The Tax Authority Worker’s Day is celebrated in Russia on November 21.
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President of Russia Vladimir Putin: Mr Mishustin, I want to congratulate you and all the Federal Taxation Service employees on this holiday and wish you every success. However, today we will talk about work and the Service’s performance. We can already discuss the estimated results for this year and the implementation of the plan.
Head of The Federal Taxation Service Mikhail Mishustin: Thank you, Mr President. In the first nine months of 2012 we have seen a steady growth in tax revenues at all budget levels. In particular, in January — October 2012, the consolidated budget of the Russian Federation received 9.2 trillion rubles, which is 13.3% more than in the corresponding period of 2011. The federal budget received 4.3 trillion rubles, an increase of 15.6%. These increases are higher than inflation, which according to Rosstat [Federal Service for National Statistics] was 4.8% in the first nine months of 2012.
In addition, the tax collection growth rate – excluding oil and gas revenues – has remained positive. The consolidated budget, excluding oil and gas revenues, posted a growth rate of 10.8%, and the federal budget – 11.2%.
If you look at the share structure (it varies a bit), two taxes make up the main share in Russia’s consolidated budget: income tax and mineral extraction tax, which stand at 22% each. Next comes personal income tax, which makes up 19%, and VAT with 17 %.
The share of property tax has increased by 1%: last year it stood at 7 %, and now it is 8%. This has become possible primarily due to the active efforts to resolve the issues associated with the inability to recover and write off debt; debt recovery was impossible because of missed deadlines and errors of the registration authorities, and many other problems that had accumulated over the decades.
Mr President, per your directive, this work has been completed without the participation of the public. We wrote off 31 billion rubles of debt, and about 31 million people were involved in this.
Vladimir Putin: 31 million?
Mikhail Mishustin: That’s right, 31 million Russian citizens. Now, what happened next. We put together all the tax notices that people received into one. There used to be six or seven notices: on transport, property, land tax, etc. Now there is a single tax notice, which shows all accrued taxes and the recipient can make payments online.
We make it possible for everyone who wishes to do so to enter into a contract with the Taxation Service and see the accrued taxes in their account on the website.
If they do not agree with the charges listed, they can easily send a receipt showing that, for example, this piece of real estate or vehicle is not the property of the individual in question, and they can also clarify any details.
Vladimir Putin: And is not subject to taxation.
Mikhail Mishustin: Absolutely. Actually, this work has led to an increase in property tax revenues, which we expect to be over 20% compared with last year. This includes transport, property and personal income tax.
Vladimir Putin: Are people using this opportunity?
Mikhail Mishustin: Yes, so far about a quarter of a million people have registered and started using their private account in one way or another. At first they used their accounts to settle tax arrears, and now it is an opportunity to see all the information the Taxation Service has about an individual.
The next trend is reducing the number of tax disputes. This is very important because the number of disputes used to be very high, and to date the number of complaints from legal entities has fallen by 11%, according to the data for the first nine months of 2012. In the same period in 2011 there were 42,000 complaints, and now that figure is 37,000. The number of court cases involving legal entities has decreased by 20%: there were 44,000 court cases in the first nine months of 2011, and 35,000 cases in the same period this year. The disputes regarding the amounts owed were down by 14% in the first nine months of this year. 200 billion rubles were contested in the same period last year, while today the figure is 173 billion, and we started this effort when it stood at 280 billion rubles.
In terms of the load on the courts, the Arbitration Court has reported that it has halved over the past three years. This indicates that higher quality of work with regard to the evidence base and pre-trial audit has allowed us to reduce the costs incurred by people in disputes with the Taxation Service.
I would also like to say a few words about online services that are extremely useful, for example to help people make convenient, quick tax payments, find out how to make the payments and how much they need to pay.
We have 32 sites where people can find out their tax inspection’s working hours, its address and get all the necessary information needed to calculate their taxes on property, land and vehicles. They can find out if their counterparties are taxpaying businesses. A single state register of legal entities is now available online.
In addition, it is now possible to register a business online. This has been recognised by the international community and all these transparent processes have allowed us to move up in the world rankings by 41 positions, from the 105th position to the 64th in tax administration.
The amount of time people had to spend filling in tax returns has decreased by three times in the past three years. Now it is 177 hours, despite the fact that the tax burden for a model company we use to calculate the corresponding ratings has increased. This is because of insurance premiums. We are also continuing our efforts to make the registration of companies more transparent. We hope that we will be able to improve Russia’s standing in the world rankings next year.
In conclusion, I would like to say that when the heads of the world’s tax services met in Buenos Aires – it is a forum on tax administration held under the auspices of the OECD (Organisation for Economic Cooperation and Development), it was agreed that the next global conference on tax administration will be held in Moscow. The leaders of OECD member and partner states will visit our country. The meeting will be held in May, during Russia’s chairmanship. Mr President, I would like to take this opportunity to invite you to make a welcoming address to our colleagues. The issues on the agenda will be very serious, with innovation in tax administration as the main theme of Russia’s chairmanship.
Vladimir Putin: I will, thank you.