State Duma plans to impose new taxes

Earlier this week, the State Duma received a bill with prospective amendments to the Tax Code. Following a discussion by the Committee on Budgeting and Taxation, the bill may be presented to the entire house in a week. The new measure is expected to bring additional RUR 22 bln ($348K) to the budget. But not all changes found support at preliminary hearings and expert reviews. Invest Foresight found out where the money will come from and how the new taxes will affect ordinary people.

Tax changes will concern alcohol trade. Specifically, lawmakers propose to raise excise duties on wine and level the rates for local and imported products, as required by the WTO. Grapes used in alcohol production will also be listed as excisable goods.

State Duma members encourage seeing the excise duty raise as a benefit for Russian winemakers. For the first time since 2017, the wine excise tax will increase almost twice, from RUR 18 (28 cents) to RUR 31 (49 cents) per liter. Sparkling wines will show a slightly slower dynamic, from RUR 36 (57 cents) to RUR 40 (63 cents) per liter. Ravil Akhmadeyev (PhD in Economics), associated professor of the Department of Accounting and Taxation at the Plekhanov Russian University of Economics, says the increased rate will make Russian wines more competitive against imported brands.

Winemakers, however, doubt that the primary goal of the measure is to support Russian producers. Members of Opora Russia, a public organization for entrepreneurs, believe that the excise hike will lift up the prices by 20%.

The measure which most participants of the preliminary hearings considered the most helpful in easing the citizens’ tax burden is the reduction of the minimum period of real estate ownership from 5 to 3 years for the seller to be relieved from income tax. The approach to the income tax on real estate sale and purchase with a minimum ownership period of 5 years depending on the cadaster value was reviewed in 2016 to reduce market speculation and take into account individual differences.

There is another tax novelty that concerns real estate purchase. Parents and adoptive parents will be eligible for a tax deduction when purchasing real estate for their children who were legally incapacitated.

Starting 2020, the new Tax Code will allow for submitting tax declarations at the Integrated Government Service Centers. There are more ways for individuals to submit their tax declarations, for instance, via their personal taxpayer account online, the Russian Post or with the help of an authorized person. Experts believe that this will improve the citizens’ tax compliance, especially in rural areas and remote villages.

The government is set to raise tax revenue, and it is ready to get closer to the people.

By Anna Oreshkina

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