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Federal Tax Service of Russia Continues to Stand by Its Comments on Russia's Paying Taxes Ranking in the "Doing Business 2020"
Tuesday, November 19, 2019

MOSCOW, Nov. 11, 2019 /PRNewswire/ -- Federal Tax Service of Russia considers the compilation of "Doing Business 2020" ranking not transparent in regards to Russia paying taxes, claiming that the ranking significantly differs from real business practices in Russia. According to the 2020 ranking, the annual time required to prepare, file and pay three major taxes is 159 hours while an independent customer survey conducted by Russia's leading accounting software company, 1C, and involving 909 companies, reveals that it only takes 32 hours. This gap brings into question the ranking of the World Bank's "Doing Business" contributors.

Over the years Russia's Ministry of Finance and its tax service authority approached the World Bank requesting to provide specific reasons behind the assessment but were never given any clear answers. Disclosure of such details might help improve Russia's tax administration system and consequently improve the business environment in the country. From the Federal Tax Service's perspective, this is one of the aspects that contributes to confusion on the "Doing Business" ranking.

It is also uncertain why a significant reduction of indicators in the social contributions filing forms did not result in the improvement of the Russian taxes ranking. A recent reform that has reduced the number of government agencies involved in the collection of health care and social contributions was interpreted by the "Doing Business" experts as the one increasing the number of payments and considerably worsening Russia's position in the rating.

Paying taxes is not the only ranking that raises questions. Starting a business is another indicator where the Federal Tax Service questions its ranking. Existing business practice suggests that a companies' founders would either make a personal visit to the company register and would not need a notary or use a notary with legally recognized digital connection to the registry and would not need to visit the registry. In contrast to assessor's opinion this is one procedure, not two. The World Bank also missed the cancelation of the registration fee when registration application is submitted digitally and over 50% of application in Russia are digital significantly dropping Russia's rating.

All there is left is to guess what input provided by contributors has formed the "Doing Business 2020" results argues a representative of the Federal Tax Service. Russia's Federal Tax Service believes that a more transparent approach would help addressing issues of improving the business climate in Russia.

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SOURCE Federal Tax Service of Russia

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