of October 8, 2004 No. 10
About Recommendations about harmonization of legislations of state members of EurAsEC in the field of regulation of collection of the value added tax and excises (on the basis of the comparative and legal analysis of national legal systems)
The bureau of Inter-parliamentary Assembly decides:
1. Approve the Recommendations about harmonization of legislations of state members of EurAsEC in the field of regulation of collection of the value added tax and excises prepared on the basis of the comparative and legal analysis of national legal systems (appendices 1, 2).
Chairman
Inter-parliamentary Assembly N. Abykayev
Appendix 1
to the resolution of EurAsEC MPA Bureau of October 8, 2004 No. 10
Questions of rapprochement of the taxation systems of state members of EurAsEC are one of necessary and the main in development of Community. The priority directions of development of EurAsEC on 2003 - 2006 and the next years in the field of tax policy, in the field of indirect taxation provide implementation of the following events:
- transition to single rules of collection of indirect taxes when exporting to the third countries, including unification of procedure and terms of VAT return;
- rapprochement of rates of excises;
- acceptance of single procedure for administration of indirect taxes in case of cancellation of customs clearance of the goods moved within mutual trade of state members of EurAsEC, considering unification of the principles of collection of the VAT and creation of the unified register of taxpayers of the VAT.
These recommendations are developed for the purpose of the solution of the specified tasks and preparation of offers on harmonization of national legal systems of state members of EurAsEC in the field of the taxation
Recommendations are prepared on the basis of the comparative and legal analysis of legal acts of state members of EurAsEC in the field of the taxation and international agreements in the field of indirect taxes: value added tax and excises.
Relevance of the considered direction is caused also by the fact that now the states of Community are at the final stage of process of transition to collection of indirect taxes by the principle of "country of destination", and in full, without withdrawals, including natural gas, oil and gas condensate.
The value added tax (VAT) is the main indirect tax and important source of revenues of the budget of the above-mentioned countries. In all states, proceeding from essence of the VAT, the value added tax assesses transactions on delivery of goods and rendering services, except those cases when specific types of activity or goods and/or services are exempted from VAT liability.
The excise is also the most important element of the modern taxation system.
The traditional goods assessed by excises in the majority of the countries are objects not to the first neobkhodimostialkogolnya the drinks, tobacco products, luxury goods and other goods made in small amount and thereof the having high prices consumed by the most prosperous sectors of society. In process of development of production of these or those types of products, the shifts in demand and requirements of the budget the list of excise goods is periodically reviewed. At the same time the majority of excises are entered as it and shall be, for the purpose of increase in tax revenues.
For achievement of the fiscal purpose excises, first, shall be simple both in the organization, and in application that is reached due to maintenance of the minimum list of excise goods. Now the majority of the countries limited the list of excise goods to tobacco, alcoholic products and oil products. The income from these commodity groups is rather high, the circle of their producers is rather narrow and the majority of commodity categories are accurately determined. Secondly, rates of tax shall not be too high. If local excises much more the corresponding taxes in neighboring countries, then smuggling of excise goods becomes problem. Besides, in case of too high rates of excises the illegal production of the goods assessed by excises can increase. Thirdly, excises shall be levied in chain of charge of value added as soon as possible, i.e. they shall be paid or at the time of crossing of customs border of the country, or at the time of production (or shipments) goods.
Based on results of the carried-out analysis, it should be noted that many problems in the considered sphere arise in connection with misinterpretation of provisions of tax codes and laws. Effective functioning of the single taxation system requires the exact, complete and accurately formulated legislative ensuring processes of the taxation that can be reached only when using uniform, consecutive and clear tax terminology. With respect thereto it is offered to establish in the national laws of the Russian Federation, the Republic of Kazakhstan, the Kyrgyz Republic, the Republic of Tajikistan and the Republic of Belarus single concepts of tax base, tax period, procedure for calculation of tax, payment due dates by modification of the corresponding legal acts and uses of the individual clauses regulating the above-stated concepts.
Tax codes of the Russian Federation, the Republic of Kazakhstan, the Law of the Republic of Belarus "About the value added tax" establish tax period on the value added tax which is equal to calendar month (to quarter - for separate group of payers). In tax codes of the Kyrgyz Republic and the Republic of Tajikistan it is known only the accounting (not tax) period on the VAT. In legal acts of the Republic of Belarus, the Kyrgyz Republic and the Republic of Tajikistan there are no Articles determining tax period on excises that leads to complication of procedure for their calculation and payment. In this regard it is offered to apply single approach to determination of date of the tax liability and payment due dates of tax and for this purpose to determine as single tax period by the value added tax and excise in regulations of the republics calendar month.
