‘No reason for complacency’: Minnikhanov urges caution despite positive financial results

Alarm signal of 7 billion rubles

Tax revenues in Tatarstan continue to break records, despite gloomy economic forecasts tied to the increase in tax burdens on businesses starting 1 January 2025. Revenues have grown, albeit unevenly, across all types of taxes. In total, tax authorities collected 396 billion rubles, marking a 13% increase. Of this, 125 billion rubles, a 20.4% rise, flowed into the republican budget. The treasury received 21 billion rubles more than expected in the first quarter.

“The first quarter turned out to be more or less favourable," said Rustam Minnikhanov, opening a meeting with financial, treasury, and tax authorities. “Budgetary targets have been met, and there are also some own revenues. However, the results of the first quarter should not be a reason for complacency," he warned.

According to him, there are concerning signs that corporate income tax revenues may decline in the future.

“Everything changes quickly. We can see that the second quarter has somewhat complicated the situation for us," Minnikhanov added.

Minnikhanov also reminded that Tatarstan’s budget has been drafted with a substantial deficit, which will need to be addressed throughout the year without disruptions. “What concerns us is the corporate income tax. A number of enterprises have reduced their contributions by 7 billion rubles, which is not a good sign," he noted. While there are objective reasons for this, it still affects budget execution. The president instructed authorities to keep the situation under control, emphasising that it is not enough to simply demand results — officials must understand the core issues and find solutions. “Our main task is to create conditions for businesses to operate comfortably," he stressed.

Fluctuating growth

Corporate income tax revenues have surged by 31%, reported Marat Safiullin, the head of the Federal Tax Service for Tatarstan. According to him, 56 billion roubles have been transferred to the republic’s budget, covering 47% of the treasury’s income. “This increase is largely due to higher payments from companies involved in oil extraction and refining, as well as strong government demand for products from organisations in several other sectors," he explained (likely referring to state defense orders).

Another part of the economy is “drifting” in the opposite direction. According to Marat Safiullin, several companies in the republic have already submitted tax returns indicating a reduction in corporate income tax by 8.9 billion rubles. Several more holding companies are planning to decrease their contributions. “Based on available data, tax returns for a number of strategically important enterprises for the republic’s budget are expected to show a reduction in the calculated tax for the first quarter of this year," he reported, warning that tax authorities will be closely examining the “legitimacy of these reductions.”

Personal income tax (PIT) collections rose by 19%, reaching a total of 38.1 billion rubles. According to Marat Safiullin, 26.5 billion rubles went to the republic’s budget, while 11.6 billion rubles were allocated to local budgets. The growth is attributed to higher wages and the creation of 23,000 new jobs, resulting in an additional 6 billion roubles in tax revenue. However, the Almetyevsk district, a key oil-producing region, saw a suspicious drop of nearly half a billion roubles in tax collections.

Property tax revenues grew by 6.8%, reaching 11.3 billion rubles, while excise tax receipts rose to 10.2 billion rubles, and the tax on gross income reached 5.6 billion roubles.

“Settling” claims could lead to criminal charges

The head of the Federal Tax Service for Tatarstan reported new cases of tax evasion uncovered in collaboration with the Federal Security Service (FSB) of Russia in Tatarstan. An on-site audit of Tekhinzhiniring-FLOT revealed that the company was linked to 17 “one-day firms” and six individual entrepreneurs. Employees were paid in cash envelopes. As a result, the company was charged an additional 29 million rubles in taxes.

Safiullin urged businesses not to resort to “fraudsters” who offer to “settle” tax claims during field audits. “The result of such 'help' is the initiation of criminal cases (Article 159, 291, 291.1 of the Russian Criminal Code), not a reduction in the amounts owed," he warned. According to Safiullin, the most effective way to resolve claims is by submitting amended tax returns, which helps save money (by avoiding penalties and payments to fraudsters) and, most importantly, preserves the company’s reputation.

Authorities are also working with law enforcement to tackle the tax arrears, which currently amount to 12.3 billion rubles. Safiullin noted that the issue is under the control of Tatarstan's prosecutor, Albert Sujargulov. With the support of law enforcement agencies, debts amounting to billions of roubles are being collected. Joint efforts to prevent abuses will continue this year.

Writing off half of Tatarstan's state debt

The Russian Ministry of Finance may write off about half of Tatarstan’s state debt, announced the head of the republic, Rustam Minnikhanov.

“This year, the task set by the president of Russia is being implemented, which involves writing off two-thirds of the debt of Russia’s regions on federal budget loans. The condition for debt forgiveness is that the released funds must be directed toward designated activities," he explained.

According to him, the debt write-off will amount to 44.5 billion rubles, with the freed-up resources intended for infrastructure development. “In accordance with the regulations, the Republic of Tatarstan has approached federal authorities with an application expressing its intention to participate in the new debt forgiveness mechanism," explained Tatarstan’s Minister of Finance, Marat Fayzrakhmanov. “The application includes a list of projects and activities, totaling 44.5 billion rubles, proposed for financing and debt cancellation.”

“To date, our proposals have been approved by the relevant federal ministries and will soon be presented for consideration by the Presidium of the Government Commission on Regional Development in Russia," he said.

The repayment of this amount is expected to take place over the next five years. As of April 1 this year, Tatarstan's state debt stood at approximately 99 billion rubles. In July 2024, Russian President Vladimir Putin signed a law that will forgive 1 trillion rubles in debts for Russian regions. This move aims to support the economic development of regional entities and the implementation of key infrastructure projects.