Tax policy in the framework of the development of the Russian economy: key elements of the system and innovations

UDC 336.02
Publication date: 28.12.2022
International Journal of Professional Science №11-2-2022

Tax policy in the framework of the development of the Russian economy: key elements of the system and innovations

Popova Julia Alexandrovna
Assistant of the Department of Accounting and Audit,
Saint Petersburg State University
of Industrial Technologies and Design
Abstract: This scientific work is devoted to the consideration of the concept, essence and goals of tax policy in the Russian Federation. The main priorities of the socio-economic development of the country, ways of solving emerging problems and measures taken for the successful implementation of tax policy are reflected. The most significant shortcomings of modern policy in the field of taxes and fees are given. The key innovations in tax legislation in recent years are analyzed. The main changes and their role in the taxation process are considered. The ways of development of tax legislation proposed by the state are revealed.
Keywords: tax policy, states, fiscal services, tax legislation, tax code, individuals and legal entities, profit, property

To date, taxes are one of the most important sources of financing the activities of the state. That is why the policy in the field of tax legislation is of such great importance. In the course of the historical and socio-economic development of the state, the forms and principles of taxation have repeatedly changed, which later made it possible to identify a new modern area of state regulation – the tax sphere, the most important task of which was the implementation of the fiscal function of taxes.

The relevance of this topic is due to the fact that tax policy plays an important role in the development of the country’s economy. The successful development of the economy and the country as a whole depends on how harmoniously it will be developed, whether it will be able to take into account the interests of the state and taxpayers, how it will be improved, what measures will be taken to implement it.

Tax policy is a set of economic, financial, legal methods and measures that contribute to the formation of the taxation system in the country to ensure that the financial needs of the state are met. This policy is expressed in determining the amount of the tax burden on citizens and business entities and is enshrined in the Tax Code of the Russian Federation. It is designed to provide the state with the financial resources necessary to solve the most important economic and social problems [7].

The main objectives of the tax policy are:

—   Fiscal – acts as the main one and consists in providing the state with financial resources by timely and full receipt of taxes to the budget.

—   Economic – consists in purposeful impact on the economy through taxation, increase or decrease in taxes to stimulate business, investment or innovation activity, regulation of supply and demand.

—   Social – there is a smoothing of inequality in income levels of various groups of the population.

—   Stimulating – implemented through a number of benefits aimed at the development of production, investment and innovation activities, the sale of goods abroad, the import of capital.

—   Ecological – essentially consists in environmental protection and rational use of natural resources through the introduction of environmental taxes and penalties aimed at preserving natural capital and restoring natural resources.

—   Control – is used by the state to control the financial and economic activities of business entities and individuals, the effectiveness of the tax mechanism is assessed.

—   International – the introduction of taxes in accordance with the requirements of international standards to strengthen economic ties with other states [7].

Over the past few years, tax legislation has undergone significant changes, which indicates the development and mobility of the tax sphere in the Russian Federation. For consideration, let’s take the period starting from 2018. At that time, the tax system was aimed at ensuring the fulfillment of social obligations and the formation of a resource to achieve national development goals. Another key task was to ensure the stability and predictability of tax conditions.

The tax legislation of the Russian Federation, according to Article 1 of the Tax Code of the Russian Federation (Tax Code of the Russian Federation), consists of this Code and federal laws adopted in accordance with it. The Code establishes a system of taxes, fees and insurance premiums, principles of taxation for legal entities and individuals in the Russian Federation. Tax legislation has the right to develop various methods of establishing, principles and methods of collecting established taxes from tax subjects [6].

As mentioned earlier, the tax system is aimed at individuals and legal entities. Individuals include all citizens of the Russian Federation who have reached the age of legal capacity. According to Article 57 of the Constitution of the Russian Federation, every citizen has an obligation to pay taxes and fees established by law, which are a prerequisite for the existence of the country and serve as the financial basis for its activities.

