We need a new legislative base which would respond
to the development of the process of the formation of full-fledged
market economy in order Tajikistan advanced quicker to it.
one should enforce alterations and addenda into some laws
of the country; beforehand the latters conformed with the
spirit of the transitional period, but now due to the changed
situation they require improvement. In particular, Tax and
Customs codes need reconsideration. Today practice shows
that the provisions of the codes in question being not in
compliance with the shaped economic situation bar the development
of business, especially small and middle sized ones; the
agrarian sector is unable to come out of crisis, home investments
are not attracted. The reality is to the following effect:
entrepreneurs, bodies corporate, subjects of economic activity
try to conceal a part of their income. Shady economics is
acquiring larger and larger scales. Subsequently, the state
does not obtain revenues in the term of taxes in full measure.
There is one more important factor - an outward one. Foreign
investors don't hurry to deposit resources into the economy
of the republic. Frequently business doesn't move beyond
protocols. Investors are repelled by the imperfection of
the legislation in the domain of entrepreneurship. It is
a large amount of taxes and customs dues, practical non-availability
of privileges for an import of technology equipment for
technical reconstruction of enterprises, non-regulated leasing
which may promote a development of this financial loan,
especially in the agrarian sector. It stands to reason that
all this impedes an influx of foreign investments.
In this connection the president of the country Emomali
Rahmonov gave an instruction to the government of the country
on simplification and alteration of RT Tax code with taking
into account the interests of tax payers. There is formed
a working group engaged in a designing of a project concerned
with a new Tax Code of RT. The commission consists of representatives
of ministries and departments, international and non-governmental
organizations.
The experts of the National association of small and middle-sized
business prepared their suggestions on alterations and perfections
of the Tax Code. They were mapped out on the basis of the
sociologic research conducted in summer among businessmen.
Our correspondent had a talk on this theme with the leader
of the National Association in question Matluba Uljaboyeva
belonging to the group of detached experts.
- What kinds of taxes should be reconsidered in order
to simplify the mechanism of their actions, to Your mind?
- The National Association of small and middle-sized business
of RT multiple times dwelt on the issue at its sittings
and come to the unanimous conclusion: one ought to adopt
a new Tax Code; herewith, basic alterations should befall
mechanism of action and tariffs for surplus value tax, income
tax imposed on natural persons and profit tax. Apart from
these taxes one must enforce a number of alterations and
addenda into other clauses of RT TC.
- What alterations can You propose on SVT?
- According to clause 187, item N, of the functioning Tax
Code SVT privileges are envisaged only under the import
of production technology equipment and its completing details
for a formation and replenishment of a charter fund or technical
reconstruction of production. The privileges in question
can't be applied to dekhan farms and other agricultural
outfits having no adequate charter fund and financial availabilities
for a complete technical reconstruction. At first sight
financial leasing can be a way out. However, the functioning
RT Law "On Financial Leasing", Tax and Customs
Codes envisage no privileges either for lease-givers or
lease-holders. The practice shows that under financial leasing
investors are not interested in payments when a subject
of leasing is imported and they are not going to pay taxes
for the incomes originating from this activity. Thereupon,
enterprises have to carry out payments at their own expense.
We propose to cancel import SVT on leasing and agricultural
technique, technical equipment assigned for processing of
agricultural produce and a number of other alterations as
well. It is worth mentioning that under the current rise
of prices for basic power vehicles and auxiliary stuffs
a gross revenue of many households-farms and recently launched
ventures exceeds index 12.000 reflecting a minimum of tax
unimposed incomes, i.e. 24000 somoni. In these cases tax
bodies require their registration as SVT payers without
waiting for 12 full calendar months to elapse. In our opinion,
it would be reasonable to be guided not with tax unimposed
minimum of incomes when qualifying this threshold, but by
a minimal salary, it will enable small and middle-sized
outfits to pass into SVT payers whose taxes are computed
proceeding from the amount of 60 thousand somoni (12000x5
somoni).
- As we know, in Russia a unified income tax from natural
persons makes up 13%. Wouldn't it be expedient for us to
pass to a unified income tax as well?
- The functioning order of qualifying a tax and stopping
it from wages in reference to natural persons, residents
and non-residents, established in Section IV of RT Tax Code
is not stimulating for payers. Increase in salary entails
increase in tax tariff. Hereby there rise social payments
resulting in the growth of price cost of produced commodities,
jobs and services enjoying no demands owing to their expensiveness.