Rates on the VAT are different in state members of Community: 18%, 10%, 0% - in the Russian Federation and the Republic of Belarus; 15%, 0% - in the Republic of Kazakhstan, 20%, 0% - in the Kyrgyz Republic and the Republic of Tajikistan. It is reasonable to establish single rate of the value added tax for EurAsEC member countries. At the same time the zero rate of the VAT shall be applied only to commodity export.
For the purpose of suppression of tax avoidance it is necessary to cancel the release from the VAT provided to the companies using work of disabled people and being in property of public organizations of disabled people, having replaced them with direct grants from the budget.
During the comparative and legal analysis number of problematic issues in the order of collection of indirect taxes when implementing the foreign trade transactions between state members of EurAsEC which require the solution at the interstate level is established. In particular, it is necessary to settle the questions connected with the procedure for confirmation of the fact of commodity export providing documentary confirmation by the corresponding marks of customs authorities of the state seller of the fact of export from its territory of the exported goods and customs authorities of the state buyer - the fact of import of these goods to its territory. As participants of foreign economic activity face problem of export confirmation, the VAT return requires a lot of time therefore VAT amounts are taken from turnover. Besides, problems in confirmation of export arise because in each country different documents which cannot be at the exporter are processed.
Considering provisions of international treaties and agreements, it is offered to unify the single list of documents for confirmation of the tax rate "zero percent" and to assume as a basis the list provided in the Agreement on the principles of collection of indirect taxes during the exporting and commodity import (works, services) between the State Parties of the Commonwealth of Independent States (on November 25, 1998). State members of EurAsEC passed to the principle of "country of destination" which provides application of zero rate of the VAT when exporting and VAT return from the budget for the resources used on the exported goods.
In the countries of EurAsEC VAT return terms, different on duration, are established. The procedure of return is too complicated that leads to the untimely tax refund. Untimely return leads to two negative effects:
- economic activity of the companies as there is derivation of current assets at taxpayers decreases and, as a result, production volumes decrease;
- export prices increase by the amount of the uncompensated VAT that, in fact, leads to the hidden double taxation. With respect thereto it is advisable to unify VAT return terms.
It is necessary to create single system of administration of the taxation indirect taxes in case of commodity import and their production. For creation of single system of administration of indirect taxes in case of mutual trade between the countries of EurAsEC it is necessary to adjust information exchange through customs and tax authorities between the states of Community by means of information systems. Necessary agreements on cooperation in this sphere are available.
It is offered to create the flexible system of decision making on change of rates of excises allowing to make their adjustment in the minimum terms in the Russian Federation and the Kyrgyz Republic.
Interstate Council of EurAsEC the decision of September 14, 2001 "About further harmonization of excise policy of state members of EurAsEC" approved No. 28 the basic list and minimum rates on the excise goods made and imported on customs areas of state members of EurAsEC. Now minimum rates of excises are not established only on the ethyl alcohol and alcoholic products which entered the basic list of excise goods. It is advisable to establish in the Basic list of the excise goods made and imported on customs areas of gosudarstvchlen of EurAsEC, minimum rates of excises on ethyl alcohol and alcoholic products and also to complete reduction of codes and units of measure of excise goods in compliance with the Commodity nomenclature of foreign economic activity of state members of EurAsEC.
State members of Community are offered to enter the "mixed" system of excise collection on tobacco products to adapt the tax legislation for the commonly accepted standards in economically developed countries.
Appendix 2
to the resolution of EurAsEC MPA Bureau of October 8, 2004 No. 10
The purpose of carrying out the comparative and legal analysis of tax legislations of state members of EurAsEC is preparation of offers on harmonization of national legal systems of the states of Community in the field of the taxation.
Now, having kept functions of the main lever of replenishment of the budget, the taxation exerts considerable impact on the international placement of productions, direct and portfolio investments, activities of the financial markets.
The new role of the taxation is shown within functioning of different integration groups including the interstate unions. So, for example, harmonization of the taxation is one of perspective elements of development of the CIS now.
