13
PLEKHANOV RUSSIAN ACADEMY OF ECONOMICS
Financial Law
Report “The Tax Law”
Student: Julia Efimova
Academy supervisors: Ekaterina
Vladimirovna Bagreeva
Per Oyvind Berg-Knutsen
Moscow 2006
Contents
Introduction
1. Taxes and the Tax Law
2. Taxpayers
3. Tax authorities
4. Tax offences
4.1 Court Proceeding in a tax offence case
Conclusion
Bibliography
Introduction
Among economic instruments, by means of which the state influences
market economy, taxes play the important role. In conditions of market
economy any state widely uses a tax policy as the certain regulator of
influence on the negative phenomena of the market. Taxes, as well as all
tax system, are the powerful tool of management of economy in conditions
of the market.
The use of the taxes is one of the economical methods of government and
maintenance of interconnection of the interests of the State with
individual persons, commercial organizations forms of ownership and
organizational – the legal form of the enterprise. By means of taxes
mutual relations of businessmen, the enterprises of all forms of
ownership with the state and local budgets, with banks, and also with
the higher organizations are defined.
1. Taxes and the Tax Law
A tax is a compulsory charge or other levy imposed on an individual or a
legal entity by a state or a functional equivalent of a state (e.g.,
tribes, secessionist movements or revolutionary movements). Taxes could
also be imposed by a sub national entity.Wikipedia. The free
encyclopedia. http://en.wikipedia.org/wiki/Tax
A tax shall be defined as an obligatory and individually non-refundable
payment collected from organizations and individuals in the form of
alienation of money resources owned by them by right of ownership,
economic jurisdiction or operational management for purposes of
financing the activity of the state and/or municipalities.Tax Code of
the Russian Federation Article 8
http://www.garweb.ru/project/mns/en/law/garweb_law/10800200/10800200-001
.htm
Taxes play the most important role of the state revenue. In 2002 the
taxes made up 81,21% Budgetary system of the Russian Federation
http://budgetrf.nsu.ru/budget/Publications/2002/Adoption/Federal/Npd/Bud
getlaws/Budget/194fz30122001/194fz30122001_short.htm of the profitable
part of the federal budget.
Tax law is the codified system of financial laws that describes
government levies (taxes) on economic transactions. The tax law
represents a branch of legal system of the Russian Federation which
regulates public relations in the sphere of the taxation, which means
the relations in connection with the realization of taxation and other
obligatory payments, the organization and functioning of the system of
tax regulation and the tax control over the all levels of the government
and local self-government.
Legislation on taxes and charges consists of the Tax Code, federal and
regional laws, local regulative acts. Tax laws which had been adopted
before the Tax Code came into force are valid in the part not
conflicting with the Tax Code.
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13
Conesco Press. Russian Taxation http://www.conseco.ru/eng/
A comprehensive Tax Code has been progressively introduced since 1999
and is now largely implemented. The Tax Code is the main legislative tax
act which consists of two parts. The first part includes general
definitions, lists rights and duties of taxpayers and tax authorities,
sets forms and methods of tax control, establishes liability for tax
offences, and so on. The second part of the Tax Code consists of
chapters covering individual taxes – VAT (Value Added Tax), tax on
profit and others. Orders, instructions, guidelines of the Ministry for
taxes and charges are mandatory only for the tax bodies and do not
relate to tax legislative acts. Only instructions on the order of
filling in tax returns are mandatory for taxpayers. The current tax
structure was introduced in 1992 and follows the federal nature of
Russia in that the various republics and regions that comprise the
Russian Federation have c ertain rights as regards levying taxes. Taxes
may be viewed as follows:
Federal: Applied in the whole of the Russian Federation, at uniform
rates. Examples of this category are: Value Added Tax (20%) Conesco
Press. Russian Taxation http://www.conseco.ru/eng/ , customs duty,
income tax from physical persons, enterprise profit tax.
Regional: Applied in the whole of the Russian Federation, but the entire
tax rate, or the locally collected portion, is determined regionally.
Collection of the tax is split between the amounts allocated regionally,
or to the centre. An example of this category is corporate Profits Tax
(currently, the federal component is 6.5 percent, with additional
regional components of 13.5 – 17.5 percent) Russia Tax Overview
http://www.kpmg.ru/russian/supl/library/taxlegal/Tax%20Overview.pdf .
Local Taxes: established by the local or regional authority and has only
local force. Collection is entirely local. An example of this category
is a Land Tax.
Date of enforcement
Federal laws introducing amendments to the Tax Code that establish new
taxes and charges, regional and local acts of tax legislation
introducing new taxes (charges) take effect not earlier than January 1
of the year following the year of their adoption and not earlier than
one month after their official publication.
