Russian Prime Minister Laments Government’s Record On Tax

by Tatiana Smolenskaya, Tax-News.com, Moscow

03 October 2005

Russian Prime Minister Mikhail Fradkov told an international conference of investors last week that the Russian tax administration has too often held back the ambitions of the business community with its unnecessary levels of bureaucracy and frequent instances of corruption, and stressed that the government must seek to make the tax system more clear cut for both domestic and foreign investors.

"I believe that we often do a lot of unnecessary work, tackle a colossal amount of scrap and often in vain,” Fradkov told the conference in Moscow.

The Prime Minister went on to lament the government's record on removing complexity and inconsistency from the tax system, noting that “we have done far from all in order to complete the work on improvement of tax administration". He added that the tax system must be made "equally clear both for Russian and foreign investors".

Last month, the budget and tax committee of the lower house of the Russian parliament, the State Duma, urged the legislature to adopt a new draft law aimed at improving tax administration, which, if approved, will be attached to the first part of Russia's tax code.

The draft law seeks to achieve a number of ends, one of the most important of which is the streamlining of tax audit procedures, in particular by reducing the amount of paperwork involved, in an attempt to make the system simpler and fairer for businesses, and increase tax law compliance rates.

Furthermore, the draft law stipulates that tax audits cannot be held at the same business more than twice in any one year, and must last no longer than two months. Steps towards the implementation of electronic accounting also figure in the proposals.

Other key changes in the the proposed legislation are the clarification of residency for tax purposes in Russia, and the creation of streamlined procedures for registering with local tax authorities.

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