President of Russia Vladimir Putin: Mr Mishustin, first a traditional question: the first quarter is over. How are you performing, what is the tax collection rate? My second question concerns our plans to tackle offshore tax evasion and adopting corresponding resolutions, normative acts and laws. How is your service preparing for this?
Head of the Federal Taxation Service Mikhail Mishustin: We have drawn up the results of the first quarter. I would like to tell you that 3.3 trillion rubles have been deposited in the consolidated budget of the Russian Federation. This is 11.6 percent more than in the same period last year. The federal budget received 1.8 trillion rubles, which is 17 percent more than in the same period in 2014.
This continues last year’s trend, when we had similar growth rates for both the consolidated and the federal budgets. The situation was somewhat troubling in January, but now we see that value added tax is the main driver of this growth in tax collection rates, which went up by 20 percent in the first quarter.
This is linked to the introduction of the second stage of the VAT refund automatic control system. I reported to you on this last year. The introduction of the first stage of the VAT refund automatic control system brought an additional 101 billion rubles into the budget.
This has led to a reduction in the number of inspections. In 2014, their number went down by 14 percent: from 41,000 at the beginning of the year to 36,000 now. Since 2010, their number has been halved.
There are also fewer tax disputes: their number has gone down by 8 percent. While the amounts won in court for the budget have grown by 80 percent. This is due to a simpler and more justified position of the tax authorities, when we have evidence in the form of confirmation of the appropriate amount by the automatic system.
Your second question was about offshore tax evasion. We are preparing to act on the law on controlled foreign companies. By June 15, Russian individuals and legal entities will have to notify the state of the companies they control abroad.
I would like to say that, as you know, the convention on administrative support in tax matters recognised by all OECD member-states comes into effect as of July 1. Now Russia is also a full-fledged participant in the information exchange of tax authorities both in automatic mode and voluntarily.
This means that now information on foreign bank accounts and assets held by Russian taxpayers becomes accessible in the course of such an exchange for both Russian tax authorities and those abroad. Therefore, if a citizen who controls a foreign company or legal entity that is affiliated in one way or another, through trust funds or directly, fails to confirm their right to the company or explain where they got the assets, very unpleasant things could happen, such as payment collection from the accounts or freezing of the account – things you spoke of on numerous occasions.
The state here has taken care to give our taxpayers the opportunity to perform their duty. The law on controlled foreign companies gives them the opportunity to declare everything and start paying taxes only in 2017.
We are also drafting a law dealing with the voluntary declaration of profits, so that if someone intentionally or by chance forgot to provide appropriate information on their assets or accounts, they can do this in a very simple way.
We have composed a brochure that explains it all. We are also providing explanations on our website. By June 15 we will be ready to receive appropriate notifications on the subject.
Vladimir Putin: Fine. I hope the results of the following quarters are just as good.
Mikhail Mishustin: Thank you, Mr President. If I may, I would like to say a few words about electronic services. The Tax Service has opened a single information line. The number is 8 (800) 222 2222, and any citizen can call and receive information. In addition, today we presented a new feature: a personal office for the self-employed.
We now have hardly any inspections of small businesses, so any individual entrepreneur can set up their online personal office to find out what this or that taxation method would cost them in taxes, including social security payments. They can also submit their declarations and get everything done without ever going to the local tax authority. This is very important. I believe such online services help our taxpayers do their duty in terms of paying all the taxes and making other payments on time and with ease.
Vladimir Putin: Yes, this is very good, considering that to start up a business now they can buy a patent, and they will have the new technology for paying taxes.
Mikhail Mishustin: Indeed.
Vladimir Putin: Thank you.
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