Demand of organizations for accelerated return of capital investment in profit taxation in Russia

With an increase in the basic income tax rate from 2025, organisations are faced with the task of ensuring the tax security of profit taxation in the context of innovative economic development, allowing taxpayers and tax authorities to effectively use innovative technologies in their activities. The purpose of this article is to find tools that can be used to optimise the profit taxation process and increase tax security. The subject of the study are investment tax deductions and ensuring economic security when applied in the context of innovative economic development. The focus of this article is on investment tax deductions as the most complex tools to reduce corporate income tax. The article uses methods of a systematic approach, analysis, and synthesis. As a result of the conducted research, it has been concluded that an individual approach by taxpayers is necessary in terms of the possibility and expediency of applying investment tax deductions, realistically assessing potential risks and tax savings. Using the example of specific paint and varnish industry organisations, calculations have been performed that allow taxpayers to make effective management decisions and ensure tax security. The presented calculations can be applied by organisations of various fields of activity. The authors have concluded that the criteria requirements for the use of investment tax deductions limit the practice of their application. The results of the study can be used in developing solutions to ensure tax security in the taxation of corporate profits. The conclusion is made about the need for further development of incentives for investment activities of organisations.

This article takes studying the impact of tax consolidation on oil companies’ tax burden as its focus. Oil companies are crucial for the Russian economy while oil and gas money are as well important for the Russian budget. Besides, a lot of oil companies being major taxpayers have had the opportunity to consolidate corporate profit tax since 2012. The articles goal is to analyze the results of creating consolidated groups of taxpayers for tax burden in terms of corporate profit tax exemplified by oil companies in order to assess the importance of profit tax consolidation as a way of reducing corporate profit tax. Upon analyzing the data provided by the Federal Tax Service of Russia and 2010-2015 oil companies financial reports, it is possible to conclude that the largest tax burden falls on fossil fuel industry in comparison with other industries what can be explained first of all by the mineral extraction tax. Corporate profit tax burden for most oil companies in 2014 accounted for 5% of revenue. At the same time, profit tax burdens on consolidated groups of taxpayers producing oil vary a lot; in 2012, the general trend was falling, but then it started to grow again. Thus, it is impossible to state that tax obligations and corporate profit tax burden have significantly decreased as a result of creating consolidated groups of taxpayers for oil producers. Quantitative analysis of money spent for paying the profit tax might be interestingfor describing consequences of creating consolidated groups of taxpayers.

The radical reorientation of the federal budget during the 1980s provided generously for military expansion at the expense of pressing social needs. In the wake of such dramatic upheavals, the federal government has already begun to seek out new sources of revenue in order to compensate for the decade of neglect. Where will the resources be found to close the deficit, fully fund education, support the sick and impoverished, rebuild the infrastructure, and cleanup the environment? The Economic Policy Institute has placed a price tag of $65 billion on these necessities (Anderson, 1989). As policy makers survey the revenue alternatives ? military cuts, a more progressive income tax, a corporate take-over tax ? one area they should not overlook is the corporate profit tax. Most people were aware that the corporate profit tax provided relatively little revenue in support of federal expenditures during the 1980s, but perhaps less well-known is the fact that corporations have enjoyed a steady decrease in their tax share for the past three decades. In 1960 corporate profit taxes financed approximately 23% of all expenditures by the federal government compared to only 8% in 1986. The purpose of this study is to demonstrate the reasons for this decline, to defend the profit tax as a viable source of revenue, and finally to propose specific reforms.

The Review of Legislative Initiatives as Regards Taxation Issues in Q2 2016

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In this paper, we provide a general equilibrium analysis of corporate profit tax on income distribution, unemployment, and wage inequality. With firm dynamics in industrial sector, we identify a new channel through which profit tax affects income and wage inequality: profit tax cut will widen not only the wage gap between skilled and unskilled labor, but also exacerbate the wage inequality of unskilled labor among different sectors. The welfare effect of profit tax cut depends on unemployment deepening (labor‐distortion effect) and more manufacturing firms enter the market (business‐creation effect), eroding the market share of incumbent firms (business‐stealing effect).

