The Ministry of Finance (MinFin) has issued an official letter in response to the government's concern regarding the need to eliminate a shortfall of taxes. In regard to increasing the amount of collected taxes, MinFin has suggested to tighten the registration procedure for companies and to limit opportunities for capital consumption.
The Federal Taxation Service (FTS) had warned early in the year that in 2007 a lack of collected VAT funds would amount to a loss of almost 400 billion rubles. The planned budget is 1.4 trillion rubles. According to the 2008-2010 draft budget, ithe collected VAT should amount to 1.3 trillion rubles within the next year and 1.8 trillion rubles in 2009.
MinFin also plans to collect an additional 500 billion rubles by creating a “club” of VAT-payers. Companies with business exceeding four million rubles (or more than twenty million rubles per year) must go through a special registration process. For small companies this registration will be optional. Only companies with specially-assigned Tax Payer ID number will pay VAT. Tax authorities will be able to focus on administration of “lesser number of taxpayers”, says MinFin.
MinFin wants to fight the one-day, fly-by-night companies that it considers to account for half of the 260,000 companies registered in Moscow in 2006. MinFin has suggested tightening registration procedure by increasing its time schedule, to obligate tax authorities to check the authenticity of data in application documents, to allow them to suspend the registration, to make liability for deceiving the registrar more severe, and to expand the list of reasons for refusal to register.
Officials expect to reduce the quantity of undeclared salaries.
Officials also hope to tighten control over privileged goods sales and to decrease number of privileges. They do not like the application of the amortization premium because companies may at once claim expenses up to 10% of purchased basic assets.
MinFin wants to also create a data exchange system between customs and tax service to modernize the system, to develop an order of confirmation of reimbursable expenses in the context of Production Sharing Agreement (it effects taxes paid by the project’s parties).
However, in MinFin this letter was referred to as “a regular correspondence” and the claim was made that not all measures will necessarily be implemented.
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