“Everything will be processed in a mild way”
The personal income tax rate for people with income exceeding 5 million roubles will rise to 15%. This will only apply to what is over the indicated sum, not all the earnings. This is what Russian President Vladimir Putin stated on June, 23. According to him, such a measure is not an attempt to achieve social justice, but only a way to help children with rare diseases whose problems have been given lower priority due to the pandemic. Are additional difficulties likely to appear? This is what Mikhail Begunov, lawyer, the managing partner of Tax Compliance law firm, talks on “Ъ FM”.
— Are we really capable of managing different tax rates effectively?
— You know, a progressive tax system is actively used in many developed countries, such as the USA and China. The experience of the Federal Tax Service has shown that they have sufficient resources to manage a considerable amount of information and, especially, a progressive tax in real time. A new law on the Unified Federal Register of Population Data has been signed recently. Therefore, the Federal Tax Service now has all the necessary resources to get information on people’s income and manage it according to the corresponding tax rate. I believe, it will all be processed automatically, and won’t affect us much.
— If we're talking about magnates, what is the proportion of personal income tax in the total tax amount?
— If we look at the Federal Tax System statistics, we'll see that the principal sources of government revenue are VAT and the personal income tax, and that people with higher income constitute the bulk of it. An average top manager makes about 5 million roubles a year, and there are plenty of them. Especially, if we're talking about transactions, that are conducted every year, in which, for instance, people in Moscow make more than 5 million roubles in profit.
— How satisfactory is Russian jurisdiction for the wealthy in terms of taxation? Are new tax avoidance schemes likely to appear?
— To exclude the risk of new income concealment schemes being created, it is crucial for tax authorities to organise cash flows monitoring in the accounts of natural persons. That’s why I believe that, on the one hand, they will track the assets of individuals, on the other hand, they will strengthen their regulation because it’s important that these measures don’t lead to the creation of new fraud schemes. I think everything will be processed in a mild way, as the main goal of the Federal Tax Service is to prevent tax evasion.
— How realistic is the sum of 60 million roubles, stated by the president, that is supposed to be raised as a result of the personal income tax increase?
—I think this calculation is based on retrospective analysis, the Federal Tax Service declared it taking into consideration the personal income tax statistics of last year and previous periods. It’s clear that the number of transactions and the amount of money earned differ from year to year. That’s why I believe that this number is approximate, and the profit may be much higher. Social focus also plays an important role. Therefore, what the president has declared will be included in the budgetary policy. Of course, we will only see it via some specific examples, when it is announced. But there is no doubt that this sum will be included in the budget and will be distributed according to the president’s instruction.
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