Other legislative acts on taxes and charges come to force not earlier
than upon expiry of one month after the date of their official
publication and not earlier than first day of the next tax period set
for the specific tax.
Legislative acts on taxes (except charges) also take effect not earlier
than the first day of the next respective tax period.
Elements of taxation
According to the Article 17 of the Tax Code of the Russian Federation
“General Conditions of Imposition of Taxes and Fees” ,
“1. A tax shall only be considered as imposed if the taxpayers and the
elements of taxation are defined, namely,”
· Object of Taxation (Art. 38 of the Tax Code)
· Tax Base (Art. 53 of the Tax Code)
· Tax Period (Art. 55 of the Tax Code)
· Tax Rates (Art. 53 of the Tax Code)
· Procedure of Tax Assessment (Art. 52 of the Tax Code)
· Deadlines and Procedure for Paying Taxes and Fees (Art. 57, 58 of the
Tax Code)
“2. In tax imposition, a legislative act on taxes and dues may also
provide if necessary tax benefits and grounds for using them by the
taxpayer.
3. In imposing fees, their payers and elements of taxation shall be
defined relative to particular fees.“Tax Code of the Russian Federation
http://www.garweb.ru/project/mns/en/law/garweb_law/10800200/10800200-001
.htm
2. Taxpayers
Taxpayers are organizations and natural persons who are under an
obligation to pay taxes and/or charges.
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a000000250000000c0000000e000080250000000c0000000e000080120000000c0000000
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00000cc04400022430061006c00690062007200690000000000000000000000000000000
000000000000000000000000000000000000000000000000000000000000000000000000
0001100dc5f11001000000040631100c060110052516032406311003860110010000000a
8611100246311002451603240631100386011002000000049642f3138601100406311002
0000000ffffffff0c04f700d0642f31ffffffffffff0180ffff0180efff0180ffffffff0
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00000000000000000000000000000000000000000000000040000002d010100040000002
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000000015018a0020000900040000002d010000040000002d010000030000000000
13
Conesco Press. Russian Taxation http://www.conseco.ru/eng/
Registration of taxpayers
· All organisations and individual entrepreneurs must be registered with
tax bodies within 10 days following the date of their state
registration.
· Registration with tax bodies is performed at the place of
organisation’s location (residential address for individual
entrepreneurs)
· An organisation acting via separate divisions, property or vehicles
must register both at its place of location and at the place of location
of each of its division and its property
· Natural persons who are not individual entrepreneurs are not obliged
to register with the tax bodies on their own
· Each taxpayer is given a personal identification number of taxpayer
when registered with the tax bodies
Rights of taxpayers:
· To claim full compensation for losses caused by unlawful decisions of
the tax bodies or unlawful actions (inactions) of their officials
· To receive from the tax bodies at the place of registration free
information on current taxes and charges, legislation on taxes and
charges, and also on the rights and duties of taxpayers, and powers of
the tax bodies and their officials
· To receive written explanations on application of tax legislation from
the tax bodies and other authorized state bodies.
· To represent their interests before the tax bodies in person or via
their representative
Duties of taxpayers:
· To pay taxes and charges set in accordance with law
· To register with tax bodies
· To keep records of their income (expenses) and objects of taxation
· To file tax returns and financial reports and to provide documents
required to calculate and pay taxes to the tax bodies and their
officials
· To fulfill lawful requirements of tax bodies to eliminate tax offences
revealed and not to hinder lawful activity of tax officials
· To provide tax authority at the place of registration with information
Penalties for violating the order of registration with tax bodies
· Exceeding the 10 days term set for filing the application for
registration: for up to 90 days 5,000 Rb of penalty
· Over 90 days 10,000 Rb of penalty
· Carrying on activities by an organization or an individual
entrepreneur without registration with the tax bodies: for up to 3
months 10% of income derived from such activity during the said period
but not less than 20,000 Rb for more than 3 months 20% of the income
derived during the period exceeding 90 days from activity carried on
during the said period without registration with the tax bodies
3. Tax authorities
Rights of tax authorities
· To demand from taxpayers and other obligated persons presentation of
documents that can be used as a reference for the computation and
payment of taxes
· Suspend operations with taxpayers’ bank accounts and seize their
property
· To conduct an examination (inspection) of any premises and grounds
used by the taxpayer for generating taxable income or for keeping
objects of taxation, regardless of their location; to conduct inventory
of the taxpayers property
· To determine amounts of taxes owed by taxpayers, on the basis of
available information on the taxpayer or by analogy with other similar
taxpayers, in case the taxpayer denies tax body officials admittance to
his/her premises and areas for examination (inspection), or fails to
present the documents needed for computation of the taxes due for over
two months
· To conduct an audit of taxpayers and seize the documents confirming
the fact of tax offences, providing there are sufficient reasons to
believe that the documents will be destroyed, concealed or falsified
· To collect taxes in arrears and penalizing interest accrued
Obligations of tax authorities:
· To register taxpayers and keep all related data
· To inform taxpayers of the effective taxes, provide them with
established accounting forms and explain the procedure of their
processing, as well as the procedure of tax calculation and payment
· To refund or offset excessively paid taxes and penalties according to
the procedure set by the Tax Code.
