The Factors Behind Shortfalls in the VAT Collection Plans was a Drop in Business Activities and Tax Deductions

According to the data of the Federal Tax Service, in 2013 revenues fr om the profit tax, VAT and excises to the consolidated budget were explicitly lower than the planned indices (the profit tax was 20% short of the plan, while the VAT and excises were 13.5% and 8.6% short, respectively).

According to the Federal Tax Service and experts, the main factor behind low revenues from the profit tax is slowdown of GDP growth rates and a drop both in demand and prices on primary products on the global market.

Also, the accrued VAT amount was affected by a drop in economic activities. It is to be noted that, on the contrary, the VAT submitted for deduction rose sharply as compared to 2012. According to M. Mishustin, Head of the Federal Tax Service the above situation is related to completion by large companies of long-term investment projects in 2013 (on those projects the VAT can be submitted for deduction with a big time lag).

As regards excises, experts point out that due to difference in excise rates of the member-states of the Customs Union the flow of counterfeit alcohol and tobacco products from Kazakhstan to Russia increased. It is to be noted that indexation of excise rates in Russia results in a situation wh ere producers of those products have to go into the shadow.

S.S. Shatalova, Senior Researcher