The foundation for harmonization of the taxation within the CIS was laid in the Agreement between the governments of the State Parties of the Commonwealth of Independent States on the agreed principles of tax policy (Moscow, on March 13, 1992). According to this document of the CIS country undertook to pursue the approved tax policy on the basis of unification of the principles and rules of the taxation and to apply the single list of the main taxes infringing on interests of all states entering the Commonwealth. The main objective of harmonization of the taxation within the CIS consists in legal support of development investment and other forms of financial and economic activities in the territory of all State Parties of the CIS. It was for this purpose decided to coordinate on the basis of rapprochement and unification following provisions of the legislation on taxes:
a) in the field of the income tax (income) of the companies, associations, the organizations and their branches - rules of determination of subjects and the taxation objects and accounting treatment for production costs and sales of products;
b) in the field of the income tax from physical persons - the principles of determination of the leviable income and income, non-taxable;
c) in the field of the value added tax - application of single rate of tax and the unified procedure for calculation and payment of this tax.
Unfortunately, this Agreement is not ratified by all CIS countries and actually has declarative nature, it became effective only for the following states:
The Republic of Belarus - on July 18, 1996;
The Republic of Kazakhstan - on July 18, 1996;
The Republic of Uzbekistan - on July 18, 1996;
The Republic of Tajikistan - on July 17, 2001.
Therefore now coordination of tax policy is performed generally within Eurasian economic community (EurAsEC) which members are Russia, Belarus, Kazakhstan, Kyrgyzstan and Tajikistan.
Harmonization (rapprochement and unification) of national legal systems in the field of the taxation and other regulations of state members of EurAsEC represents system of mutually agreed views of common goals and priorities of forming of the legal basis of Community, way, action, mechanisms and stages of practical implementation of the approved tax policy. Basis in harmonization of the tax legislation is voluntariness and independence of the states in determination of the directions and depths of participation in processes of rapprochement of national legal systems, gradualness and phasing of its realization. Need of work in the direction of harmonization of the national taxation systems is objectively caused by tendencies of rapprochement of national legal systems, interstate, intergovernmental and interdepartmental agreements signed in development of integration processes.
Within implementation of the Agreement of March 13, 1992 and the Agreement on the Customs union and the Common economic space of February 26, 1999 bilateral agreements between the governments of the Russian Federation and the Republic of Kazakhstan, the Russian Federation and the Republic of Belarus, the Russian Federation and the Kyrgyz Republic are signed.
At the same time the concept of tax harmonization assumes preserving identity of the national taxation systems and does not provide complete standardization of procedure for collection of taxes in EurAsEC.
Distinctive feature of regulation of the taxation in EurAsEC is lack of the general document (similar to the Tax code) systematizing all main regulations of the tax legislation of EurAsEC. Now the provisions determining tax policy within Community represent set of separate regulatory legal acts which are drawn up in the form of decisions, recommendations, agreements.
The decision of Integration Committee of EurAsEC of April 5, 2002 No. 75 approves the basic principles of tax administration and it is offered to be guided to Tax Services of Russia, Belarus, Kazakhstan, Kyrgyzstan and Tajikistan by them in practical activities.
Proceeding from objectives, the purpose of enhancement of the tax legislation of state members of EurAsEC is determination of the main directions promoting creation of the most favorable economic conditions for activation of activities of business entities and inflow of direct investments.
Object of this research are regulatory legal acts in the field of the tax legislation of the Russian Federation, the Republic of Kazakhstan, the Republic of Belarus, the Kyrgyz Republic, the Republic of Tajikistan, international agreements and legal acts of EurAsEC.
Now the structure of the taxation in the states of EurAsEC is characterized by some extent of unification. As of January 1, 2004 the taxation systems of all states assume collection of the income tax, income tax, the VAT, excises. Besides, such elements of the national taxation systems as procedure for calculation of taxes, tax benefits and releases, procedure for collection of indirect taxes are identical.
At the same time the taxation systems of state members of EurAsEC have also the features which are connected with priorities of national economic policy, budget relations between different levels of the power and other factors. At the same time the legal act containing exhaustive list of taxes and fees is absent only in the Republic of Belarus.
In general development of the tax legislation of the states of Community goes in the direction of unification as only in this case it is possible to provide free modulation of the capital and equality of competitive conditions.
Modern tax and customs practice show that application of provisions of the codes which are not corresponding to the developed economic situation interferes with business development, attraction of external and internal investments. Entrepreneurs, legal entities, subjects of economic activity try to hide part of the income, and, respectively, the state receives less the income in type of tax.
