Combined Reports


Russia plans to raise its value-added tax rate from 20 percent to 21 percent from next January, Interfax quoted Finance Minister Vladimir Panskov as saying.


Also, President Boris Yeltsin on Friday signed a decree instructing his government to improve the tax system, targeting improved collection, a streamlining of existing levies and a revision of VAT to stimulate investment, Interfax said.


Interfax gave no details Saturday of why VAT, which is easier to collect and harder to evade than other taxes because it is based on consumption, was being increased, or of how much revenue Russia hoped to raise through the measure.


Russia's 1995 budget says VAT will bring in almost 50 trillion rubles out of a total anticipated tax revenue of 128 trillion rubles.


Accountants greeted news of Yeltsin's decree with guarded optimism.


"If it's a decree stimulating legislative activity, that's fine. That would be consistent with the decrees of the last year," said Stewart Naunton, a tax partner with Coopers and Lybrand.


Yeltsin asked in the decree that existing tax legislation be amended to make VAT variable to stimulate industrial production and investments in it, presidential economics adviser Alexander Livshits told Interfax.


Other changes include a procedure for evaluating foreign trade deals in order to regulate the taxation of barter contracts and tougher penalties for tax evasion. The decree also declares an October 1993 tax amnesty null and void, Livshits was quoted as saying.


While acknowledging that an improved tax system would be a "welcome addition," Arthur Andersen tax manager Scott Antell said Yeltsin's move was not a complete answer.


"You can pass all the decrees you want, but without policy coordination and without the government following its own laws you could create potentially new areas of contradiction," Antell said. ()