| From June 1, a special agricultural regime will be introduced in Russia The government appears to be making a third and final attempt to introduce “exclusive” taxation for farmers. Amendments to the law on the unified agricultural tax were put on the president's desk yesterday.
If the amendments come into force, then within two months all agricultural producers will be expected to submit applications for a voluntary transition to a fundamentally new tax payment system. If this special regime finally works, then the ideologists of tax reform will be able to celebrate a small victory: the most inert part of taxpayers has “succumbed” to the reform and is ready to pay taxes.
Preferential tax regimes, which the reformers fought against, still exist today. With the exception of the practically obsolete PSA regime, special regimes “protect” socially unprotected areas of business: small business and agricultural production. But if exclusive tax conditions brought some relief for small businesses, tax reform for farmers until recently was in vain.
The unified agricultural tax, introduced two years ago, did not cause much enthusiasm among agricultural producers (who could switch to this regime voluntarily). Although the new tax replaced 18 previous ones, the collection system itself was not very convenient. Payments had to be made quarterly, but agricultural enterprises receive revenue only in the fall.
It was proposed to calculate the tax per hectare of land, regardless of the financial condition of the enterprise. As a result, it turned out to be much more profitable to remain on the general taxation system and, showing negative income, not pay taxes at all. Which is what everyone used for the time being.
The “re-introduction” of a single agricultural tax at the beginning of 2004 also did not bring success, although the system of its collection itself was fundamentally changed. It was decided to take the tax not from the area of the site, but from the profit. For farmers, the 6% single tax was replaced by VAT, unified social tax (except for contributions to the Pension Fund), income tax, property tax and personal income tax. The problem now arises with VAT. Remaining in the general taxation system, agricultural enterprises sold products with a preferential 10% VAT, while purchasing equipment with a 20% VAT. The difference was reimbursed by the state. Those wishing to pay the unified agricultural tax had to return this money from non-depreciated equipment.
The updated version of the agricultural tax also solved this problem. According to a source from the Department of Tax Policy of the Ministry of Finance, just in order to “teach” farmers to pay taxes, the government is ready to forgive VAT for agricultural enterprises, and push the deadline for filing applications for the transition to a single tax to June 1. However, experts doubt that this third attempt will be successful. The only thing that suits all market participants about the agricultural tax is that its rate is four times lower than the amount of all taxes that it replaces. However, experts say that in the long term the special regime could do agriculture a disservice. After all, linking the tax to the area of land, according to the logic of legislators, should have forced inefficient owners to give way to more efficient ones. And 6% of net profit (income minus expenses) clearly will not force inactive farms to cede land to more active ones.
According to the acting Governor of the Perm region Oleg Chirkunov, the most dangerous thing in the new system is that the state is building a new legal tax evasion scheme with its own hands. “By luring farmers into exclusive taxation by introducing an open list of expenses (all expenses can be deducted from the taxable base. - Ed. ), the Ministry of Finance again contributes to the fact that enterprises will minimize taxes to zero,” Mr. Chirkunov believes.
According to members of the budget committee of the Federation Council, enterprises that receive at least 70% of their revenue from the sale of agricultural products will be able to use the simplified system. Consequently, the new regime will not apply to industrial-type organizations (poultry farms, animal farms). Enterprises that freeze chicken legs will continue to be considered industrial. So this tax innovation can only come down to a mechanical reduction in rates. Irina SKLYAROVA |
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