The Federal Taxation Service’s head briefed the President on the agency’s work.
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President of Russia Vladimir Putin: Mr Mishustin, November 21 is your professional day.
Head of the Federal Taxation Service Mikhail Mishustin: Yes, Tax Authority Worker’s Day.
Vladimir Putin: Congratulations to you and all of your staff on this professional holiday. I want to wish you all the best. Your success is very important to us. So, I have a logical question: how is the work going? What are the results of the tax revenue collection season?
Mikhail Mishustin: Thank you, Mr President. Over ten months, the consolidated Russian budget has received 14.3 trillion rubles, which is 19.1 percent or 2.3 trillion rubles higher year on year. This includes the federal budget share of 7.5 trillion, which has increased by 30 percent or 1.7 trillion year on year. I would like to note that the increase is largely due to the oil and gas industry that accounts for 60 percent of the revenue increase.
Vladimir Putin: Sixty percent?
Mikhail Mishustin: Yes, 60 percent of the total tax revenue increase. Most of it is corporate tax revenue which is 2.9 trillion rubles (18.8 percent or 451 billion rubles higher than last year). And, of course, the economy growth rate of 1.8 percent (according to the Federal State Statistics Service) over the nine months. We can feel this revival.
Now, personal income tax. It is good to see that tax revenue is growing faster than nominal wage increase, which has grown 6.7 percent over nine months. We have received 2.5 trillion rubles in personal income tax revenue, which is 8 percent growth. It is 1.3 percent higher than the wage increase.
Now, insurance contributions. In carrying out this duty, our records indicate that insurance contributions are increasing even more rapidly. Over ten months, we have received 4.6 trillion rubles, which is 8.6 percent higher year on year. And it is 2 percent higher than the wage growth rate.
I would like to add that excise tax revenue is increasing rapidly too. As you know, in 2016 the Federal Taxation Service and several law enforcement agencies were given the objective to take measures for more alcohol producers to observe the law. As a result, excise tax revenue has gone up by 18.4 percent, including 17 percent for strong spirits, or 22 billion rubles.
And finally, I would like to specifically talk about value-added tax. Indeed, the VAT revenue trend in the past five years has been positive. In fact, currently, we see that it is growing by at least 13 percent a year. The transactions we use to monitor the VAT revenues, are worth around 15 billion a year.
I would like to point out that the issues still persisting for the Federal Taxation Service currently concern the 1 percent of all amounts which are subject to VAT refund, or 96 billion rubles. During the refund procedure we try not to disturb taxpayers. In particular, all VAT verification is now automated. If there are any discrepancies, we send a notice first rather than carry out an onsite inspection. Therefore, in 2017 some 660,000 notices have been sent using the VAT refund automated control system resulting in 90,000 taxpayers correcting their declarations and the final VAT revenue increasing by 69 billion rubles. At the same time, the number of onsite audits has decreased by 23 percent. We have conducted 15,500 audits over nine months. This is not many. Speaking about mean figures, some 2 to 3 percent of taxpayers were subject to auditing, for example, in Europe, etc. So basically, the lower number of audits is due to using modern information technology.
Of course, we are expanding the range of services offered to taxpayers. You learned more about them during your visit to the Federal Taxation Service. We have upgraded the individual taxpayer account interface. Some 27 million Russian citizens use their account to pay taxes via online banking. For example, this year taxpayers have paid over 37.6 billion rubles in taxes via online banking which they accessed from their personal accounts on the Federal Taxation Service’s website. If we look at property taxes, this is 44 percent of all property taxes paid by individuals. It is a very convenient service. Taxpayers can review their incurred taxes and fulfil their duty to the state from home, without visiting a tax service office.
Finally, I would like to tell you about the cash register equipment reform. Following your instructions under the 2016 federal law, we have completed the first phase of the reform, or the transition from the old cash register equipment to online cash registers. More than 470,000 taxpayers who are obligated to use cash register equipment have registered 1.447 million new-generation cash registers so far. These machines send information to the Federal Taxation Service via the internet.
As of today, around 16 billion receipts worth over 10 trillion rubles have been issued. That is, we record around 100 million transactions online. Coupled with other information systems, this allows us to develop a monitoring system to control taxpayers and their sales in order to eliminate onsite audits altogether. As you said, for taxpayers, this is an opportunity to check…
Vladimir Putin: Yes, I just wanted to ask about that. Is this mechanism working?
Mikhail Mishustin: Yes, it is. First, it is very useful that taxpayers can immediately after a purchase…
Vladimir Putin: … check what they paid for.
Mikhail Mishustin: Exactly. Who they paid and for what. You said that it does not matter who they bought from. But now it is becoming important. It motivates people to check the source of the purchase, its relations and, therefore, verify the quality of the products.
Another important part of this is that now businesses can register their equipment online and receive electronic confirmation. This reduces paperwork. Now almost all these operations can be completed online.
You gave us instructions to postpone introduction of the online cash register equipment requirement for individual entrepreneurs. You met with OPORA Russia President Alexander Kalinin. We believe that this decision was correct. We’d rather give businesses time to prepare and analyse which types of business activity do not require the use of the equipment because for some of them there are no tax evasion risks.
Vladimir Putin: Good. Thank you.