Page 35 - RUSRptAug18

Russia’s Duma agreed to discuss Ministry of Finance's tax proposals and plans for 2019-2021 a month earlier than expected at the start of July. The proposal is largely as expected, with some corrections and concerns for taxpayers.
the decision to move up discussion by a month shows that that the Duma is gearing up for an ugly August thanks to pension reform. They're locking in painful taxes and revenue increases while people protest something more tangible. MinFin is happy to expand its powers to demand money arbitrarily from businesses and landowners who aren't "too big to fail."
The tax plan proposal includes all the changes discussed since May: raising VAT taxes from 18% to 20%, preserving VAT exemptions for socially important goods, holding tariffs on insurance premiums at 30% (22% for compulsory pension insurance), and introducing a special tax regime for the self-employed. MinFin proposed to continue distributing 3% of the 20% regional corporate tax rate to the federal government.
MinFin wants to reduce the Federal Tax Service's (FNS) window to audit firms from 3 months to 2 months. There are proposals to end legal liability for those who don't pay taxes on time but quickly correct the mistake. More radically, MinFin wants release exporters making use of VAT exemptions from the obligation of providing shipping documents. But doing so creates new opportunities for graft and does not yet have a clear mechanism to function.
MinFin language is also going after "illegal tax optimization," denying firms the possibility of reducing taxes by consolidating their tax payments between subsidiaries. But what MinFin calls "illegal tax optimization" is actually a business necessity since most reorganizations are internal. The state would have an excuse to demand more taxes from firms trying to reduce losses from unprofitable subsidiaries.
Finally, MinFin wants to give the FNS power to calculate income taxes for those who fail to register sales of real estate. The problem? Real estate sales are exempted from registration if they occurred 3 years ago or, after January 1 2016, 5 years ago. Tax collectors can exploit this proposal for personal or institutional gain.
Troubled commercial bank Binbank (aka B&N Bank) will sell RUB110bn ($1.77bn) non-core and distressed assets to its former sister bank Trust bank, which is being turned into a de facto “bad bank” by the Central Bank of Russia (CBR).
Both banks were amongst the so-called Garden Ring banks that went bust in the autumn of 2017 and had to be rescued by the CBR .
The CBR has since taken the banks over and is retasking them with jobs before they are eventually privatized. Binbank’s assets will be transferred in several stages until the end of 2018.
Binbank is selling troubled corporate loans and securities, which the CBR believes will it to significantly improve its financial performance by improving the quality of assets, reducing its share of overdue debts in the corporate loan portfolio and so reduce the amount of capital tied up in prudential reserves.
35 RUSSIA Country Report August 2018 www.intellinews.com