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Russian president puts in a word for business

December 04, 2015, 19:10 UTC+3 Alexandrova Lyudmila
© Mikhail Metzel/TASS

MOSCOW, December 4. /TASS/. Russian President Vladimir Putin’s proposals for protecting businesses in Russia have met with support from the expert community. Analysts agree that the excessive activity of regulatory and supervisory authorities must be reduced. In exchange, though, businesses should agree to make themselves transparent.

As he addressed the Federal Assembly with the annual state-of-the-nation address on Thursday, Putin placed special emphasis on the need for supporting private enterprise. He urged creating comfortable conditions: reducing the number of watchdogs, using arrest against those responsible for economic crimes only in exceptional cases, and prolonging the amnesty of capital for another six months. Putin said that the freedom of enterprise was the most important pre-requisite for economic development, while the excessive activity of law enforcers harmed the business climate. He urged the government to present by July 1, 2016 its proposals for "eliminating excessive and redundant functions of control and supervisory bodies."

Putin said that according to the available statistics the investigative authorities in 2014 launched 200,000 criminal cases over economic crimes; 46,000 were taken to courts and another 15,000 fell apart. "In other words, a tiny 15% of cases ended with the pronouncement of verdicts. In the meantime, an absolute number of businessmen involved (83%) who faced criminal charges lost their businesses partially or completely. In other words, they were first subjected to pressures, then robbed and eventually allowed to go."

"The president’s words are very important, but what will be done to act on his instructions is no less significant," the first vice-president of the all-Russia organization of small and medium businesses Pillar of Russia, Pavel Sigal, told TASS. "It is very important the president mentioned statistics confirming the victimization on businesses on pseudo-criminal charges. But will the law enforcers now derive the proper conclusions?"

"Putin said himself: we keep talking about these things year in year out, but the problems remain unresolved," Sigal said. "The identified benchmarks are correct ones by and large, but only political will can make the corresponding services and ministries do what they are expected to do."

"This is a very important signal," Associate Professor Emil Martirosian, of the presidential academy RANEPA, told TASS. "It was issued to both businesses and the control and law enforcement agencies. This is a bilateral process. Businesses should emerge from the shadow at last and reduce the share of their concealed, untaxed incomes. And this share is very large - I would estimate it at about 30%-35%. The president gives a clear message to both parties: one should agree to make it transparent, while the other should extend a helping hand (through an amnesty) to help businesses out of that situation."

"Just lowering the tax rate is not enough. There has to be business people’s determination to operate openly and honestly," Martirosian. He believes that claims to the effect there was no chance of doing business in Russia honestly did not hold water. "Russia’s tax rate is one of the world’s lowest - 13%. Social taxes are way below those in Europe or the United States. Newly-launched businesses remain immune from inspections for an initial period of three years, until they find feet. All inspections that may be carried out during the first two years as a rule are launched to probe into suspicious transactions to which the government cannot but respond."

"The gist of the presidential message is this: honest businesses must be well protected. Doing business must be prestigious," Professor Sergey Kalendzhian, of the presidential academy RANEPA told TASS. "Everybody remembers the cases in which numerous inspections were used for the sole purpose of taking away people’s businesses. If this vicious practice is brought to an end, the prestige of private enterprise will grow and the economy will feel positive effects.

He pointed out that this time the task had been set of achieving specific solutions by the end of the year, including those in the legal sphere, which would make it possible to translate the presidential instructions into reality. Reducing the number of inspections is number one priority.

Kalendzhian warned that the tax pressures on Russia’s small and medium businesses were unduly heavy and they continued to be increased on an on in defiance of the president’s previous instructions.

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