VAT down and digitalization: SPВILF experts have discussed crisis-proof taxation measures

The round table on Tax and Administrative Measures to Support Business, OECD-Russia: Best Practices, that brought together both Russian and foreign experts, has discussed how to assist business amid COVID 19 pandemic and what support measures were introduced by tax authorities worldwide. The round table was held within St. Petersburg International Legal Forum 9 ½. 

Dmitri Satin, Deputy Commissioner of the Russian Federal Tax Service, said that online monitoring and collecting feedback should be regarded as the primary support measure for business. He said that Russia had to this end set up Situation Centers to collect data from all the regions and monitor the current trends. Mr. Satin also said that the Federal Tax Service was using this data for decision making.  

Besides, he listed the amendments that had been made in the Russian taxation law. “Bearing in mind that the situation at hand is less than ordinary and totally unprecedented, we have to admit that the taxation law, that took shape over the last decade, was totally unprepared for prompt changes. That’s why first thing we did was to vest the government with extra powers so that they could swiftly introduce necessary changes in order to improve the tax administration, to postpone tax payment, fast-track control over tax administration, to offer delays and deferred payments and other measures to support business,”- he said.

Peter Green, Head of OECD FTA secretariat, said that after the crisis was over the countries would have to focus on resuming their efforts in the area of digitalization and digital transformation of tax administration. He believes it would not only make it easier for the tax authorities to act in extraordinary situations, but also enable them to better serve the taxpayers.

«If even today we can progress in digitalization, after the crisis is over we will be able to dramatically enhance interaction between us, the tax administrations, and the taxpayers to make sure that we are better equipped with all the necessary when future crises occur,”- he said..

This statement was echoed by Dmitry Volvach, a Deputy Commissioner of the Russian Federal Tax Service, who moderated the session. He said that Russia relied on the achievements in the area of digitalization, made by the Russian tax authorities.  

«They (these achievements) are really very handy. I share this opinion that once we come out of these hardships, we will do a lot of useful things for the taxpayers, so that they feel less administrative burden in the areas where digitalization helps us achieve better success and results,”- he said.

Iliya Kucherov, a Deputy Director of Institute of Legislation and Comparative Law under the Government of the Russian Federation, said that supporting the taxpayers amid the incumbent pandemic was one of the main challenges of today.

David Bradbury, Head of the Tax Policy and Statistics Division of the Center for Tax Policy and Administration, OECD, reported on the innovative measures, taken to help the taxpayers in various countries. In particular, he focused on supporting the healthcare industry which now is at the forefront of the fight against the pandemic.

«It may be about less social an welfare contributions (for instance, pension ones), offering bonuses that are higher than in normal times. It may be about lower tax burden for the healthcare providers who have already retired or are no longer working. We can let them pay taxes in a different manner, using fast track procedures and reduced rates. It also includes reduced VAT rates or VAT exemption, lower customs and imports duties. It is all benefiting the healthcare which has risen to combat this terrible crisis”, he said.

Huang Suhua of China’s State Taxation Administration, a Deputy Director-General of International Taxation Department, shared the practices used by the Chinese tax authorities.

«VAT generates most of what we collect. It accounts for more than 40% of our budget revenue. In the midst of COVID 19 the province most hit by the pandemic was exempt of VAT for three months. The same opportunity was offered to small size businesses in other regions, too. Therefore we reduced the burden placed on small businesses from 3% to 1%. Transportation companies and catering firms got an income tax delay. They can pay it within 8 years rather than regular 5 years. These businesses are also exempt of social and welfare contributions for 5 months”, he said.

Concluding the discussion, Iliya Kucherov, a Deputy Director of Institute of Legislation and Comparative Law under the Government of the Russian Federation, predicted that very soon we would see more changes and amendments in the tax law of Russia and other countries aimed at supporting business.