President of Russia Vladimir Putin: Let us begin with tax collectability. This is my regular question. I know you also have some suggestions and ideas. We will discuss them as well.
Head of the Federal Taxation Service Mikhail Mishustin: Mr President, the general rate remained quite good between January and May 2018 at all budget levels. The consolidated tax revenue is one trillion rubles higher than over the same period last year, at 8.3 trillion. The amount of taxes paid to the federal budget has increased by 18.9 percent, or 4.4 trillion.
Therefore, if we speak about specific taxes, it is good to see that the oil and gas tax revenue continues to grow and has gone up by 10 percent. Of course, the tax on extractable resources ensured a significant increase, which is 29.5 percent, due to the rising oil prices. But the non-oil taxes are growing.
Revenue from the income tax has increased by 12.5 percent. It is good to see that this is due in particular to business activity and the profit growth rate of successful companies, which was over three percent in the first quarter.
For value-added tax, collectability has been growing for the past five years without fail. The rate is 14 percent despite the fact that the companies that commissioned large projects received significant tax rebates. But the automated VAT refund monitoring system allows us to monitor VAT collectability across entire groups of companies that must pay value-added tax to the state, with great precision.
The collection of personal income tax has increased by 12.9 percent, while wages have increased by an average of 12.1 percent. We have recorded an increase of 13.1 percent in the collection of insurance payments to three funds: the Pension Fund, the Social Insurance Fund and the Mandatory Medical Insurance Fund. We have streamlined interaction between the Tax Service and the Pension Fund. As for business, we have simplified tax reporting and reporting to the funds. We hope that the legalisation of wages will enhance the efficiency of the collection of taxes to the extra-budgetary fund.
Also, I would like to tell you about an important figure we have reported, which concerns a reduction in the number of ‘dummy’ firms. Starting in 2016, we have been working with law enforcement agencies to get rid of companies that engaged in so-called aggressive tax planning from the corporate register. We are also taking serious preventive measures to get such companies from using aggressive tax planning schemes. There is a fivefold reduction. Back in 2016, we reported the existence of some 1.649 million ‘dummy’ companies, or some 34.2 percent of the total number of all legal entities operating in Russia.
Vladimir Putin: More than one-third of the total?
Mikhail Mishustin: Yes, that was the figure. As of this moment, there are 309,450 such companies on the corporate register, or some 7.3 percent of the total. This shows that our economy is getting rid of dishonest taxpayers who do not pay taxes and use aggressive tax schemes.
Vladimir Putin: Is this the result of the new methods you have mentioned?
Mikhail Mishustin: Exactly. We have devised a package of measures jointly with the law enforcement agencies, the Central Bank and Rosfinmonitoring [the Federal Financial Monitoring Service]. The key measure concerns the removal of such companies from the corporate register. We amended the legislation in 2016, which allowed us to remove over 1.3 million such non-operating firms from the register.
I would also like to report on the implementation of your instructions, which you also mentioned in your executive order, on the establishment of a special mechanism for the self-employed. As you said, it must be a convenient system of interface between the people and the tax service, so that people only need to register and subsequently fulfil their obligations to the country in a one-click process.
For example, we have created a prototype mobile app so that people would be able to register with the tax authorities without having to go to tax offices and to pay taxes without compiling tax reports or submitting all manner of background information and various documents.
We also believe that the yearend insurance payments by the self-employed can be included in the tax. Mr Siluanov [First Deputy Prime Minister and Minister of Finance] has issued instructions to this effect, and a draft law will be eventually submitted to the State Duma.
I would like to ask you to approve the use as a pilot scheme, of this technology in four regions – Moscow, Moscow Region, Kaluga Region and the Republic of Tatarstan – just as we did in the case of online cash registers before their introduction throughout the country.
We believe that we could launch a six-month trial period of this technology on January 1, 2019, and if you approve of the idea and the performance of this technology, we will be able to introduce it throughout the country so that it will be easier for people to fulfil their obligations without submitting specialised reports.
Vladimir Putin: Let us do this.
Mikhail Mishustin: Thank you.