Page 56 - RusRPTAug19

autonomy has allowed different systems of exemptions to flourish across Russia. For the time being, the current measures (set to kick in at the beginning of 2020) will be focused on collecting data, but they may well come into play in future strong-arm measures to keep revenues flowing,” BMB said in a note.
MinFin counted 1,500 tax exemptions in Russia, worth RUB330bn ($5.24bn) each year. The planned register will divide exemptions by intended effect: social (8%), stimulating (72%), and technical (20%).
Tax Service to create unified base of data on citizens. A new State Duma project looks to establish a unified national registry of individuals in Russia, complete with names and family connections. The project is intended to standardize information and ease tax services, but will have obvious implications for other spheres. The data collection entailed in the planned national database would dramatically change the amount of information in government hands, simplifying the draft, taxation, and census-taking, among other fields. Many current national projects are aimed at similar efforts to standardize information available to authorities, but this has arguably the greatest potential to enact fundamental change in Russia. The data would be shared across governmental services, theoretically making them more efficient, but also breaching long-treasured routes of escaping government oversight including draft-dodging and tax evasion. Moreover, there are many political activists who may be keen to keep the government in the dark about relatives. In addition to concerns about privacy and government interference, it also remains to be seen whether the agencies charged with handling this data will be able to keep it out of the hands of bad actors. The database is planned to launch in 2022, synchronizing information from hundreds of government resources. The phase of transition to this new system is scheduled to end in 2025. Intelligence services will be responsible for the reliability, authenticity, and completeness of the data, while the tax service will be responsible for defending it.
MinFin may simplify insurance taxes on sole proprietorships. The Russian Ministry of Finance (MinFin) has confirmed that it will hold discussions on changing the mandatory health insurance tax from a flat rate for all sole proprietorships to a more flexible tax on profits.
The argument for updating the mandatory health insurance tax from a flat fee to a percentage based on profits is sound, especially when considering the number of non-functional or minimally functional sole proprietorships in Russia. Consequently, many people do not pay this tax and legally dissolve their businesses if auditors come around. The argument against is that larger sole proprietorships with greater profit margins will have to pay more than their usual share of the insurance burden, which in turn change the incentives of remaining registered as a sole proprietorship.
As of this year, sole proprietorships must pay taxes of 29,300 rubles ($465), a sum that the ministry updates every year, and 1% of income over 300,000 rubles ($4,760) for pension insurance, and, for mandatory health insurance, a flat fee of 6,900 rubles ($109). The proposed tax system would simplify these insurance taxes into 1% of either income or income minus expenses, depending on the preference of the business owner.
56 RUSSIA Country Report August 2019 www.intellinews.com