President of Russia Vladimir Putin: Mr Mishustin, the tax service is celebrating its 25th anniversary now. I congratulate you and everyone working at the service on this occasion.
There is no need to say just how important this service and its work are for our country. I say the service is important for our country rather than for the Government, because it is responsible for providing the bulk of budget revenue, and it is this money that funds budget spending on social commitments, payment of benefits, public sector wages, service pay for military personnel and similar groups, and funds our economic development plans. What more is there to say? Whatever you collect determines how much we can spend.
Implementing many of our plans depends on how effectively you work. Of course, as we have discussed in the past, this work must be civilised, effective, and not a burden on the taxpayer. I know that you have made a lot of progress in these areas over this time. How do you assess the results?
Head of the Federal Taxation Service Mikhail Mishustin: Mr President, thank you for your congratulations.
Yes, November 21 is when we mark the 25th anniversary of Russia’s tax service. We have travelled a far from easy road over this time. I remember the 1990s, when we did not even have a register of ownership rights. Practically the only owner during the Soviet period was the state, and then there were collective and cooperative forms of ownership. We therefore had to start from scratch in registering ownership rights and establishing relations between taxpayers, linking them to their property and so on.
A great many events took place as the tax system developed, of course. By 2000, we were collecting 50 different taxes and fees, but after part one of the Tax Code, which you worked on actively, came into force, the number of taxes dropped to 14, with four special tax regimes.
Big changes have taken place, especially concerning the inspections that have been the subject of so much discussion. We have changed direction radically. In the past, every third taxpayer was subject to inspections, but today, the figure is only four in every 1,000 taxpayers. This is possible because we introduced a risk-oriented model and, using this model, now carry out inspections only when we know what risks are associated with particular taxpayers. Taxpayers themselves can assess these risks too – the system is publically accessible. The main risk is when the average tax burden in a given sector is much higher than what a taxpayer working in that sector claims.
People have noticed these changes. Now, we see that the various assessments carried out by public and international organisations no longer raise issues such as corruption in the tax service, which had been the subject of much discussion in the past. The international organisations that make assessments of tax services have taken note of our changes. You know that we have moved up in the Doing Business rating. This year, we moved up several points in the area of taxation. The main thing is that people have seen and noted this.
Just over two years ago, I briefed you on how we introduced a system of online tax payment facilities for taxpayers, whether legal entities or private individuals. To date, more than 16 million people have registered and are actively using these personal payment facilities. The important thing here is that we have organised through this system practically all relations involving tax inspectors and taxpayers. If you use modern information technology, you no longer need to visit your tax office. People can now take care of all their tax business quickly and conveniently, using the internet and internet banking, and this is appreciated.
I also want to say a couple of words about the lower burden on the courts now. There were a good many cases in the courts, as you know. Over the last five years, we have reduced three-fold the burden on the arbitration courts and, over this same time, we have seen a 1.5-fold drop in the number of complaints filed by taxpayers, which is very important.
In conclusion, regarding these 25 years of work, if you look at the two main components of the taxation service’s work, there is the tax collection side, and the service side. In Russia now, in large part thanks to your efforts, we have established good conditions for legal entities and private individuals to take care of their tax responsibilities. You have spoken a lot about reducing the number of inspections, and I can say that this year, there have been only just over 30,000 inspections.
Vladimir Putin: Yes, a lot has been accomplished over recent years. Once again, I congratulate you on this anniversary.
Mikhail Mishustin: Thank you.
I also want to say a couple of words about revenue. We have some good figures. Today, the situation with tax collection is as follows. If we take the consolidated budget, tax revenue into the consolidated budget came to 11.7 over the first 10 months of the year. This is 11 percent higher than over the same period last year.
In the first quarter, you gave us the instruction to keep up the pace we set at the start of the year. The federal budget has now received 5.9 trillion rubles, which is 16 percent higher than for the same period last year.
VAT is the main source of tax revenue. We have seen an increase in VAT collection over these last 2.5 years. In this respect, I want to say that the introduction of an automated system for monitoring refunds of VAT has produced results. Just a few years ago, everyone was talking about fraudulent schemes for getting refunds of VAT from the budget, but these schemes no longer work now. We have noted this progress. This achievement is the result of the work done by a whole army of tax service personnel and our colleagues from the law enforcement agencies.