Profit tax and tariff under international oligopoly

Introduction. The pedagogical need due to the migration situation in the country actualizes the need for research on the specifics of migrant children’s linguistic and socio-cultural adaptation in the regions. The research purpose is to identify reliable and significant differences in the specifics of problems of migrant children’s educational environment in federal districts of the Russian Federation. Materials and methods. The study involved 8,864 teachers (4,026 respondents were selected for the content analysis) working in multicultural classes from 8 federal districts. The study used a method of content analysis, survey methods and methods of mathematical and statistical processing (descriptive methods, cluster analysis, Kruskal-Wallis test). Research results. Peculiarities in the supportability of the educational process of migrant children in different federal districts of the Russian Federation are revealed: the greatest attention is paid to the problem in the North Caucasus Federal District (64%) and the Ural Federal District (67%). Teachers’ perceptions of the main difficulties they face in teaching migrant children are divided into two clusters: “Migrant children’s communication difficulties, difficulties in learning a new language” (66.9% of the respondents) and “Socio-cultural features of the education system for migrant children”, which includes seven subclusters, for which, when compared, reliable and significant differences were revealed in different federal districts: difficulties in interacting with parents are most relevant in the Ural Federal District (p=0.001) and Siberian Federal District (p=0.001), organizational-methodological problems – in the Northwestern Federal District (p=0.034) and Ural Federal District (p=0.034), problems with the mastering of the educational program – in the Central Federal District (p=0.001), Volga Federal District (p=0.001) and Ural Federal District (p=0.001), difficulties in socio-cultural integration – in the Central Federal District (p=0.001) and Far Eastern Federal District (p=0.001), difficulties in social-psychological adaptation – in the Central Federal District (p=0.01), Volga Federal District (p=0.01) and Far eastern Federal District (p=0.01). Conclusion. There are differences in the problem field of migrant children’s socio-cultural adaptation in federal districts of the Russian Federation: in the scientific-methodological support of the educational process, in the main difficulties that arise during the socio-cultural adaptation of migrant children. The main difficulties include: migrant children’s communication difficulties, difficulties in the interaction of a teacher with parents, organizational-methodological problems, problems with mastering the educational program, difficulties in socio-cultural integration, difficulties in socio-psychological adaptation. The data obtained can be used for psychological and scientific-methodological support of the educational process of migrant children in order to diagnose and control social-cultural adaptation.

The article presents the results of a study of the investment attractiveness of the food industry in Ukraine, the investment activity of food enterprises and the relationship between the profit tax and the investment activity of industry enterprises. The dynamics of the volume of sales of food products in Ukraine in absolute terms and in percentage of the volume of sales of the industry is characterized. A certain role of the food industry in the country's economy. The dynamics of profitability of enterprises producing food products, by types of profitability and by categories of food products are analyzed. The main indicators characterizing the property position of food enterprises are considered. A comparative characteristic of costs in industry and in the food industry is presented. The current state of investment activity in the food industry is analyzed. According to the results of 2016. the ratings of capital investment of the food industry by regions of Ukraine and the share of capital investment of the food industry in the total volume of investments in the regions are compiled. The regions-leaders and outsiders of ratings are determined. An econometric model of the relationship between the investment activity of enterprises of the food industry and the main motivator of entrepreneurial activity, a corporate profit tax, has been constructed. The degree of interrelation is determined and the forecast of investment volumes is made provided that the tax rate is further reduced. Key problems that prevent the development of the food industry are formulated. The main measures on the part of the state that will promote the activation of investment processes in the industry of the country in general and in the food industry in particular are determined.

At a domestic level, dividend tax systems are usually designed to relieve the economic double taxation of corporate profits and are related to the personal taxation of savings income. Increasingly over the last 40 years, however, international considerations have intruded upon domestic tax policy. Source country taxation of corporate profits and residence country personal taxation of dividends have limited domestic tax policy options and decoupled corporate and personal tax systems. This article examines the issues for dividend tax policy in an international setting and the role of bilateral tax treaties in addressing those issues. The article explains how, within the European Union, the freedoms guaranteed by the EU Treaties have dictated Member States’ tax policy options. It concludes that general non-discrimination principles, in contrast to specific treaty provisions, have a limited role to play in resolving the competing claims of source and residence countries to tax the return on corporate activity.

У статті характеризується система методичного забезпечення оцінювання фіскальної результативності доходно-прибуткових податків в Україні, проводиться аналіз методик оцінювання його економічної ефективності, а також визначається інтегральний показник результативності для визначення напрямів його реформування з метою нарощування фіскальної результативності. До доходно-прибуткових податків в Україні відносяться податок та збір з доходів фізичних осіб, податок на прибуток підприємств, єдиний податок із суб’єктів малого підприємництва. Фіскальна результативність доходно-прибуткового оподаткування визначається ефективністю механізму справляння кожного податку окремо чи системи прямого оподаткування в цілому. Складовими фіскальної результативності є фіскальна значимість, фіскальна ефективність, постійність і рівномірність надходжень, соціальна справедливість. Окремими характеристиками фіскальної результативності є обсяги надходжень, частка податку у загальній структурі доходів бюджету та у ВВП, рівень ефективної ставки податку, рівень виконання планових податкових надходжень тощо. З метою вдосконалення механізму справляння доходно-прибуткових податків в Україні визначено факторні залежності фіскальної результативності доходно-прибуткових податків в Україні за період 2014-2018 рр. від рівня фіскальної значимості, рівня виконання планових надходжень, витратомісткості оподаткування, навантаження працівників органів державної податкової служби, ефективності та нерівномірності податкових надходжень. На основі проведених розрахунків визначаються основні пропозиції та рекомендації щодо пошуку шляхів зміцнення фіскально-регулюючих засад доходно-прибуткового оподаткування, які дадуть змогу у майбутньому вивести податкову систему на якісно новий рівень.

