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Analysts: Russian government continues business-friendly policy amid crisis

June 02, 2015, 17:53 UTC+3 Alexandrova Lyudmila
© Yekaterina Shtukina/Russian government press service/TASS

MOSCOW, June 2. /TASS/. The Russian government continues its business-friendly policy amid complex economic conditions in the country.

After introducing tax and supervisory "holidays" for business, the government has moved to declare a moratorium on non-tax payments, which bear heavily on entrepreneurs.

Of course, business is operating in uneasy conditions today and the government’s measures implemented in this sphere are not enough but the authorities are trying to help even amid a shortage of funds, experts said.

At a government meeting on Monday, Prime Minister Dmitry Medvedev supported the introduction of a moratorium on some non-tax payments until January 1, 2019. Business is expected to save 1.5 trillion rubles ($28 billion) from this measure, Economic Development Minister Alexei Ulyukayev said.

While non-tax payments are formally excluded from the tax system, they actually mean compulsory payments for business. Russian entrepreneur associations earlier requested the government to adjust or cancel several dozen payments of this kind and postpone the introduction of new such payments during the crisis period.

Many of these payments were previously supported by the Economic Development Ministry. A decision on the most acute issues, in particular, the sales fee, has been postponed.

Overall, the government’s decision taken on Monday will apply to eight-nine payments. Specifically, the moratorium extends to four fees that are stipulated in legislation but have not been levied to date. It covers the environmental fee, the payment for damage to centralized water disposal systems, the fee for the discharge of contaminants and expenses on cash reserves for the elimination of emergency situations.

Besides, the government will continue developing the regulatory framework for several environmental payments but has decided to postpone their introduction.

The issue of non-tax payments should not be underestimated, experts said.

"It is frequently wrongly believed in Russia that a considerable problem for business is posed by taxes," renowned Russian business coach Gleb Arkhangelsky wrote in the Live Journal.

"This is not the case because the tax rates in Russia are quite reasonable judging by world standards and considering even the general taxation system, to say nothing about simplified tax regimes and taxes for individual entrepreneurs. Moreover, taxes are transparent and simple. The real problem is posed by various non-tax burdens and informal fees. They are far less transparent and contain more possibilities for corruption. So, in the first place, it is necessary to struggle against them," he said.

OPORA Small and Medium Business Association first vice-president Vladislav Korochkin said in an interview with TASS news agency the government had largely made a political decision so far because the documents introducing the moratorium still had to be elaborated. The expert said he was confident the government’s decision would be implemented without any delays.

The tax and supervisory "holidays" are among the most important steps made by the authorities lately to ease the burden on business, Korochkin said.

No doubt, tax administration in some ministries and departments has improved considerably, the expert said. ‘There are serious positive shifts."

However, the latest government’s measures are clearly not enough. Specifically, the government has not yet made a decision on cancelling non-tax payments, which are scheduled to be introduced in 2015 and 2016 under decisions passed in 2013 and 2014, the expert said.

"Additional costs for business from non-tax payments run into trillions of rubles: the results of the first quarter showed that 38% of all Russian enterprises were generating losses," he said.

Also, some levies related to the environment are quite disputable from the viewpoint of their practical implementation. It is doubtful that they will work but they are already generating costs," he said.

Associate Professor of the Russian Presidential Academy of National Economy and Public Administration (RANEPA) Dmitry Tikhonov noted the government’s desire to meet business halfway.

"There is a clear positive moment at least in the fact that the government has not adopted tax amendments discussed last summer when there was a desire to toughen many things," the expert said.

The Russian budget has scarce funds but the government should all the same lend support to business, the expert said.

"The situation has deteriorated: several persons from among my acquaintances have already declared about their bankruptcy or are thinking about it - in December last year they did not think about this."

"The state is making sacrifices to help business," Deputy Head of the Chair of State Finances at the Higher School of Economics Dmitry Kamnev said.

"When the business community turns to the government with some request, the government tries to help, although such expenses weigh on the budget during the crisis period," he said.

"Now the government is once again giving a signal to the real sector: We’re with you in the same boat," the expert said.

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