Alexei Kudrin called innovations in tax legislation insignificant
Alexei Kudrin, the head of the Accounts Chamber, spoke about the innovations in tax legislation, according to Forbes. As a reminder, in March and June, Vladimir Putin announced an increase in income tax from 13% to 15% for wealthy citizens whose earnings exceed five million rubles per year. In addition, taxes on dividends paid to foreign organizations have been increased. The question about Kudrin’s attitude to innovations was raised during his speech at the presentation of diplomas to graduates of the Russian School of Economics.
He was quite unemotional about the changes in the tax area. Kudrin also said that initially such a model was introduced due to low tax collection, when citizens’ salaries were often paid in envelopes. The single interest rate did its part; tax collection has doubled in two years after its introduction.
Kudrin said that negative sentiments towards the rich began to grow among citizens. From a political point of view, this decision was predictable, and from an economic point of view, it was quite democratic. Kudrin noted that the innovation will not bring significant changes to the budget, since it was adopted to balance political sentiments.
The head of the Accounts Chamber feels negative about the increase in the dividends taxation. He is confident that this will entail a deterioration in the investment climate and relations with some jurisdictions. For example, a complex dispute is being held over negotiations to revise agreements to avoid double taxation, which had to be postponed due to the COVID-19 pandemic.
In his words, these innovations are not necessary, since they will not bring serious income to the country’s budget, however, they trigger a tense atmosphere among entrepreneurs.
On June 23, the President announced the introduction of an increased tax rate for citizens with an income of over 5 million rubles a year. A simplified flat rate of 13% was valid since 2001 and introduced during the time when Kudrin was Minister of finance. Now citizens with an income of 5 million rubles or more will pay 15% tax. The President is confident that this decision will bring an additional 60 billion rubles to the budget.
Almost three months earlier, Vladimir Putin submitted a proposal to increase the tax rate on interest and dividend payments abroad. He stated that such payments should be subject to “adequate tax”. Today, the maximum rate in favor of foreign companies reaches 15%, and 20% for foreign loans. It should be noted that in the case of reaching agreements on the avoidance of double taxation with another jurisdiction, these rates can be reduced to 5% and 0%, respectively. Russia has such agreements with more than 80 states, but some of them are under revision.