Russian tax system: review

At the end of 2007 World Bank and PWC conducted research of tax structure of 178 countries of the world. Russia took the next places: By simplicity of tax payment – 130 By quantity of tax payment – 58 By spending time on calculation of tax duty – 151 By level of tax burden -131

State Russia Maldives UK USA Germany Ukraine 7 10 32 98 Tax payments (number per year) 70 Time to comply (hours per year) 256 Tax rate 54,2% 1 0 9,3% 105 325 105 2185 35,4% 46% 57,1% 60,3%

Tax rates

Tax on profits of organization – 24% VAT – 18% (10%, 0%) Tax on incomes of natural persons – 13%

Uniform social tax Tax base of every separate worker with increasing of total from the beginning of the year Under 280 000 RUB Uniform social tax 26,0% Fee in Pension fund 14,0% From 280 001 to 600 000 RUB More than 600 000 RUB 72800 + 10% from the sum, exceeding 280 000 RUB 104 800 +2% from the sum, exceeding 600 000 RUB 39 200 + 5,5% from the sum, exceeding 280 000 RUB 56 800 RUB

Tax responsibility Zero out - fine at the rate 20% from unpaid amount of tax (40% of deliberate non-payment of the tax) Delay of payment of tax - 1/ 300 of refinancing rate of Central Bank of Russian Federation (now it is 10,5%), for the every day of delay

Struggle with abuse of law in tax sphere - Business purpose - Priority of essence above form - The right of tax body to control the prices of dealership

Confiscation of property for the tax violation of the law (art 169 of Civil Code)

Stanislav Dzhaarbekov, CEO of MCFR-consulting (Moscow)

MCFR Consulting • Yaroslavskaya ulitsa 8, korpus 4 • Moscow 129164 • Russia • Tel: +7 (495) 937-90-86 • E-mail: [email protected]