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Duma proposes to levy tax for use of foreign brand names

October 02, 2013, 11:37 UTC+3

The lower house of parliament is dissatisfied with the total use of foreign words

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MOSCOW, October 2 (Itar-Tass) - The State Duma lower house of Russia’s parliament has prepared a bill law that would obligate producers of goods with foreign names to pay additional taxes to the treasury. The MPs have promises that the tax would be small, but in view of the national businessmen’s trend to use foreign names, the revenues could be substantial enough, the Izvestia newspaper writes on Wednesday.

The author of the legislative initiative, Yevgeny Fyodorov, said that domestic businessmen in almost all spheres, ranging from food items and ending with the names of major IT companies and clothes manufacturers, use attractive for the customer foreign names.

Studies have shown that since the Soviet times consumers have developed a liking for foreign names of products, rather than for the domestic names. Few of Russian consumers would agree to buy clothes under the brand of a knitting factory from a provincial Russian town, but with great pleasure are buying the products of the same provincial knitting factory, which have Italian or French names. Even if the foreign component of the goods ends with the name.

The lower house of parliament is dissatisfied with the total use of foreign words.

“We we are currently writing this bill, by which we plan to introduce taxation for Russian companies that use foreign words in the title of the goods,” Fyodorov told the Izvestia daily. “The tax itself will be symbolic: 1 percent or less. But it would stress the privilege of our companies that find suitable Russian words for naming their products.”

The lawmaker is currently deciding which scheme should be used for the tax collection - either a tax on the profits of a company or any other.

The business community has negatively taken the idea of MP Fedorov on tax sanctions against foreign-sounding names.

The head of the board of trustees of Russia’s NGO Opora Rossii Sergei Borisov has criticized the bill’s idea. “It’s discriminatory measures that nobody wants. In is necessary to understand the current world integration processes and not to forget that we are already in the WTO. Therefore, these proposals can only spoil the investment climate in the country and prevent the development of our companies,” said Borisov. “We, on the contrary, need our companies to access international markets and economically intertwine with the foreign.”

However, if the bill is passed, the businessmen would have no choice but to comply with it. And they have promised not to raise prices in order to compensate for losses from the additional taxes. “Certainly, if such a bill becomes law and a new tax is introduced, we will fulfill these requirements,” said Andrei Fedorin, a representative of the Ginza Project holding, which unites several chain restaurants. “As for the possible of price rise for our services due to such innovations, I do not see special reasons to change the prices.”

Yevgeny Fyodorov has promised to submit the bill on the new tax to the State Duma before the end of the year.

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