The Ministry of Economic Development of the Russian Federation has proposed to simplify the tax system and conduct the most significant tax reform in the country’s recent history. The Ministry wants to abolish VAT, personal income tax, income tax and insurance premiums, but collect sales tax of 6.2%.
The main idea is that the implementation of the principle of equal taxation declared by the Tax Code of the Russian Federation is possible only in one way — the introduction of a single turnover tax calculated as a percentage of revenue, instead of the four main taxes:
- income tax;
- insurance premiums and personal income tax.
The Ministry of Economic Development proposed to deduct money from companies and sole proprietors automatically, writing off the turnover tax from each amount received on the current account. The same mechanism is recommended for cash collection in retail.
In accordance with the current legislation, the fuel and energy sector and retail pay 6–14% of taxes to revenue, while organizations in the construction, housing, transport and agriculture sectors pay 24–27% to income. This approach gives a hidden advantage to some industries at the expense of others, which actually fall into tax slavery.
If you impose a 6.2% tax on the revenue of organizations, you can replace the four existing taxes, equalize the rights of companies, and eliminate shadow costs. The Ministry hopes to block the ways of tax evasion and simplify tax administration as much as possible.