Foreign investors do not hurry to invest money in economy of the republics. Further protocols on intentions of case do not move ahead. Investors are frightened by imperfection of the legislation in the field of business activity, large number of taxes and customs payments, their high rates, lack of privileges for import of processing equipment for modernization of the companies, etc. Naturally, all this slows down inflow of external investments into economy of said countries.
For successful functioning of the taxation system including in the field of collection of indirect taxes, the exact, complete and accurately formulated legislation, with the uniform terminology clear is necessary for all countries. Only in this case it will be possible to achieve efficiency, simplicity and "transparency" in case of their application.
Within this research we will carry out comparative analysis of legislations of state members of Eurasian economic community in the field of the taxation regarding indirect taxes, namely - the value added tax and excises.
The value added tax (VAT) is the main indirect tax and important source of revenues of the budget of the above-mentioned countries. In all researched legislations, proceeding from essence of the VAT, the value added tax assesses transactions on delivery of goods and rendering services, except those cases when specific types of activity or goods and/or services are exempted from VAT liability.
Tax base
Article 153 of the Tax Code of the Russian Federation and the article of the Law of the Republic of Belarus "About the value added tax" accurately determine tax base by the value added tax and have the name "Tax base". In the Tax code of the Kyrgyz Republic Article 152 "Rateable value of deliveries" and Article 155 "Rateable value of import" is set; in the Tax code of the Republic of Tajikistan Article 184 - "The cost of taxable transaction" and Article 186 - "The amount of taxable import", Article 199 - "Rate of the value added tax" which Item 2 says: "Taxable turnover consists of total cost of taxable transactions for the accounting period" which are close on content to concept of tax base. Thus, the different name of Articles determining tax base by the VAT leads to ambiguous interpretation of this concept. The question how to determine the taxable cost, is one of fundamental provisions on the VAT. As all tax amount paid at different stages of movement of goods or service is paid finally by the final consumer, determination of tax base shall be based on the concept of "market value" as this cost and is paid by the final consumer. Proceeding from it, the size of leviable turnover should be determined on the basis of the price applied by the parties of the transaction. It fully corresponds to the concept of "market value", and also the international principles of calculation of the VAT.
In this regard it is offered to carry out the maximum unification of tax base on the value added tax, since introduction of single terminology in legal acts of member countries of EurAsEC. It reaches the solution of one of the principles of the taxation - simplicity and availability. The taxation system shall be easily understood by both taxpayers, and tax authorities.
Tax period
Article 163 of the Tax Code of the Russian Federation, article 246 of the Tax Code of the Republic of Kazakhstan, article 17 of the Law of the Republic of Belarus "About the value added tax" establish tax period on the value added tax which is equal to calendar month (to quarter - for separate group of payers). In article 158 of the Tax Code of the Kyrgyz Republic "Accounting and payment due dates of the value added tax" and article 205 of the Tax Code of the Republic of Tajikistan "The accounting period on the value added tax" is known only the accounting (not tax) period on the VAT. However according to general terms of establishment of tax the tax is considered established only in that case when taxpayers and elements of the taxation are determined: taxation object, tax base, tax period, tax rate, procedure for calculation of tax, procedure and payment due dates of tax. For the specific tax discharge, according to the legislation, the concept of tax period shall be determined by tax. As only this concept generates obligation of payers of this tax not only to hand over the reporting under this tax, but also to make its payment, and in case of untimely payment gives the grounds tax authority to bring payers to tax responsibility.
Besides, from formulations of articles of Tax Codes of Belarus, Kyrgyzstan whether Tajikistan the right is absolutely clear, granted to small enterprises to make the tax discharge and to hand over the reporting after, for example, quarter (tax period "quarter") as turnovers at these companies are limited in quantitative expression.
In this regard it is offered to enter Article establishing as tax period on the value added tax calendar month into legal acts of Kyrgyzstan and Tajikistan.
Tax rates
Additional unification is reached by equalization of VAT rates. Rates are determined by the VAT by legal acts of the states (the Tax Code, the law) and as we see from regulations, over all researched countries are different: 18%, 10%, 0% - in the Russian Federation and the Republic of Belarus, 15%, 0% - in the Republic of Kazakhstan, 20%, 0% - in the Kyrgyz Republic and the Republic of Tajikistan.
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