Tax authorities and their officials bear responsibility for:
· damage inflicted on the taxpayer in the course of unlawful actions
(decisions) or inactions
· non-fulfillment or improper fulfillment of their duties on securing
taxpayer’s rights
4. Tax offences
Responsibility for tax offences
· Each taxpayer is presumed innocent of committing a tax offence until
his guilt is proven in accordance with the procedure provided for by the
federal law and established by a legally effective court ruling.
· A taxpayer is not required to prove his innocence. The burden of
presenting evidence of the tax offence and proving taxpayers guilt in
committing it is born by the tax authorities. Ineradicable doubts as to
the guilt of the taxpayer in committing a tax offence are interpreted in
favor of the taxpayer.
· Taking liable for commitment of a tax offence:
o of an organization ? does not release its officials from
administrative, criminal or other responsibility if sufficient grounds
are present
o of a taxpayer ? does not release him from the obligation to pay taxes
and penalizing interest
Administrative liability
· Administrative liability in the field of taxes and charges may be
imposed on the following persons:
o taxpayer’s officials
o natural persons – taxpayers if the exposed action is not qualified as
a tax offence
· Administrative penalties for administrative offences in the field of
taxation are levied on the basis of a court ruling. Court proceedings
are initiated in accordance with a protocol on an administrative offence
drawn up by the tax body
Tax audit
Tax audits may cover no more than 3 calendar years of taxpayers
operation preceding the year of the audit. Tax authorities may undertake
separate audits of an organization’s branches and representations,
irrespective of any audit that may have previously been undertaken of
the organization itself.
4.1 Court Proceeding in a tax offence case
If upon a tax audit the tax body took a decision on holding the taxpayer
liable for committing the tax offence (in the form of a ruling to hold
the taxpayer liable), then:
· Before filing a claim to the court the tax body must offer the
taxpayer to pay the amount of tax due and sanctions on a voluntary basis
· In case the taxpayer refuses to pay the tax due and sanctions on a
voluntary basis, the tax body files a claim to the court on collecting
them
· A claim on collecting the tax due and sanctions from an organization
or an individual entrepreneur is filed to the arbitration court, or to
the court of general jurisdiction if such are to be collected from a
natural person.
· A claim may be filed within the term of six moths starting from the
date when the tax offence was discovered and the act of tax audit was
drawn up
Interpretation of unremovable doubts
In accordance with Article 3 of the Tax Code, all unremovable doubts,
contradictions and ambiguities of legislative acts relevant to taxes
and/or charges shall be interpreted in favor of taxpayers.
Conclusion
In the tax system, proceeding from the Federal device of Russia, the
rights and the responsibilities of corresponding levels of management
(Federal and territorial) in the tax law are differentiated.
Introduction of local taxes and tax collections as an addition to the
list of the operating Federal taxes, stipulated by the legislation, has
allowed to take into consideration various local needs and kinds of
incomes for local budgets. Nevertheless the Tax Law has quite a lot of
disadvantages, such as complexity, a plenty of various privileges etc.,
which do not stimulate economic growth.
Bibliography
1. Tax Code of the Russian Federation
http://www.garweb.ru/project/mns/en/law/garweb_law/10800200/10800200-001
.htm
2. Russia Tax Overview
http://www.kpmg.ru/russian/supl/library/taxlegal/Tax%20Overview.pdf
3. Conesco Press. Russian Taxation http://www.conseco.ru/eng/
4. Budgetary system of the Russian Federation
http://budgetrf.nsu.ru/budget/Publications/2002/Adoption/Federal/Npd/Bud
getlaws/Budget/194fz30122001/194fz30122001_short.htm
5. Wikipedia. The free encyclopedia. http://en.wikipedia.org
6. Финансовое право. Учебник для вузов. Л.Г. Вострикова. М. Изд.
«Юстицинформ» 2005г.
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