1. Which period the amnesty will be applied to 2. How the amnestied monetary funds are planed to be retained on the territory of the Russian Federation, i.e. how to avoid further outflow of the amnestied and legalized monetary funds to other countries 3. Which taxes the amnesty will be applied to Will payment of income tax be accompanied by payment of the single social tax 4. Which amount of tax rate is to be applied to the income which was undeclared by taxpayers in the period when the tax rate was other than 13% for personal income tax and other than 24% for corporate income tax 5. Is it only the monetary funds that is to be amnestied, or there will be a provision for payment of 13% income tax from the value of purchased assets where the income is invested in securities or other assets 6. Is it possible to use the institution of representatives during the amnesty Banks and other credit organizations with corresponding retail operation licenses can act as agents of the RF Government in implementing the amnesty. Three documents are to be filled out in opening a special account: request for a bank account, tax return and order of withdrawal of the amount equal to 13% ( it is also desirable to collect penalty interests for utilizing the monetary funds ). The withdrawn amounts are to be transferred to specified accounts with the Federal Treasury.
Thereupon banks shall send the completed tax returns to tax authorities under the Federal Tax Service which shall send or deliver otherwise a confirmation of monetary funds declared by a corresponding physical body to a specified address.
At the same time, the measure of using banks as fiscal agents during implementation of the amnesty is not mandatory and only represents a mechanism of fulfillment of the RF President’s mission of depositing the amnestied monetary funds with Russian credit organizations ( it should be realized that under this condition the monetary funds can be deposited for the period not exceeding one banking day ). The option of declaring income that was not taxed in the previous period, and payment of corresponding tax and penalty interest is optimal. Other issues ( checking of income sources, investigation into completeness of disclosure of income that was undeclared with tax authorities in the previous periods, etc. ) shall be in the scope of internal affairs of tax authorities.
Basic Conclusions A substantial discussion on the methods of implementation of the provisions specified in the message of the RF President to the Federal Assembly, which was unfold prior to a meeting of the Government of Russia on June 30, 2005, leads to the following conclusion: politically, the first option of capital amnesty seems to be the only one that should be used under the circumstances, i.e. simplified declaration of income generated prior to January 1, 2005, and payment of a 13% contribution. According to the option, income would be declared according to the scheme similar to that used for personal income tax. Upon receipt Federal Treasury’s confirmation of depositing a 13% contribution with budget accounts, tax authorities would be obliged to provide guarantees to the taxpayer that no tax audits would be performed in relation to the amount declared in the period prior to January 1, 2005. In doing so, however, no allowance should be made for taxpayer’s exemption from potential investigations by internal affairs bodies, national security agencies, financial monitoring agencies, prosecutor office and other authorized bodies.
Under the present economic and political environment this option seems to be optimal in terms of risk minimization. It is felt that the foregoing initiative of the RF Government aimed at creating incentives for income legalization is unlikely to receive a large-scale interest among taxpayers, physical bodies, if the existing trends remained the same. Physical bodies’ behavior depends more on the institutional climate, quality of fiscal administering and other factors rather than conditions of taxation.
I. Trunin, N. Korniyenko Issues Considered at the Sessions of the RF Government on June 9 and Of June RF Government sessions of special interest are the following: On June 9, the report of Sharonov A.V., the deputy minister of economic development and trade, “On measures to raise the efficiency of purchase of goods (works and services) for the government needs” was considered, which gave an analysis of the current public procurement system, as well as the recommendations of measures to raise efficiency in this sphere; on June 23 the Economy Minister Gref G.O. presented a report “On the list of federal target programs to be funded from the federal budget in 2006”.
* * * At June 9 session, Sharonov A.V. presented a report “On measures to raise the efficiency of purchasing goods (works and services) for the government needs”, which noted the drawbacks of the current system of government procurements and main areas of its improvement.
It was stressed, for example, that to a number of procedural questions no single approach existed in the federal normative legal framework on public procurement. At present, the draft of a new federal law “On placement of orders for the supply of goods, performing activities, and provision of services for the government and municipal needs” is practically in its final stage. In addition, the report specifies that there is the need for further normative regulation of the procedure of interaction of the bodies of power concerning procurement procedures, standardization of tender documents, government contracts, protocols and reporting, development of methodical materials for use by the governments of all levels, as well as the need for fixing, on a regulatory level, the principles of products procurement for the government needs, which will enable to solve issues, that are not resolved with the legal framework, using a single approach. Work is under way in the Ministry of Economic Development and Trade of Russia in line with the above mentioned.
As follows from the report, the need exists to raise the efficiency of the system of planning and forecasting the volume of procurements. To substantiate the volumes of financing the procurements of the Ministry of Economic Development and Trade of Russia, the methodology of economic computation of assessment of targeted costs and volumes of public procurements had been prepared for making a forecast for 2006. As well, the methodology of economic computations had been prepared to assess the planned costs and volumes of public procurements, which provides various methods of evaluation of the volume of costs: standardized, index-based, planned, and formula-based. it is planned to develop methodological recommendations on the procedures of comparison and examination of the budget targeted expenditures effected in the financial year.
