Yelena Remisova
Commentator, Eurasian Metals

    As a result of numerous debates on ways to reform Russia’s tax system, the consensus has emerged that the existing tax laws still do not correspond to tasks of developing the budget system and do not contribute to the increase of economic activities. Modification of these laws is aimed at regulating legal aspects of taxation, making standard-setting instructions compact and uniform, improving taxation procedures and defining responsibilities more clearly.
The first part of the new Tax Code has already become law. The second one, which is still in the works, is being put in effect by separate chapters.
Chapter 25 called «Tax on profits of enterprises» has become effective at the beginning of 2002. It sets forth radically new rules of calculating and paying this tax. The Chapter’s major points are:
– it «openly» enumerates returns and expenditures, which are taken into account in calculating a tax base. They include returns on realizing commodities (labor, services), on selling property (including securities), extra-realization earnings (expenses). A taxpayer’s expenditures are recognized as such, if they are well-founded and documented;
– it repeals a whole number of restrictions affecting those expenditures, which at present can be included in a prime cost in a limited way only;
– it sets a new mechanism of property amortization, which allows enterprises to much faster write off expenses on acquiring primary means of production that results in a tax base reduction.
Among the most significant changes in calculating profit taxes is a practically total elimination of tax privileges. The profit tax rate has been reduced from 35% down to 24 %.
The Tax Code’s chapter on taxing subsoil use has also been in effect since the beginning of 2002.
Mineral resources are to grow in importance for budget revenues with reforming the system of tax payments for subsoil use and introducing a tax on recovering them.
In 2002 the total amount of tax payments for recovering mineral resources should secure budget receipts of $5.5 billion. Just for comparison: profit tax payments by enterprises should provide the federal budget with receipts of $6.6 billion.
The Tax Code envisions an evaluation of recovered mineral resources for the purpose of taxing, introduces taxation on a zero-rate basis as well as a special procedure to calculate a tax rate for oil depending on fluctuations of world prices.
The remaining chapters of the RF Tax Code’s second part are to be introduced in 2002. They will help regulate subsoil use. Among them are: Forest tax, Water tax, Ecology tax, Tax on using fauna, Tax on using water biological resources.