Tax Administration

The tax system in Russia has changed significantly______the past five years. One of the ______ changes has occurred in the institutional structure of the country's tax administration. The Taxation Ministry, which is ______ for the administration of all major taxes, was reorganized in 1991.

This institutional ______in the structure of the Ministry has been accompanied by numerous changes of the revenue structure of the _____ . Not only have new ______been introduced (the value-added tax and the expanded property tax, among others), the revenue-sharing arrangements have also been adjusted a number of times over the last five years. Tax rates themselves have changed a number of ______ over the last five years. Additionally, the privatization of ______ and the growth of new businesses have left the Ministry with an increased responsibility to locate and taxpayers. The growth in the number of self-employed businesses is particularly problematic because these_____ have a higher rate of non-compliance worldwide since locating evaders is difficult.

Computerization is not widespread, which ­­­­­­­­­­­­­_____ collection efficiency even more, and prosecution against evaders is difficult. Finally, the development of new systems of accounting and audit is necessary to ______ the efficiency of tax collection. Some of the problems in the area of tax administration are new to Russia, such as the development of new enterprises, the change in the structure of the Ministry, development of international systems of accounting, and increased commerce with foreign firms. These problems continue to exist under the______ system of taxation as well.

Words you may need:

Англійський Російський Український

варіант варіант варіант

tax administration система сбора налогов, система збору подат

налоговое ведомство ків, податкове ві-

домство

self-employed business самостоятельное, некор- самостійне, некор-

поративное предприятие поративне підпри-

ємство

to locate evaders обнаруживать, выявлять виявляти тих, що

уклоняющихся от уплаты ухиляються від

налогов сплати податків

widespread широко распространенный широко поширений

prosecution преследование переслідування

Discussion

Ex. 7. a) Read and discuss the text.

2. Sum up the text in 5-7 sentences and present your summary in class.

3. Give your opinion on "tax havens". Tax Havens Explained

What do the Bahamas, Bermuda, Hong Kong, Liberia, the Netherlands, the New Hebrides, Panama, and Switzerland have in common? They are all "tax havens".

Essentially, a tax haven is a place where foreigners may receive income or own assets without paying high rates of tax upon them. Although, strictly speaking, not all tax havens are countries, we can refer to them as such here for the sake of convenience. In some havens the tax relief that foreigners enjoy stems from the absence of the chief forms of direct taxation - income, estate, and gift taxes; but in most countries the relief stems from special features of the tax system that result in a very low effective tax rate on certain forms of foreign investment.

Even though the list of tax havens includes several developed countries, most are developing countries. It is precisely their example that other developing countries are tempted to follow, in the hope that becoming a tax haven will help them solve some of their economic problems.

Tax haven operations consist fundamentally in establishing within a tax haven country one or more legal entities, such as trusts, personal holding companies, or corporate subsidiaries, and attributing to them income earned elsewhere in order that it should be taxed at the country's low rates - or perhaps not taxed at all. This objective is usually accomplished by either (1) accumulating income in the tax haven country at low rates of tax to be withdrawn later and invested elsewhere according to the investor's wishes; or (2) artificially shifting business profits from high-tax countries to a tax haven country.

Low tax rates are perhaps the principal attraction offered by tax havens. Usually these low rates are associated with income taxation; in fact, what springs to mind immediately upon hearing the words "tax haven" is the absence of income taxation that exempts foreign investors. Though it is true that many of the advantages offered by tax haven countries are income tax advantages, these are by no means the only benefit that these countries offer to foreign investors.

Within the tax field, the absence of other taxes such as estate, inheritance, and gift taxes may be as important to certain investors as the absence of an income tax. Bilateral tax treaties between a tax haven country and some of the major developed countries are another feature that may attract investors. The existence of a tax treaty allows third-country investors to base their holding companies in tax havens and obtain a reduction in withholding taxes applied to the dividends and interest they receive from developed countries with which the tax haven country has the tax treaty.

Strict and well-enforced rules of banking secrecy and, in general, the possibility of doing business without close supervision by government agencies are additional attractions usually offered by tax haven countries. Other factors, such as the low cost of doing business, the existence of liberal banking regulations, and the absence of exchange controls are also important. Finally, a good communications service, a well-developed legal system with an abundance of legal and accounting expertise, and, above all, a high degree of political and financial stability also help to make a country successful as a tax haven.

Words you may need:

Англійський Російський Український

варіант варіант варіант

tax haven налоговое убежище податкове сховище strictly speaking строго говоря строго кажучи

for the sake of из соображений удобства з міркувань зручності

convenience

tax relief налоговая льгота податкова пільга

enjoy (зд.) пользоваться (тут) користуватися

to stem from происходить, проистекать траплятись, проістікати

из із

estate tax налог на недвижимость податок на нерухомість

gift tax налог на дарение податок на дарування

trust траст траст

holding company холдинговая компания холдингова компанія

subsidiary дочерняя компания дочірня компанія

attribute приписывать (кому-л.), приписувати (комусь),

относить (за счет/на счет відносити (за рахунок/на

чего-л.) рахунок чогось)

accomplish осуществлять здійснювати

accumulate аккумулировать, аккумулювати,

накапливать накопичувати

withdraw (зд.) забирать, отбирать (тут) забирати, відбирати

artificially искусственно штучний

shift перемешать переміщувати

to be associated (with) быть связанным (с) бути пов’язаним (з)

what springs to mind первое, что приходит в перше, що приходить у

голову голову

inheritance tax налог на наследство податок на спадок

exempt освобождать от уплаты звільнення від сплати

налогов податків

bilateral двусторонний двусторонній

well-enforced (зд) действенный (тут) діючий

abundance изобилие, избыток достаток, надлишок

Ex. 8. Read the dialogue, sum up its content and act it out.

