17 Feb 2023 13:34

Finance Ministry wants to collect 300 bln rubles from big businesses' 2021-22 profits via tax instruments; will not affect fuel and energy complex

MOSCOW. Feb 17 (Interfax) - Tax instruments will be used in order to implement an additional levy on the profits of Russian large businesses for the financially successful years of 2021-2022, rather than through "voluntary contributions", which do not suit the companies, Finance Minister Anton Siluanov said during an interview with the Rossiya 24 TV channel.

"Special amendments to the tax legislation will be prepared. Most likely, participation will be in the form of fees from businesses, from the increase in financial results in recent years. For now, 2022 and 2021 are being considered compared to 2019 and 2020. Businesses are ready to share with the government part of the growth from the increases that were generated, which are mainly revenues from the opportunistic economic situation," Siluanov said during the interview.

First Deputy Prime Minister Andrei Belousov last week said that the authorities were discussing with businesses a one-time voluntary contribution to the budget from profits generated in 2022. This did not concern raising taxes, but, rather, concerned payment as a "windfall tax", Belousov noted. According to estimates from Alexander Shokhin, head of the Russian Union of Industrialists and Entrepreneurs (RSPP), this could mean an amount of about 200-250 billion rubles. A voluntary contribution would be complicated by corporate procedures, so businesses would prefer payments through tax instruments, Shokhin said.

According to Siluanov, "The details are now being agreed with our entrepreneurs. We are currently discussing with businesses the matter regarding the form in which support will be provided (...) I am certain that we will find the best instruments for businesses in the near future, by which they will in fact participate in financing government programs," he said.

"We are preparing a proposal for the amendments to the legislation. How else? Such issues cannot be resolved without the corresponding legislative norms," Siluanov said when answering whether the levy would will be approved at the legislative level.

"We expect that this [fee] will be about 300 billion rubles," Siluanov said.

According to the Federal State Statistics Service (Rosstat), Russian enterprises generated combined pre-tax profit (profit minus losses) of 16.6 trillion rubles in the first half of 2022, a rise of 32% year-on-year. However, the dynamics deteriorated somewhat in the second half of the year, with a balance of 20.2 trillion rubles in 9M 2022 that was already 2.7% year-on-year lower. Rosstat intends to publish full-year data in March. Russian enterprises generated combined pre-tax profit of 29.65 trillion rubles in 2021, a surge of 2.6-fold year-on-year.

The tax will not affect the fuel and energy complex, where the effective tax rate has historically been higher than in mining, for example; and it will not affect small businesses.

"I will say straight away that we are not considering the participation of small businesses in the matter, and the oil and gas sector as well. Why? Because we have recently adopted a number of tax innovations in the oil and gas sector that already centralize part of the additional revenue that the sector has generated as a result of the price situation," Siluanov explained.