To improve the possibility of systemization, automation, analysis and record of purchases, the report offers an official implementation, for use in the whole territory of the RF, of a typical classifier of goods, works, and services for the government needs.
According to the report specifications, one more problem exists - decentralized placement of government order at the cost of federal budget and the extra-budgetary sources of financing. In a number of cases, the Ministry of Economic Development and Trade of Russia offers to place centrally government orders for the federal bodies of executive power. It is provided to consider a possibility of creation of a specialized body for tenders, aimed exclusively at conducting tenders on the order from the government customers, while it is reasonable that the right to signing government contracts be rested on government customers.
To solve the problem of shortage of qualified staff, the Ministry of Economic Development and Trade of Russia finds it necessary to prepare methodical recommendations on mechanisms of attraction and payment by the government customers of the services of individuals and outside organizations for the performance of part of functions for organization and carrying out public procurements, as well as improvement of public procurement system.
The report outlines that organization of centralized collection, recording, and storage of information about public procurements and the signed government contracts is an essential factor for establishment of a public procurement system. It is suggested that a single federal register of government contracts be maintained, that will register all procurements and contracts concluded by the government customers out of the federal budget and the extra-budget sources of financing.
The report specifies that the current methodology of assessing the efficiency of conducting a tender is not indicator of the efficiency of work of the procurement system, as it does not account the costs and other indicators of the system itself. In this connection, it is necessary to consider an issue of creation of the methodology of monetary and index-based system of assessment of the efficiency of procurement system functioning.
As specified in the report, among major proposals of the federal bodies of executive power are:
making annual timelines of conducting open tenders and their quarterly publication, automated maintenance of the Single federal register of public procurements and contracts, possible organization of a specialized body for public tenders, setting a minimum price, as a criterion to determine a winner in placement of the government order for standardized goods, development of instructional guidelines for writing technical requirements and specifications for different commodity groups and the types of works (services), methodical recommendations on the mechanisms of attraction and payment by the government customers of the services of individuals and outside organizations for performing a part of functions for organization and carrying out public procurements, as well as specification of the methodology of accounting the budgetary funds’ savings, from the performance of tenders for placement of government order.
June 23 session considered the report of the Economy Minister Gref G.O. “On the list of federal target programs to be funded from the federal budget in 2006”.
A was mentioned in the report, the RF government performed intensive activities of late on improving the mechanisms of development and implementation of federal target programs (FTP), aimed at enhancing their efficiency and effectiveness. In particular, priority areas of government investment and also principles of drafting and implementation of FTP till 2006 had been approved. With account of the RF government instructions and introducing changes in the normative legal documents the gov ernment customers should correct FTP and indicators of resources' provision, specify (determine) the target indicators that reflect the efficiency and effectiveness of FTP (subprograms) implementation according to years. The report emphasized that, despite the Government decisions, major part of the programs had never been corrected and still contain essential drawbacks: their tasks and goals have been formulated in outline, they do not suggest achievements. In many cases, target indicators are absent, quantitative indicators for reaching goals are not formulated, the alternative methods for solving problems have not been studied, subprograms have been developed with violation of the current procedure of development and implementation of FTP. Not infrequently, FTP does not contain concrete planned activities, timeframes for them and estimates of the results of their implementation.
Also, one cannot find in them the lists of concrete investment projects with indication of the sources and volumes of their funding according to years. As well, one cannot see the sections wherein the efficiency of FTP implementation is assessed, and also the sections or measures that reflect distinctive characteristics to examine the program realization.
According to the report data, as many as 50 FTP (in accordance with the established procedure) are being funded in 2005 from the federal budget, while 3 of them are not approved by the RF Government. As much as Rb 267.1 bn have been allocated for their implementation out of the federal budget.
In 2005, as in previous four years, FTP are being realized within the frame of six basic priorities approved by the RF Government: 9 FTP are being realized basing on “Infrastructure development” priority, 6 - "New generation", 2 - "Reforming the justice system", 12 - " Safety of living and environmental protection", 11 - "New economy", and 10 - "Regional parity". According to the preliminary data, it is planned that, in 2005, for 1 ruble from the federal budget will be attracted 5.7 rubles from the budgets of the RF Subjects and extra-budgetary sources (according to preliminary estimates, in 2006 – 6.1 rubles).
Under the report, as many as 50 federal target programs were drafted to be funded out of the federal budget. The total volume of financing of which is not yet finalized and will be specified during the preparation of a draft federal budget for 2006. In 2006, within FTP it is planned to support the educational, health care and judicial system reforms, to fostering the market for affordable housing, construction and modernization of transport facilities, support the realization of big transport infrastructure projects, as well as the economy sectors with high innovation potential, etc. In order to use efficiently the investments, the implementation of FTP in 2006 will be based on priority areas of public investment approved by RF Government. It is suggested to tighten control over realization of the federal targeted activities. Primarily this is t control over the targeted and efficient use of means, continuation of the formalized assessment of FTP realization, ensuring annual coordination of the government customers and the Ministry of Economic Development and Trade and Ministry of Finance of Russia of specified indicators of efficiency of programs for respective year and quarterly reporting on the course of their execution.
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