President of Russia Vladimir Putin: Mr Yegorov, good afternoon.
In 1990, on November 21, the Main Tax Inspectorate was established as a unit of the Finance Ministry. It has been 30 years, an impressive period of time, and much has changed in the agency’s operation. It has become not just independent, but also one of the key fiscal agencies in Russia, and, thanks to the efforts of the current Prime Minister, it has turned into a very high-tech department, using a lot of modern tools and services.
How would you assess your work today? And of course, what are the results?
Head of the Federal Taxation Service Daniil Yegorov: Thank you very much for your kind words. It is an honour for our entire team.
Speaking of the Taxation Service today, I would say our digitalisation strategy has proved very effective and the right thing to do. The adaptations we have made during the COVID-19 restrictions period have enabled us to work on three tracks.
The first is, of course, tax collection. Here, we certainly need to bear in mind the following three factors. One is limitations on the oil price and oil production; then, there was a contraction in both supply and demand due to the restrictions not only in Russia, but also around the world; and third, there are the Government support measures based on your decisions to help businesses, because those involved tax breaks, among other things.
As a result, while in the second quarter our revenues decreased by 26 percent, by the end of 10 months of 2020 they stood at 16.9 trillion rubles – I am talking about the consolidated budget, and this is minus 11 percent.
It should be said that the areas where maximum efforts were taken – assistance to businesses designed to keep employees – showed maximum returns from the so-called salary taxes, that is, the income tax and insurance contributions. The collection of the income tax has increased by 4 percent. As we see it, this pace will continue until the end of the year, compared to last year. At the same time, we also stayed in the black, that is, profitable, in terms of insurance contributions in the areas where the tariffs were halved, by your decision, from 30 to 15 percent for small businesses, which constitute 74 percent of national companies.
Speaking about the second aspect, our digital technologies and competencies were used to implement support measures for businesses, including wage subsidies (over 91 billion rubles) and the blockchain platform, which we launched to facilitate the allocation of easy-term loans: over 500 billion rubles have been allocated under the first and second programmes.
Moreover, together with our colleagues in the banking community, we are analysing the possible use of this platform for complementing the banking system’s data with our own information, which would reduce uncertainty and risks and hence can lower interest rates. Therefore, we are working on this side of the matter as well.
I believe it important that we have implemented, upon your instructions, a tax rebate programme for self-employed people. We have refunded the taxes they paid for 2019 back to them and have imputed 15 billion rubles…
Vladimir Putin: Have you done this?
Daniil Yegorov: Yes we have, their self-employment tax has been refunded.
Second, we have imputed the so-called bonuses, as they are commonly referred to, while in fact this is tax support allocations: over 15 billion rubles for the self-employed who already number more than 1.3 million. Therefore, those who trusted us and were officially registered or registered themselves as self-employed have received maximum support from the state.
Vladimir Putin: Has the number of self-employed people increase after that?
Daniil Yegorov: Yes, it has. We register up to 5,000 self-employed people every day. Hence, on the one hand, we should tread carefully so as to prevent the re-registration of otherwise employed people as the self-employed. On the other hand, this is proof of the benefits of going legal – simple, convenient and without an excessive administrative workload.
Vladimir Putin: This is also very good because it means the government announces certain goals and targets and implements them. True, citizens always have a lot of complaints about the government, and they are mostly justified, but if the government actually achieves its stated goals and fulfils its promises, this gives a very positive development dynamics in this sector of the economy.
Dmitry Yegorov: That is why we are investing a lot of effort in communication and reducing conflicts in the tax sphere. We believe, this way we will be able to provide the level of services that would actually enable people to pay taxes themselves, not through some kind of control tools. This is the highest value for us.
Vladimir Putin: What about the number of on-site inspections? I hope, it is decreasing.
Dmitry Yegorov: In 2010, we performed 70,000 checks, whereas last year, we only did 9,000. Let me explain. This does not mean we are simply cutting back on checks. The point is that we are introducing analytical tools, and companies can see that their transactions are being tracked, and there is simply no point in tax evasion.
Overall, we believe, how the numbers have changed is not even the most important indicator; it is important that today, we have the smallest tax gap, for example, in the VAT, it is 0.43 percent around the country. We have never had it so small before, and it looks like taxpayers are growing out of their evasion habit. Even despite the current crisis, we still observe very low tax gap figures – this, I think, is of particular value.
Vladimir Putin: What are this year’s results?
Dmitry Yegorov: Concerning this year’s results, we plan to bring 20.5 trillion rubles into the consolidated budget (down 10 percent compared to last year). But if you would like to know how the tax inflow is faring without the hydrocarbon factor, it is totally flat, that is, exactly the same as last year.
Vladimir Putin: This is good; it means that our non-oil and gas income is stable.
Dmitry Yegorov: Yes, that is absolutely right, we have been resilient.
Vladimir Putin: It is probably even growing. I think, maybe, it will even become higher.
Dmitry Yegorov: We are making conservative projections as always, so we'll see the end of the year. I hope that maybe we will see an increase. It is important not to overdo it.
Our main task now is to have people work calmly and comfortably. That is why we made restrictions on tax collection, and we approach it very carefully, easing up on control measures, and bankruptcies were postponed by your decision. In fact, we have introduced a moratorium on bankruptcy until next year.
Vladimir Putin: I know. Good, thank you.