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Putin Says Tax Rules Should Remain Unchanged

by Tatiana Smolenska,, Moscow

12 December 2014

Russia's President, Vladimir Putin, has said that tax legislation should remain unchanged for the next four years, and that he wants a one-off tax amnesty for individuals who repatriate capital to Russia.

Addressing the Federal Assembly, Putin said that there is a need for stable legislation and predictable rules, which is why he supports a four-year freeze on "existing tax parameters."

As regards the amnesty, he suggested that anyone who legalizes their holdings and property in Russia would receive "firm legal guarantees" of not being asked to explain how they acquired their capital or where it came from. However, he stressed that this would be a one-time opportunity.

The President also highlighted a plan to give a two-year tax holiday to small businesses registering for the first time and for production facilities starting from scratch.

Russia previously ruled out VAT and income tax changes for 2015 in September, although the Prime Minister, Dmitry Medvedev, has recently confirmed that next year's Budget may have to be revised if economic conditions change. In August, Medvedev described tax increases as "a last resort" in the face of international sanctions.

Meanwhile, Russia's Ministry of Culture has created controversy by proposing an "anti-piracy" levy on internet usage. The Ministry is working on draft legislation following consultation with the Russian Union of Right-holders, and revenues would be used to pay the owners of copyrighted material available online.

Putin's address came shortly before the World Bank announced that Russia's economy is likely to contract by 0.7 percent of gross domestic product (GDP) during 2015, before increasing by 0.3 percent in 2016. A World Bank economist, Birgit Hansl, said that the further contraction would be due to "continued uncertainty, restricted access to international financial markets by Russian companies and banks, and lower consumer demand." She added that "lower oil and commodity prices are expected to negatively affect investment decisions."

TAGS: individuals | Russia | tax | investment | small business | economics | business | gross domestic product (GDP) | copyright | internet | legislation | tax rates | tax reform

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