Russia Moves Towards New Tax Cuts In 2004

by Tatiana Smolenska, Tax-News.com, Moscow

24 February 2003

There seems to be general acceptance in Russian government circles that further tax reductions are likely, with discussion now centering only on the timing and amount of reductions. Some ministers favour 2004, others 2005, including the Finance Ministry.

On Friday, Vice-Chairman of the Duma Budget Committee, Sergei Shtogrin, told deputies that the state had sufficient resources to permit the introduction of new cuts in sales taxes and VAT in 2004, and that their amount was a political rather than an economic question.

Earlier in the week, Russian President Vladimir Putin told the Russian Union of Industrialists and Entrepreneurs that the government was commited to reducing the tax burden on business, and pledged to aim for a rate of between 30% to 30.5% next year.

Speaking earlier this month with regard to the possible introduction of a further package of tax reduction measures, Prime Minister Mikhail Kasyanov revealed that the government's work over the past three years has reduced the country's overall tax burden by the equivalent of 3% of GNP, and proposed a reduction of 3% in the rate of VAT, currently at 20%, as it has been since its introduction nearly ten years ago. This would reduce the tax take by a further 1% of GNP,

Both Mr Kasyanov and the Chairman of the Budget Committee Alexander Zhukov are on record as wanting to implement new cuts for 2004.

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