VAT is a relative term: about how Tatarstan tax specialists surprise Anton Siluanov
The first deputy prime minister of Russia was surprised by the concentration of financial resources in the hands of regional customers, high VAT charges and the success of the experiment with the self-employed
The head of the Russian finance ministry brought to Kazan unexpected news about the approval of the restructuring of the regional state debt, which, apparently, will lead to a long prolongation of the “Universiade” debts in exchange for the taxes received from investment projects implemented using the released funds. Tatarstan tax authorities reciprocated, collecting a record “harvest” of 126,5 billion rubles in VAT, the second most important tax for the federal budget. Only financiers know in whose favour this year's “tug of war” on the tax field ended. Read more about the meeting of financial, treasury and tax authorities of the Republic of Tatarstan held on 14 December in the report of Realnoe Vremya.
Anton Siluanov: money for national projects will come before the beginning of the year
First Deputy Prime Minister of the Russian government Anton Siluanov made it a rule to come to Kazan strictly once a year and always at the end of the following financial year. This new year's visit is connected with the desire of the federal ministry of finance, headed by Siluanov, not only to control the final figures of the budget of the regions but also to discuss the implementation of the national projects at the local level, which started last year. As you know, this topic is under the special control of the prime minister of the Russian Federation, and the belated transfer of resources to the regions has been criticized at the federal level. The minister of finance of the Russian Federation arrived in Kazan on 14 December to participate in the republican meeting of financial, treasury and tax authorities, but at the behest of the president of Tatarstan made it clear he was willing to discuss the working moments of the execution of the national projects.
“I would like to see how the work [on the implementation of the national projects] is going in the region, what changes have occurred, and discuss the problems. We see more belated funding for the national projects, we see some problems in the procurement legislation. It would be desirable to hear what problems should be solved by the federal centre,” Siluanov suggested to complement the agenda, having recognized that it has taken a long time for money to come. He also promised that the funds would be transferred before the beginning of the next financial year.
Concentration of resources in the hands of republican customers
During the meeting, he was interested in how quickly this money would reach the municipalities if all of them are concentrated in the regional authorities. “You do it centrally. What is the reason for this?” he asked Minister of Finance of Tatarstan Radik Gayzatullin.
Let us explain what resources we are talking about. Tatarstan intends to spend 55,3 billion rubles from the federal budget on the national projects within 3 years, Tatarstan Economy Minister Farid Abdulganiev said at the meeting later. Thus, 26,7 billion rubles have been allocated for the implementation of the national projects this year, 21,8 billion of which were spent at the beginning of December. Next year, 15,6 billion rubles are to be allocated for the national projects in the republic.
The head of the Tatarstan ministry of finance did not delve further into the specifics of managing financial flows but assured that funds for national projects are brought to the municipalities in a timely manner. Tatarstan President Rustam Minnikhanov took the floor, explaining that the concentration of capital is due to that at the municipal level there is no sufficient infrastructure of customers who control the passage and expenditure of each ruble. In other words, if resources are dispersed among many municipalities, there is a risk of losing control. The finance minister agreed with this approach.
Two-thirds of taxes — to the federal Treasury
However, the first item on the agenda of the meeting was the report of the head of the federal tax service of Tatarstan, Marat Safiulli,n on the results of the work of tax authorities in 2019. Tatarstan tax authorities collected 828 billion rubles by the end of the year, an increase of 7%, he said. Two-thirds of the collected amount is transferred to the federal budget, which is 5% more than last year. One third, respectively, goes to the consolidated budget of the Republic of Tatarstan (plus 1,7% compared to last year). “The forecast budget indicators will be fulfilled in full,” the chief tax officer of Tatarstan reported.
The largest increase in tax revenues has been achieved in VAT. On the slides, it was indicated that for this tax it amounted to 126,5 billion rubles with an increase of 34,8%. They also collected more of income tax — 135 billion rubles, plus 5,4%. Eighty-one billion rubles of personal income tax with an increase of 7,3% have been put in the tax “piggy bank”, and 36 billion excise taxes with an increase of 5,8%.
Here, the head of the federal tax service disclosed data on the dynamics of reducing the tax gap on VAT in recent years (tax gap — the difference between the amount of taxes that theoretically is to be paid by taxpayers, and the amount of actually collected funds — editor’s note). In Tatarstan, the tax authorities have brought it to 0,33%, which is lower than the federal value — 0,6%, to which the tax service has consistently been going since 2015. The reduction of the gap has been achieved by eliminating one-day firms and total control over operations under the ASK NDS system. According to Safiullin, successes in the fight against VAT evasion are due to large-scale digitalization.
“Why such an increase of 34,8%?”
“You have a very high rate of increase in value added tax: by 34,8 per cent. Where are these figures taken from” Siluanov asked.
Marat Safiullin replied that a third of the increase was provided by the increase in the VAT rate by 2 p. p., and two thirds — the software product of VAT control. “We identify beneficiaries, work with taxpayers on unreasonable deductions and ask them to fulfill their tax obligations,” Safiullin said.
Siluanov's second question concerned the experiment with the self-employed. Marat Safiullin said that more than 55 thousand people registered in Tatarstan in this status, 70% of them began to pay taxes for the first time.
In conclusion, the head of the Russian ministry of finance announced the approval of the scheme of restructuring of the regional debt, which, apparently, implies a long prolongation of the “Universiade” debts. “Next year we will have new financial opportunities to stimulate economic development. At the suggestion of Rustam Nurgalievich, it has been decided to restructure inter-budget loans,” he said.
It seemed that the audience did not immediately understand what he was talking about and was silent. “Applause!” Rustam Minnikhanov urged to support the solemn moment.
“Applause to Rustam Nurgalievich, this is his idea,” Siluanov said. He explained that this proposal has been included in the law on the budget for the next three years and applies to all regions. “The logic of the restructuring is that the resources that should be used to repay the loans of the federal centre will be directed to the development of the region. And the taxes that will be received from these new investments will be used to repay the loan. This is a very good offer, thank you for the idea.”