Transcript:
Question: Mr Siluanov, what has the Government decided in terms of the first issue? Has it approved the programme or returned it for improvement and coordination?
Anton Siluanov: It is not a programme, but rather it is guidelines for the 2014-2016 tax policy. The Government has approved the document, on the whole. We have agreed that a number of improvements should be made before we submit the final version to the Government. But on the whole, the document has been approved.
Question: When will the final version be submitted?
Anton Siluanov: I think that it will take us a couple of weeks.
Question: Could you speak about taxes on Eurobond yield payments? You said that the Ministry of Finance has proposed abolishing them. Which of the two proposed decisions will be approved?
Anton Siluanov: Why two? There is only one variant in the document. It states that the organisation issuing Eurobonds is a tax payee, and that we will free it of its function as a tax payee. All taxation issues will be regulated in accordance with the legislation of the home country of the Eurobond holder. If he or she is a Russian national, they will pay taxes on Eurobond yield payments in accordance with Russian legislation. You know, we spent a long time discussing this issue with our experts and bankers. It was their proposal, which we supported.
Question: So Eurobond yield payments will not be taxable?
Anton Siluanov: We propose lifting the function of the tax payee from Eurobond issuers, which they had in the past. Now an organisation that issues Eurobonds will not collect taxes from bondholders when making coupon payments, which has been a contentious issue. Banks and other organisations that issued Eurobonds were obliged to collect taxes. They are not doing so now because we have a moratorium on this until mid-2014. What we have decided now is that these organisations will not be tax payees after 2014; they will not collect taxes from Eurobond yield payments.
Question: Has the Government supported this proposal?
Anton Siluanov: We discussed it for a long time, checking everything. We have not held a separate discussion on this issue today. Alexander Pochinok, who spoke on behalf of businesspeople, supported the idea. He said that it is a sound decision.
Question: So, is this the final decision?
Anton Siluanov: Yes, I think so. We are trying to meet halfway the organisations that make transactions on the financial market. Allow me to repeat – it is our responsibility to make the Russian financial market attractive to investors, including foreign investors, with a comfortable level of taxation and also organised operation. We are open to continuing to perfect our tax laws, so as to make the Russian financial market as attractive as the financial markets in other countries.
Question: What information disclosure requirements will beneficiaries face? You were planning to work out some requirements.
Anton Siluanov: Do you mean the requirements for companies registered in tax havens?
Remark: No. I am referring to Eurobonds.
Anton Siluanov: The requirements for Eurobond holders state that if a holder is registered in an offshore jurisdiction that has not signed an agreement with Russia on avoiding double taxation – there is a list of such jurisdictions – the company will be required to pay a tax. As for other Eurobond holders registered in a bona fide and transparent jurisdiction that has signed the agreement the tax agent should not tax the income on these Eurobonds.
Question: As we understood from the discussion that we just heard, you still do not agree in terms of the excise tax rates on tobacco and petrol because the ministers responsible for these industries are both… Calls were made to raise the tobacco excise tax higher than you have proposed, and as for the petrol discussion, the Ministry of Transport said that this income will still not suffice, and their estimates regarding the potential shortfall of income did not match yours. Have you reached any agreement this time around?
Anton Siluanov: This is indeed a sensitive issue. However, we held a Government meeting on excise taxes today before bringing it up here.
With tobacco, we just heard two opposite views – the trade unions said that we should be very careful about raising the tobacco excise tax, while the Minister of Healthcare insisted that we should raise it more quickly. Our position is actually somewhere in the middle, although I must admit that tobacco taxes have been climbing at a high rate of up to 40% a year.
We have discussed plans for 2016, and an initial 10% increase was proposed. However, after a discussion in the Government, we decided to raise the tax higher. Finally, the Ministry of Finance proposed a 28% increase, which was approved by the other ministries concerned. It is also important that our neighbours raised their excise taxes, too.
As is, Russia has seen an inflow of tobacco from Kazakhstan and Belarus. Just look at the following figures – with the local excise taxes significantly lower than in Russia, importing one trailer of products fetches around $1 million in profits. Can you imagine this? Half of all of the tobacco goods sold in the border areas have no Russian excise stamps on them.
I think that our watchdogs responsible for the consumer market – for products being certified and legal – should make a stronger effort to eliminate products without Russian stamps from the market.
Question: What is the decision regarding social security contributions for small businesses?
Anton Siluanov: Social security contributions will remain at their current level for now. No changes are planned in the near future.
Question: And for small businesses?
Anton Siluanov: For small businesses, I should remind you that we have a pension system development strategy that does not allow us to extend existing benefits.
Yet, the Ministry of Economic Development has asked if the social security contributions of small businesses could be considered as a separate issue today. We will probably do so, but it is still our belief that everyone should contribute to his or her pension.
If small businesses do not pay as much as everyone else, then this means that someone else has to pay for them. Is that fair? I do not think so. Our strategy was to grant them a temporary privilege, and that privilege is expiring. We have heard a proposal today to extend it for another year. But I do not think that one year will make a difference, except for leading to the resumption of this discussion one year from now.
They will then ask to extend it for another year, and then for another, and so on and so forth, indefinitely… Thus, we have not included policy changes in these guidelines. The Ministry of Economic Development has raised this issue today. We will probably meet to discuss this issue once again, but we have not included any special decision in the guidelines.
Thank you.
