As corporate tax rates have tumbled, value-added tax rates have tended to climb, as countries shift more of their tax burdens from income to indirect taxation. In the latest example, Russian President Vladimir Putin has signed into law legislation to hike Russia’s VAT rate to 20 percent from January 1, 2019.
Furthermore, VAT is now a very familiar tax globally, with around 160 jurisdictions having adopted some form of this tax. India is probably one of the more notable recent entrants into the VAT and GST club. The United States is certainly the most visible absentee, given that state sales taxes do not operate in the same way as a VAT. And, a few unlikely legislative proposals aside, the US has shown little inclination in joining.
However, just as there are some anomalies in corporate tax trends, with a few jurisdictions having … Read More »
Recent tax developments in Azerbaijan are suggestive of a country with a modern outlook, keen to encourage local entrepreneurs to grow their businesses and welcome foreign investors with open arms. Taxes are low – corporate tax stands at 20 percent and the top individual tax rate has fallen to 25 percent – and lately tax reforms have focused on making life easier for companies with the introduction of more electronic services, the creation of a tax ombudsman and other measures designed to streamline tax administration. Tax holidays have also been granted to companies engaged in various non-oil related activities like information technology. According to a senior tax official, Azerbaijan is now working to harmonize its VAT regime with that of the EU. Some might see this is a retrograde step given the complexities of EU VAT law. But it is … Read More »
It used to be known as the bread basket of the Soviet Union. Now Ukraine is more like the economic basket case of Europe. What’s happening in the east of Ukraine right now is truly tragic. But leaving aside that ethnic conflict, the other tragedy is that things ought to have turned out so much better. When Ukraine gained independence from the Soviet Union, it was generating one-quarter of the USSR’s agricultural output while its diversified industrial sector was one of the bloc’s main workshops. But instead of building on this base, successive governments seem to have squandered Ukraine’s economic potential to the point where it has probably gone backwards rather than forwards. A huge problem is that corruption is rife and pervades the public and private sector at all levels. Surviving as a business very much depends on who … Read More »
It’s easy to have a go at Russia this week, and almost everyone is doing it, between its cack-handed attempts to influence Ukrainian affairs and the giant, gilded hostage to fortune represented by the Sochi games which are close to turning Vladimir Putin into a laughing stock. So here is a rare bouquet for the Economic Development Ministry, which has sensibly proposed to reduce the rate of tax imposed on people who rent out their apartments. Well, perhaps it is sensible, and perhaps not. It sounds good, but if as they say 95 percent of private landlords are evading the 13 percent income tax that should apply right now, why would a reduction to 12 percent or 11 percent make any difference? Even if the rate was reduced to 5 percent, no-one will pay it, because paying it involves declaring … Read More »