Translated material
Add value to yourself
Business unions obtained instructions from the president to the government
Small and medium-sized businesses received a nod at the highest level. Vladimir Putin met yesterday with representatives of Business Russia and OPORA. Entrepreneurs presented the president with a new concept for reforming the value added tax (VAT) , and the head of state instructed the government to take into account business proposals when preparing the concept of the country's socio-economic development until 2020.The concept, which must be approved before the end of Vladimir Putin's current presidential term, will obviously combine election promises and guidelines for action for the new government. So, getting into it with your proposal would be a great success for any lobbyist. Small and medium-sized businesses, apparently, can congratulate themselves on successfully passing the lobbying exam: Mr. Putin liked their proposals for VAT reform.
At a meeting with the president, the chairman of Business Russia, Boris Titov, said: “We, together with United Russia, have made proposals, they are aimed at changing the administration of this tax.” Vladimir Putin, after listening to Titov’s arguments, said: “I have a meeting right now with the economic bloc of the government, and I will formulate this instruction.”
Mr. Titov explained that the VAT reform proposed by entrepreneurs presupposes “the most non-revolutionary path.” “It (tax. - Ed. ) will remain the same, it will simply be charged to a different tax base - without transitional calculation of incoming and outgoing taxes. VAT is charged only on the added value that was created in the company, that is, it is profit, depreciation , wage fund and UST (unified social tax - Ed. ), which is charged to the wage fund," said Mr. Titov.
Simply put, if today VAT is calculated as the difference between input VAT (paid to the supplier) and output VAT (on the cost of the product), then Delovaya Rossiya proposes to abolish input VAT altogether. According to Boris Titov, “VAT is one of the most difficult taxes to administer; the main payers of this tax are middle-level businesses.”
Mr. Titov politically intelligently reminded the president that Russia borrowed this tax from Western countries in 1992. And this tax, even for Western countries, with their developed tax system, turned out to be heavy. “We were not ready, and what we see today is a constant increase in the complexity of the administration of this tax, which is caused by the fact that tax inspectorates are increasingly building up control tools, and some businessmen are building up tools that allow them to optimize the tax, leading to that costs on both sides are growing,” said Mr. Titov.
That is why the question of how to modernize this tax is being actively discussed in business circles, and there are proposals to abolish it, replace it with another tax, increase other taxes, and also introduce a sales tax. “Business itself is tired of fly-by-night companies that are created precisely because of problems with the administration of this tax,” said the head of Business Russia.
Entrepreneurs are ready to abandon the idea of lobbying for a reduction in the VAT rate from 18 to 13%, which business had previously insisted on. Referring to expert calculations, the head of Business Russia said that even if the current rate is maintained, the income of entrepreneurs will increase from changes in the administration of this tax. Mr. Titov also noted that the transition to a new VAT administration system will not cause new additional costs. However, Mr. Putin noted that the problem is not the costs. “The point is that new loopholes should not be created to evade taxes,” said the head of state.
So the government still has a chance to convince the president that the proposal for business unions is just such a loophole.