Alexander Ermolenko, Head of FBK Legal Corporate Practice on Russian Tax System

Business-Magazine publishes an author column of Alexander Ermolenko, head of FBK Legal corporate practice where he expounds on Russian tax system. Alexander believes that the current changes are “a natural adjustment and an ordinary need” without which it would not be possible to manage the tax field. Alexander advises to pay attention to other, more important issues which are to be solved. Among them is bureaucratization of state power and tax system as well. “State authorities do not understand that economics is the common cause, common interest, that successful business is necessary for people and state, but not only for a businessman. This is why there is no friendly attitude towards business, no consideration for their problems”, the expert emphasizes. Among other deficiencies Alexander highlights the problem of pension system. “It is a sort of loophole in tax system, which they don’t know how to “patch up”. This is why they do the most simple thing – they “patch it up” by increasing social due fees which de-incites business and disencourages doing business within legal framework”, the lawyer believes. As a positive example of reforms he provides reform of 2000: the tax rate on income of individuals was decreased almost twice, however collectability of taxes increased then almost by 30%.

So, according to Alexander Ermolenko, any local issues of simplifying, enhancing and stabilizing are no matter of principle. “At the level of approaches, principles of tax administration we have much more important problems and they have to be solved”, the expert sums up.