danilov-Danilyan, head ofthe expert council at the Delovaya Rossiya business association, sayshis organization thinks current rate for profits tax is quitereasonable.
Russianregions are also likely to be dissatisfied with the FinancialMinistry’s idea as gas production tax revenues go to the federal budgetand 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 Kremlinmay take a political decision to cut VAT before the end of the year,despite the Finance Ministry’s opposition. A source in theadministration says the issue may be included in the president’s budgetaddress.
Finance Minister Alexey Kudrin said mid-February that the ministry mayagree to lower VAT from 18 to 15 percent in exchange for an equivalentrise in mining operations tax for the gas industry.Deputy Finance MinisterSergey Shatalov on Thursday expressed the ministry’s reviewed position.Gas production tax should be raised in any case, he said. But if thegovernment wants to use the revenues from it to lower other taxes, itshould choose profits tax, Sergey Shatalov said, adding that theministry is considering a cut in profits tax from 24 to 20 percent. Thestep will be more effective for business, the official told Kommersant.
Businessmen, however, said they are not considering lower profits taxas an alternative for lower VAT rates. Anton Danilov-Danilyan, head ofthe expert council at the Delovaya Rossiya business association, sayshis organization thinks current rate for profits tax is quitereasonable.
Russianregions are also likely to be dissatisfied with the FinancialMinistry’s idea as gas production tax revenues go to the federal budgetand 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 Kremlinmay take a political decision to cut VAT before the end of the year,despite the Finance Ministry’s opposition. A source in theadministration says the issue may be included in the president’s budgetaddress.
