PRESS: Ministries agree to cut Russia’s payroll tax, raise VAT

MOSCOW, Feb 15 (PRIME) -- The Economic Development and Finance Ministries have agreed that they will have to cut taxation of labor and compensate budget losses by higher indirect taxes like value-added tax (VAT) in order to support the economy, Vedomosti business daily reported on Wednesday quoting government officials.

In January, Economic Development Minister Maxim Oreshkin said that the biggest problem in the Russian taxation system is a heavy payroll, while Finance Minister Anton Siluanov said that the payroll tax stands at 30% for companies, while there is also a personal income tax, making the tax burden too heavy.

Vedomosti reported that different options of changes are under discussion, with the major one being to cut the payroll tax to 21% from 30% and to raise VAT to 21% from 18%, or to set them at 20% and 22%, 22% and 22%, or 21% and 22%, respectively, government officials told the daily adding that no final decision has been made.

Two officials told Vedomosti that the idea was worked out by parliament and experts, including experts from the Center of Strategic Research, but President Vladimir Putin is to make a final decision. According to the sources, the idea was proposed by Oreshkin and supported by Siluanov.

Sources also told the daily that Oreshkin discussed a restart of the economic growth in Russia with First Deputy Prime Minister Igor Shuvalov, and among possible measures they discussed the tax maneuver, support to exports, expansion of tax preferences for innovative companies, measures to fight poverty, and changes in the personal income tax.

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