The Russian Tax System

Abstract

This chapter provides a description and analysis of the Russian tax system and its development since the start of economic transition. The current tax system has evolved in form, though not always in substance, to essentially a market-oriented structure containing a conventional mixture of indirect and direct taxes. There are, however, certain idiosyncratic elements of the Russian system that resulted from the country’s historical, economic, and political circumstances. These include the federal system of government, the importance of natural resources in the economy, and the structure of particular markets that emerged from the decline or breakup of state enterprises. The performance of the tax system and its perception by business taxpayers is evaluated based on macroeconomic and firm-level data. In addition, we examine in greater detail taxation of two specific sectors: oil extraction and the small business.