General taxes for the entire population include: personal income tax (personal income tax), property tax of individuals, land tax (if citizens own land, as well as if they own it on the right of permanent use or on the right of lifelong inherited ownership), transport tax. Also, mandatory payments include state duty and excise taxes. The state fee is paid in some cases when a citizen (or an organization) is required to obtain any legal action from authorized special bodies. Excise taxes, in turn, are paid by a citizen when transporting certain goods across the customs border of his state.

For legal entities (organizations), as a general rule, the following taxes are allocated: on profit, on value added (VAT) and on property. Legal entities registered on the territory of the Russian Federation are obliged to pay a percentage of the profit regardless of the place of its receipt – on the territory of the Russian Federation or abroad (expenses incurred, such as salaries to employees, etc., are not taken into account). VAT is imposed on all organizations at any stage of production of goods and its sale. The third type of tax is imposed on all property owned by the company (with the exception of money in the settlement account and property legally exempt from taxation).

Due to the extensive changes in the tax sphere, let’s take a closer look at each tax and its changes for the period indicated.

The personal income tax rate for most citizens of the Russian Federation (in particular, residents of the Russian Federation) has been stable for several years. Tax is levied on: income from employment (salary, vacation pay, etc.), income of sole proprietors from entrepreneurial activity, income from the sale of property (real estate, vehicles, etc.), dividends. According to the head of the Ministry of Finance Anton Siluanov, the personal income tax rate of 13% is competitive at the moment and has been so for about 20 years. However, V.V. Putin announced in June 2020 the possibility of raising the rate to 15% for citizens whose annual income exceeds 5 million rubles. The indicated increased percentage is charged from the excess amount. At the same time, this innovation affects only a small part of the population (approximately 0.9%) [5].

Tax rates on the property of individuals depend on the procedure used in the subject of the Russian Federation for determining the tax base: based on the cadastral value, or based on the inventory value of taxable immovable property. Since 2015, this tax is calculated on the basis of the cadastral price of the object (the more expensive the housing, the higher the percentage). Since 2017, the following have been taken into account: the inventory value of the object; the rates set for the cadastral price and inventory value; the deflator coefficient (increased from 0.69 to 0.81 in 3 years); various benefits. Since 2020, the tax on the property of individuals, based on the inventory value, is not calculated. Thus, the tax rate on the property of individuals fluctuates annually, based on the orders of municipal authorities [5].

Tax rates for calculating land tax are established by regulatory legal acts of representative bodies of municipalities and may not exceed 0.3% and 1.5%. Similarly with the tax on the property of individuals, the amount of payment is made with the calculation of the annual orders of municipal authorities [2].

The transport tax has undergone a number of changes. Since 2019, the use of increasing coefficients of 1.3 and 1.5 (valid until 2018 inclusive) for taxpayers for vehicles has been abolished when calculating the transport tax on expensive passenger cars. For cars with an average cost of 3 to 5 million rubles, from the year of manufacture of which no more than three years have passed, only an increasing coefficient of 1.1 was applied when calculating the tax. In 2020, the President of the Russian Federation signed a law amending tax legislation, which was supposed to provide support to organizations and entrepreneurs affected by the spread of coronavirus infection. Based on the amendments, in the period from April 1 to June 30, sole proprietors were exempt from paying this tax in respect of vehicles used (intended for use) in entrepreneurial activities.

The main change in the state duty is the possibility of its return, if the authorized agency has not considered the application, namely: returned the application and / or documents that officials did not consider. This innovation appeared on January 1, 2020. Previously, it was impossible to return the fee on this basis.

A significant innovation for legal entities in the income tax was the introduction of an investment tax deduction in 2018, which helped to stimulate organizations and sole proprietors to upgrade fixed assets. As a general rule, the total income tax rate in Russia is 20 percent (from 2017 to 2024). In 2020, the possibility of applying a zero income tax rate for medical, educational organizations and social service companies, as well as for theaters, museums and libraries, was realized.

The interest rate for calculating VAT was changed from 18% to 20% only in 2019, which brought some problems for recalculation of interest in the framework of transactions concluded before the innovation.

