Sep 26, 2007: 2007 Annual Tax Seminar

Tax Reform in Russia: Where Are We?

By David Birney

Russian government and corporate tax experts briefed a high turnout of AmCham members on September 26 at AmCham’s Annual Tax Seminar. Held at the Marriot Grand Hotel in Moscow, the event was chaired by AmCham president Andrew Somers and featured keynote addresses by Sergey Shatalov, deputy minister of Finance, and Stanislav Voskresensky, deputy head of the Presidential Expert Department.

Addressing the 130 attendees, Mr. Shatalov spoke on some of the ongoing developments in taxation policy and tax reform in Russia. He noted that the principal change to VAT application has been the introduction of quarterly payments instead of monthly payments, resulting in significant changes to financial flows both for the government and companies alike. Among other changes he discussed were adjustments to profits tax and personal income tax, new taxation rules for pension insurance and endowment insurance and exclusions for medical insurance and education loans. Looking ahead, Mr. Shatalov predicted that by 2009 changes could be made to rules and regulations governing the tax residency of corporate bodies. He also mentioned the recent adoption of the Ministry of Finance’s “Guidelines for the Policies for the Coming Three Years,” which sets out the triennial budget for 2008 through 2010.

In his remarks, Stanislav Voskresensky suggested measures to address specific tax issues, such as the establishment of an expert group to discuss transfer pricing legislation and simplify the rules set out in Articles 20 and 40 of the RF Tax Code. “These Articles [20 & 40] are not effective,” he said, “neither for companies nor the government, because the losses incurred on transfer prices by the tax authorities are almost 90%.” Mr. Voskresensky also touched on a number of other issues, including recently-announced plans to seek resources for a reduction in tax rates. “But what will happen with VAT,” he asked rhetorically.” “Our position has not changed in substance, but tactically it is as follows: we consider that this question must be answered.” Additionally, Mr. Voskresensky highlighted changes to the decision-making process for tax-related legislation, praising the High Arbitration Court and Ministry of Finance’s practice of disclosing draft decisions on their websites, providing an opportunity for public comment and discussion.

Other speakers at “Tax Reform in Russia: Where Are We?” included:

• Andrew Somers, president of the American Chamber of Commerce in Russia
• Nancy MacEntee, human capital director, Ernst & Young
• Andrey Bashkirov, tax manager, P&G
• Sergey Pepeliaev, managing partner of Pepeliaev Goltsblat & Partners
• Alex Chmelev, partner, Baker & McKenzie
• Vladimir Konstantinov, director, PricewaterhouseCoopers
• Henrik Hansen, senior manager, Ernst & Young
• Dmitry Alimov, tax manager, General Electric
• Estella Dzhantukhanova, senior manager, Deloitte
• Chet Bowling, partner, Alinga Consulting
• Art Franczek, president of the American Institute of Business & Economics
• Konstantin Antipov, general director, Agency AM Consulting
  

Complete presentations from all speakers can be found here.