If we look at taxes in real terms, that is, without inflation, the increase today is 103.5 percent in real terms, taking into account the various forecasts, including the situation with the current slowdown in GDP growth.
I hope we will succeed in maintaining this pace. I hope too that we will provide the treasury with the revenue it needs, as you said, to be able to take care of our needs concerning maintaining the armed forces and fulfilling social spending obligations.
Vladimir Putin: In other words, the consolidated budget has seen an increase of 11 percent?
Mikhail Mishustin: Yes.
Vladimir Putin: Compared to the same period last year.
Mikhail Mishustin: Yes, compared to the first 10 months.
Vladimir Putin: And the federal budget has seen an increase of 16 percent?
Mikhail Mishustin: Yes, again, for the first 10 months.
Vladimir Putin: This is good.
Mr Mishustin, we are making a steady effort to reduce administrative barriers and any administrative pressure on business. We certainly intend to continue this policy.
At the same time, business too must be absolutely transparent, clear to the state authorities, and must fulfil its lawful obligations, including tax obligations, perhaps above all tax obligations.
In this respect, I want to note the recent experiment in four regions, when new cash register systems were introduced, making it possible to send information in real time to the relevant tax authorities. I want to come back to this now. How is the experiment going, and what are its results?
Mikhail Mishustin: Yes, Mr President, this experiment did take place. We worked with four regions: Moscow, Moscow Region, Tatarstan, and Kaluga Region. More than 3,000 of these new cash registers were installed, which, as you say, send online information to the tax services on company turnover and the receipts the company gives its customers, that is, our citizens.
Vladimir Putin: And this system is now up and running in these four regions?
Mikhail Mishustin: Yes, it is up and running. In the Government, it is [First Deputy Prime Minister] Mr Shuvalov who is responsible for this, and they decided to continue the experiment so that the expenses the businesses incurred when installing these new cash registers wouldn’t be in vain. We will continue this system’s work.
Vladimir Putin: In this respect, we need to go further so that businesses do not lose money in purchasing these new cash registers, which after all, are most likely simple devices or chips of some kind installed in ordinary cash registers. We don’t want to place an extra burden on business, and so we need to decide on allowing companies that go over to this system to deduct these expenses from their taxes.
We also need to reflect on and discuss with the State Duma deputies the matter of giving this work a legal framework.
Finally, another possibility opening up now for our tax services, law-abiding business, and the general public is that all consumers, everyone here in Russia, will have the possibility of checking the goods and services they received from this or that company. What this means is that once they have received a receipt for the purchase of goods or services, people can get online via their telephones or devices and check with the tax service about the information the retail outlet that sold the good provided to the tax service.
To put things simply, someone who went to a restaurant say and paid for a steak from high-quality Russian veal can check what the restaurant or café that sold him this good reported to the tax office. Who knows, they might have claimed they sold cheap buffalo meat. The same goes for all other goods. It also enables consumers to check whether a retailer or service provider actually exists, or whether it is a fly-by-night company or unregistered trading outlet. This concerns big companies, and small ones too, florists, for example.
This way, people can take part in checking what they are being sold and what services they are receiving, gain additional means of defending their interests, and help the country. I say this with the idea that we could introduce a genuinely broad-based form of public oversight. If people see discrepancies between the receipts they were given and the information the seller sends to the tax inspectors, they can inform the tax inspectors about these discrepancies, with all the ensuing consequences.
In the first stage of this work, we could get the Russian Popular Front involved, though really, this concerns everyone, all consumers, and so I think there should be broad-based cooperation between the authorities, business, and the public here.
Mikhail Mishustin: This is very true, Mr President. If your idea goes ahead, people would take on a little of the tax inspector’s role. Of course, people will be primarily interested in the quality of the goods they buy, as you said. We could make it possible too to file an online complaint if people see they have been deceived. We are working on this in an experimental version now. Of course, we will work through everything and I think that we will soon be ready with the draft legislation. As you said, we will work with the State Duma deputies to make sure that this legislation is passed.
Vladimir Putin: Good.
Mikhail Mishustin: Thank you.