The purpose of this paper is to assess, based on legal and economic data, which paradigm prevails in personal income taxation in Russia—a fiscal one or a social one, and suggest the measures to tackle the deficiencies discovered during the analysis. The authors analyze the features of PIT regulations that may improve the people’s effective demand and therefore their welfare, and continue with the analysis of tax-related statistics to determine effective PIT rates and potential people’s tax savings should the paradigm shift happen. They show that Russian Tax Code virtually neglects the redistribution function of PIT, and after lost of connection between PIT deductions and minimal monthly salary level (proxy to minimum subsistence level, as it was in Law on PIT of 1991) the people with lower revenues, especially the families with children, lose the material sums. This happens along with the decrease in disposable household income, thus hindering effective demand of these people. The authors conclude that fiscal paradigm still dominates in Russian PIT in Russia and suggest the advantages of a shift towards the social paradigm.KeywordsMinimum monthly salaryPersonal income taxNominal tax ratesEffective tax ratesTax deductionsTax functionsJEL CodesH24H30H31

Relevance. In recent years, the Russian economy has faced the global challenges posed by the COVID-19 pandemic and unprecedented sanctions. Understanding how the tax systems of Russian regions respond to these external shocks is crucial for identifying critical stress sources affecting budgets at various levels.Research objective. This study aims to assess and compare tax revenue stress across the federal districts of the Russian Federation, considering different levels of the budget system, and to identify the underlying sources of this stress.Data and methods. The study relies on official data from the Federal Tax Service of the Russian Federation on tax revenues to federal and regional budgets in the federal districts. The analysis covers monthly data from January 2013 to December 2022. The stress index was calculated by measuring the difference between the moving standard deviation and the mean of the annual tax revenue growth rate, with a lag of 1 month. The methodology for decomposing the sources of tax revenue stress was also tested.Results. Over-time assessments of stress indices for tax revenues to federal and regional budgets were obtained for the Russian Federation and its federal districts. The varying levels, dynamics, and budgetary distribution of tax revenue stress across federal districts are explained by differences in the structure, growth rates, and volatility of various taxes, as well as their correlations in these districts. Decomposition of federal and regional tax stress showed the unique role of mineral extraction tax and profit tax as stress amplifiers during crises, while in stable periods, they contribute significantly to stress reduction. The study also establishes the distinct roles of federal districts in intensifying or alleviating overall tax revenue stress during pandemic and sanctions shocks, as well as periods of relative stability.Conclusions. This research demonstrates the importance of assessing and identifying sources of tax revenue stress in regions. Such insights help identify vulnerabilities and reserves for enhancing the resilience of regional and federal budgets through the diversification of regional economic systems and adjustments to tax system rules in response to changing external conditions.

What Happened to the Corporate Profit Tax?

The purpose of this article is to describe a mechanism for taxing e-commerce profits of multinational corporations (MNCs). Our research hypothesis is that the new economic reality, where digital transactions are on the rise, requires new mechanisms for taxation of MNCs’ profits. Our research methodology relies on a systemic approach aimed at embracing the complexity and dynamics of the above phenomena. We analyze the feasibility and possible outcomes of the introduction of the indirect digital services tax in Russia, in particular its potential impact on the tax burden distribution and economic growth. Special attention in the article is given to the definition and criteria of virtual permanent establishment. We propose a definition that emphasizes the non-physical nature of permanent establishments in e-commerce and does not include any subjective criteria. Since the Russian tax system is not sufficiently synchronized with the global digital trends, especially regarding taxation of e-commerce profits of tech giants, which means that the introduction of a digital services tax in Russia may be premature due to its possible negative influence on the tax burden redistribution, competition, business profitability, employment, personal income and innovation. Russia will be able to participate in the process of allocation of MNCs’ profits if the mechanism of direct taxation is developed and the institution of virtual permanent establishment is introduced into the national tax legislation. These measures will enable the Russian state to realize its taxing rights in relation to MNC’s profits and benefit from the international trends in profit-allocation. Our critical analysis of the OECD’s unified approach has shown its weaknesses and led us to the conclusion that a simple and more transparent taxation mechanism is necessary based on the formulary apportionment of MNCs’ total revenues rather than residual profits among the relevant jurisdictions. In our view, Russia should move ahead with the unilateral measures for taxation of MNCs in accordance with the mechanism described above. Unlike the majority of research, we propose to use only objective value indicators, which cannot be distorted by subjective interpretations, and exclude the risk degree indicator from the set of allocation keys. It also makes sense to use a formula for allocation of profit among the countries rather than corporate structures, as it will enable tax authorities to take into account the impact of federal and regional tax preferences to investors. For citation Polezharova L.V., Krasnobaeva A.M. E-Commerce Taxation in Russia: Problems and Approaches. Journal of Tax Reform. 2020;6(2):104–123. DOI: 10.15826/jtr.2020.6.2.077. Article info Received June 3, 2020; Revised July 9, 2020; Accepted August 8, 2020