Tax burden and tax behaviour of branches of the Russian economy: part I, taxation in the Russian mining and metals sector

Abstract

Der vorliegende Beitrag untersucht das Steuersystem in Russland unter besonderer Berücksichtigung des Metall- und Bergbausektors (MBS). Die beiden Subsektoren haben häufig unterschiedliche Interessen und Schwierigkeiten, beklagen sich aber darüber, dass sie einer enorm hohen Steuerbelastung ausgesetzt sind, wobei der Bergbausektor besonders belastet wird. Diese hohe Steuerlast wird sowohl im nationalen als auch im internationalen Vergleich beklagt. Der erste Teil des Beitrages beschäftigt sich mit der relativen Besteuerung des MBS in den neunziger Jahren, unter besonderer Berücksichtigung der Umsatzsteuer, der Exportauflagen und der Ressourcensteuer. Darüber hinaus wird der Frage nachgegangen, ob der MBS als Teil einer allgemeinen Ausbeutung des Ressourcensektors steuerlich benachteiligt ist. Der zweite Teil des Papiers beleuchtet die Bemühungen um die Steuerreform, seit der Amtszeit Putins. Da viele der Reformen, die den MBS betreffen, noch nicht verabschiedet wurden, kann in diesem Kontext noch keine abschließende Bewertung vorgenommen werden. (ICDÜbers)

"The mining and metals (M&M) sector has with regard to tax, as indeed with respect to other aspects of its existence, a dual character, being made up of miners and metal producers, usually in the guise of juridically independent enterprises. The two sub-sectors often have different interests and difficulties. Both claim to be harshly treated by the taxation system, with it being said that the M&M sector bears a tax burden double that of the economy as a whole, with the miners' burden being double that of the metal producers. Further, it is claimed, an enterprise in the Russian M&M sector bears a tax burden double that of the typical Western M&M firm. The miners claim to suffer from liability to a range of particular taxes related to their resource exploitation activities as well as heavy liability to assets tax. The difficulties claimed by the metal producers are based on their VAT liability at each stage of a multi-stage production process; they also find themselves subject to the sudden imposition of export duties. The claimed difficulties of the M&M sector can be seen in the context of the general discussion of whether the resource sector is the milk cow or wolf of the Russian economy. That discussion is generally focused on the oil and gas sector, but the complaints of the M&M sector of an unfair tax burden, on the one hand, and accusations of massive tax evasion and capital flight against the sector, on the other, suggest that it is not an irrelevant issue here. The main tasks, therefore, in the first part of this paper, dealing with taxation in the M&M sector in the 1990s, is to examine relative tax rates in the two branches of the sector; the specific issues of the VAT and export duty liabilities of metal producers and the resource taxes faced by the miners; the tax evasion issue among metal producers, something generally although not always related to their export activities; and finally whether or not the M&M sector is being exploited through the tax system as part of a general exploitation of the resource sector. These questions will necessarily be approached with a degree of vagueness, given the paucity, inconsistency and uncertain reliability of the data. The second part of the paper will deal with efforts at tax reform since Putin came to the presidency, including an account of lobbying by the M&M sector within the tax reform process. This part of the paper will have to be open-ended, since some of the most important changes for the M&M sector had not been implemented or taken effect at the time this paper was written." (extract)