Russian: I'm sure you know that one of the most serious problems in Russia now is poor tax collection causing sharp decline in tax revenue.

Foreigner: Yes, we know that and understand your concern. But tax evasion is characteristic of quite a number of countries. Inadequate tax law and weak control on the part of tax services make it possible for taxpayers to find loopholes and evade taxes.

R.: In Russia many individual taxpayers simply do not pay taxes. We can't put up with such a situation any longer, particularly because the government is planning to gradually move the tax burden from enterprises to incomes and property of physical persons.

F.: In that case you will have to work with your taxpayers.

R.: What do you mean?

F.: Sometimes individual taxpayers and businesses do not pay taxes or do not pay them fully because they do not understand the procedures of tax collection, they are unclear about filing tax returns.

R.: Are you facing a similar situation?

F.: In a way, yes. But we in the US Internal Revenue Service (IRS) try to educate taxpayers, to provide them with information, to help them to comply with the tax laws.

R.: Our taxpayers, both individuals and legal entities, also often turn to employees of the Taxation Ministry for clarifications and explanations. F.: It’s usual practice. Besides, we invite people to attend our educational programmes designed for specific groups of taxpayers, we make available special publications which explain the many rights of taxpayers, procedure of appeal and seizures, etc.

R.: The staff of the IRS must be very big.

F.: No, not very. The purpose of the IRS is to collect the amount of tax revenue at the least cost, so we increasingly work in cooperation with local volunteers, who offer free help in preparing tax returns, for instance, for elderly taxpayers. R.: You are operating the "self-assessment" system, aren't you?

F.: Yes, we accept most taxpayers’ returns as filed. Sometimes, however, we select returns for examination.

R.: Do you check dishonest taxpayers?

F.: No, the check doesn't suggest that the taxpayer is dishonest. We check returns to make sure the math is accurate and see if the taxpayer has paid the correct amount of tax. R.: And what if the taxpayer has not paid the full amount of tax? What measures are taken? F.: If a taxpayer owes tax, IRS employees will send the taxpayer a bill describing the tax and stating the amount the taxpayer owes in tax, interest and penalties.

R.: Is the taxpayer given a specific period of time to pay the bill in full? F.: Yes, we do not take any enforcement action until after we have given the taxpayer the chance to voluntarily pay the tax due.

R.: What enforcement measures can be taken if the defaulting taxpayer does not respond? F.: As a rule we place a tax lien on the property to secure the amount of tax due. The lien is released no later than 30 days after we find that the entire tax is paid. R.: What rights do taxpayers have if they disagree with an IRS decision, for instance the amount of tax due?

F.: The taxpayer has the right to appeal our filing if he or she believes that the amount is wrong or the lien was filed in error.

R.: The taxpayers have the right to recover the actual economic damages sustained, I suppose, don't they?

F.: Yes, sure. One of the goals of the IRS is to protect the rights of American taxpayers, so that they have confidence in the integrity, efficiency and fairness of our tax system.

£.: Yes, taxpayers have the right to be treated fairly, professionally, promptly and courteously. Our tax employees also do their best to serve the public by continually improving the quality of services.

Words you may need:

Англійський Російський Український

варіант варіант варіант

Loophole лазейка лозійка

to file a tax return подавать налоговую подавати податкову

декларацию декларацію

IRS (Internal Revenue Налоговая служба США Податкова служба

Service) США

comply (with) выполнять требования виконувати вимоги

appeal апелляция аппеляція

seizure наложение ареста на накладання арешту

имущество, изъятие на майно

имущества

the math is accurate расчет произведен розрахунок зробле-

верно ний вірно

enforcement actions принудительные меры примусові міри

defaulting taxpayer налогоплательщик, платник податків,

нарушивший закон що порушив закон

tax lien залоговое право на залогове право на

имущество в обеспечение майно по забезпе-

уплаты налогов ченню сплати податків

the lien was filed in error право удержания имущест право удержання

ва было применено майна було засто-

ошибочно совано помилково

to recover damages взыскивать убытки взискувати збитки

integrity честность, професси правдивість, профе-

ональная репутация сійна репутація

promptly без задержки , незамед без затримки, неу-

лительно повільнюючи

courteously учтиво, обходительно, учтиво, обхідливо,

вежливо поважно

Ex. 9. Give extensive answers to these discussion questions:

1. What taxes provide the bulk of budget revenues in Russia?

2. How can tax assessment be done?

3. How do taxes in Russia compare with taxes in other countries?

4. Is there a need to soften the burden of taxation in Russia?

5. Are people beginning to understand that paying taxes is in their interest?

6. What is the difference between tax evasion and tax avoidance?

7. What is usually taxed?

8. What is an excise duty? Why were excise duties introduced?

9. What are the duties of the Taxation Ministry and Tax Inspectorates?

10.How can poor tax collection in Russia be explained?

11.What measures, in your opinion, can improve tax collection in Russia?

12.What rights do local bodies of authority have regarding taxes?

13.What is the government planning to do to eliminate defaults on payments and ensure that taxes are paid?

14.What enforcement measures can be taken against defaulting taxpayers?