Since 2018, the decision on exemption from payment of tax on movable property of organizations began to be taken not by federal, but by regional authorities. The subjects of the Russian Federation led the publication of laws, including the introduction of federal benefits. If there is no regional law, the tax rates for such property could not exceed 1.1%. Since 2019, movable property was excluded from taxation, taxes had to be paid only for immovable property. By 2020, the tax rate is determined by the subject of the Russian Federation and should not exceed 2.2%.

Based on all of the above, it can be argued that over the past 5 years, the fundamental condition for taking measures to adjust the tax system has been the principle of fiscal neutrality – keeping a stable tax burden for bona fide taxpayers from increasing it. The improvement was the creation of comfortable conditions for the voluntary and timely payment of taxes and other payments.

If in the second quarter of 2020, due to the crisis, tax breaks were taken in the form of delays and reduced tax payments for small businesses, now the tax policy measures for 2021 are mainly aimed at increasing the tax burden. As a result, measures to increase the personal income tax were supplemented by an increase in excise taxes on tobacco products, an increase in the mineral extraction tax (mineral extraction tax) for extractive industries, as well as a revision of the taxation of controlled foreign companies. All this in 2021 took place against the background of previously planned measures — the indexation of excise taxes on gasoline, alcoholic beverages, cars, raising the threshold levels of wages for calculating insurance premiums, the abolition of the Unified Tax on Imputed Income, the completion of the «coronavirus» tax deferrals and the gradual reduction of tax benefits [1].

Candidate of Economic Sciences V.Yu. Kononova, an analyst at the Institute for Integrated Strategic Studies, believes that, despite the fact that the state is striving for «tax stability,» new changes envisaging an increase in the tax burden from 2021 contradict these goals. Although these measures to increase the tax burden have already taken place in 2018-2019, for example, an increase in VAT to 20%, indexation of excise taxes, etc., they still did not occur with the same frequency as it is happening now [1].

Along with this, the growth of the tax burden and the unpredictability of tax policy may negatively affect investment activity, reducing the interest of foreign investors in the Russian economy.

A recent example with an increase in the mineral extraction tax has demonstrated that the existing mechanisms of special investment contracts SPIC (a form of agreement between the state and investors, the purpose of which is to stimulate the localization of production in Russia) and agreements on the protection and promotion of investments of NWPC (North-Western Industrial Company), which should provide investors with protection from adverse changes in legislation, actually provide it is only within limited limits. It was assumed that if changes are made and worsen the conditions for investors, the state undertakes to compensate the investor for the costs incurred. When this did not happen, as a result of which a negative reaction of business followed, a separate rule was introduced, excluding an increase in the MET burden for projects implemented within the framework of the NWPC [3].

Excessive tax burden can also affect the activities of many commercial organizations and individual entrepreneurs. If economic entities give a large share of income to the state, they will not have funds for development, therefore, it is necessary to maintain a balance between encumbrance and the possibility of the existence of commercial organizations when setting tax rates and tax payment rules.

One example is an attempt to increase insurance premiums for sole proprietors in 2014. After that, many sole proprietors formally closed, but at the same time continued their activities unofficially. As a result, the planned increase in budget revenues failed [4].

At the same time, it should be noted that for the qualitative development of the tax system, the state has developed and approved rules for the formation of a list of tax expenditures at the federal level. They were created in order to form a comprehensive system of control, accounting and evaluation of the effectiveness of tax benefits. These rules are considered in the Decree of the Government of the Russian Federation No. 439 dated April 12, 2019 «On Approval of the Rules for the Formation of the List of Tax Expenditures of the Russian Federation and Assessment of Tax Expenditures of the Russian Federation» (letter of the Ministry of Finance of the Russian Federation dated September 24, 2019 № 15-07-06/73914).

Particular attention is paid to increasing the collection of payroll taxes (personal income tax, insurance premiums), and creating a unified information environment for tax authorities – digitalization of tax administration. The development of a new form of tax control – tax monitoring, will allow large companies to organize expanded information interaction with the tax authority and provide access to data in real time. Tax monitoring will allow you to quickly coordinate approaches to taxation, provide advice on completed and planned transactions by submitting the opinion of the tax authority, tax audits, submission of updated tax returns, explanations and required documents [5].

