Putin Calls For Business Tax Simplification

by Tatiana Smolensky, Tax-News.com, Moscow

01 March 2002

The Russian President, Vladimir Putin, called this week for simplification of the tax system for small businesses - just two months after he complicated the regime with the introduction of new legislation.

Speaking to reporters on Wednesday, Economic Development and Trade Minister, German Gref revealed that following pressure from small business groups, the President had asked the Government to prepare new legislation by the end of March.

Putin's stated desire to: 'simplify the way businesses are taxed, including social taxes, and make sure accounting red tape would be kept to a minimum,' will be welcome, if somewhat perplexing, news for small businesses in Russia.

Having announced at the end of last year that the development of small businesses was one of the Government's goals for the future, SMEs were outraged when the Duma introduced a bill obliging them to pay social taxes, and also introduced an amendment to the tax code which effectively created a new parallel accounting procedure for companies.

'This effectively doubled the tax burden for small businesses,' revealed Andrei Nasonov, one of the leaders of the country's largest small business lobby, OPORA. He added that the amendment to the tax code was also fantastically unpopular, and was referred to among the people as 'accountant genocide'.

Mr Nasonov welcomed Gref's announcement, but observed that moves to simplify the tax procedure were somewhat overdue, given the Government's earlier proclamations on the subject: 'You have to make changes when legislation contradicts the stated plan of the Government to support small business and business in general,' he commented.

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