The draft law developed by the State Duma of the Russian Federation provides additional guarantees for the stability of the tax system and the entry of tax legislation introducing an increase in rates and/or the abolition of reduced rates on income tax, property tax, land tax, transport tax, not earlier than three years after the date of their official publication and not earlier than the first day of the next tax period.

At the same time, taking into account the difficult socio-economic situation caused by the consequences of the global pandemic, external sanctions pressure, the Ministry of Finance of the Russian Federation has adopted some planned changes in the budget, tax and customs tariff policy in 2020-2022, among which is the norm fixing the requirement for the entry of changes in tax legislation no earlier than a year from the date publications; phased inclusion of quasi-tax payments (tourist, recycling fees); joining a number of regions of the country to the experiment on the application of the NAP («Professional Income Tax»); improving the procedure for collecting insurance premiums and personal income tax; taking measures to increase the competitiveness of domestic goods, increase employment and labor productivity of workers, and much more [9].

From the perspective of tax policy reform, it is envisaged:

—   firstly, the annual increase in the established MET rate for the extraction of natural gas fuel;

—   secondly, a gradual reduction in the rate of export customs duty on oil with simultaneous compensation of the lost income due to an increase in the mineral extraction tax rate on oil;

—   thirdly, the implementation of the indexation of excise rates of alcohol and tobacco products and a gradual increase in excise taxes on these products, as well as on all classes of motor gasoline and diesel fuel is planned [8].

Three main directions have been identified for the implementation of tax policy in the Russian Federation:

1)    a pronounced fiscal policy that squeezes the maximum out of economic entities;

2)    the establishment of a moderate amount of taxes, which will create favorable conditions for the development of entrepreneurship in the country, which eventually contributes to the growth of tax revenues;

3)    strong centralization of all the country’s finances by setting high taxes, but at the same time a high level of social security of citizens is also provided [5].

For the successful implementation of tax policy and the development of the country’s economy, taking into account the existing problems and the measures already being implemented to eliminate them, a number of economists put forward the following proposals for further improvement of tax policy:

1)    Easing the overall tax burden. The reduction of the tax burden without prejudice to the receipt of budget revenues can be obtained by canceling a number of benefits that negatively affect the prospects for the development of the country’s tax system.

2)    Simplification of the tax system. Consolidation of an exhaustive list of taxes and fees while reducing their total number and combining as much as possible the already functioning calculation regimes and the procedure for paying various taxes and fees.

3)    Improving the quality of work of tax authorities. It is necessary to carefully monitor the quality of the work of tax authorities, as well as the competence of their employees.

4)    Carrying out work to reduce the debt on taxes and fees. Tax evasion has become a serious problem in Russia, and various schemes to circumvent tax legislation have become widespread. Regulatory authorities need to more effectively identify the objects of tax audits and improve the documentary checks carried out.

5)    Increase in the level of taxation of dividends from equity participation of shareholders in the capitals of large companies.

6)    Simplification of the calculation mechanism for value added tax for Russian organizations that do not have benefits for this tax. It is advisable when calculating value added tax, instead of selling products, to take as the tax base the value added included in it, which consists of the payroll, depreciation, profit and taxes, and which can be determined without much difficulty according to accounting data.

7)    There is a need to reduce the tax burden on enterprises producing consumer goods, as well as innovative enterprises that are currently uncompetitive in the domestic market of the country [8].

The priorities of the tax policy of the Russian Federation remain the same – the need to create a stable tax system that ensures fiscal sustainability, both in the medium and long term. Of course, the changes are aimed at creating favorable conditions for all participants in market relations. Tax policy should be stable, which is one of its main principles. At the same time, it is very clear that for its successful implementation and improvement of the economy, it is necessary to develop and improve according to the current situation in the country and around the world. As a result, we can say that in the tax system of Russia there are both inhibiting and effective elements of the development and effective operation of this system. It is worth noting that according to a number of indicators, the modern Russian tax system is becoming more socially oriented and sparing in relation to taxpayers.


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