If social payments are carried out being aimed at fund with
further retrieval in the terms of pensions and allowances
they should not be imposed with taxes, in our opinion. Social
payments tariffs must be brought in conformity with a minimal
salary.
At present many experts move a proposal to enforce a unified
income tax rate. At first sight it may legalize completely
the incomes of population. However, the functioning provision
of the order concerned with qualifying an income tax embraces
the bulk of population whose 10% is enforced this part of
population will find themselves in a worsened situation.
Under qualification of tax rates it would be more correct
to be guided with a minimal salary, but not with non-imposed
income minimum with income tax".
The practice shows that the resources of private persons
are often used when attracting additional investments both
from abroad and inside the republic. Under the functioning
order of imposition in reference to natural persons, residents
and non-residents, on the principle of deduction from a
source of payment people have no stake in depositing money
into any enterprises and they will try to evade legalization
of incomes. Under non-deduction of taxes in the place of
being paid tax-payers - residents must pay impositions taking
into account all the fines. This situation may make reconsider
many investitive projects and contracts, forced lowering
of incomes, volumes of jobs and services that leads finally
to reduction of investments in RT. Attraction of foreign
investments to our republic is possible only in avoidance
of double taxation of incomes and annulment of taxes stipulated
in clause 149 of RT TC.
- What alterations do you propose in reference to profit
tax imposed upon bodies corporate?
- As it is known, profit tax qualifies the result of the
activity for the year reported. Its object is a profit presenting
a positive difference between a gross revenue and deductions
(expenditures) stipulated by chapter 19 of the Tax Code.
Under detailed examination of all allowed deductions on
the chapter in question one can do the inference that the
Tax Code affords really to include into an outlay part all
the expenses beset with such revenue. Paradoxical as it
may seem, but tax bodies on the spots when qualifying tax
imposed profit are guided with the "Provision on Calculation
of Cost Price of Produce (Jobs, Services) at Enterprises
and Organizations of Tajikistan Republic". This Provision
is ratified by edict 210 of RT government, from May 12,
1999. It adduces multiple limitations in reference to outlays
that is incompatible with the functioning Tax code of RT.
All normative instruments contradicting TC must be abolished.
The Tax code doesn't disclose completely such concepts as
"hospitality expenditures", "activity of
diverting character". Besides, deductions from tax
imposed profit for charity in the size of 2% fixed in clause
133 don't stimulate people for carrying out such payments.
We forward a motion to increase their amount up to 5%.
The most uncertain clause of RT Tax code from our point
of view is that one numbered 163 which qualifies the order
of material goods registration. Pursuant to item 2 of the
clause in question the cost of material goods reserves for
the beginning of the period reported is added to revenue
and the cost shaped for the end of the period is deduced
from revenue. The following picture is formed: if an outfit
stored raw stuffs and materials for next year at the end
of the current year having gained factual profit in the
year reported and outlined respective deductions for a development
of production and stimulation of workers then under non-availability
of reserves for the beginning of the year the result is
non-profitable, but is doesn't respond to reality. It is
worth mentioning that the loss shaped under such conditions
is transferred to the results of the latter. In order our
reader understood us better we shall deliver an example
with conventional "Bahor" Assoc. Ltd:
1. Residue of material reserves for the beginning
of the year reported - 100000 somoni;
2. Total yearly revenue (without SVT) - 40000 somoni;
3. Aggregate deductions - 32000 somoni;
4. Residue for the end of the year reported - 75000;
5. Tax-imposed profit (1+2-3-4) 33000 somoni;
6. Profit tax (33000x30%) - 9900000 somoni;
7. Profit remaining at out's disposal - 23 somoni.
The example illustrates that "Bahor" could utilize
only a part of material reserves for the year reported having
gained the revenue to the amount of 40 thousand somoni.
The outlays which ensured this revenue had made up 32 thousand.
Factual profit should make up 8 thousand somoni, the tax
computed proceeding from this sum will average 2400 somoni
(30% from 8000). With taking into consideration clause 163
tax-imposed profit amounts up to 33000 somoni and profit
tax will constitute 9900 somoni. It means that the residue
of material reserves is included into tax-imposed revenue
and it is liable to imposition next year as well, insomuch
as it gets into circulation. Thus, the profit remaining
at "Bahor" disposal has accrued up to 23100 somoni.
Actual profit which may be used by "Bahor" for
the development of the outfit for the year reported makes
up only 5600 somoni (8000-2400). Thereof, we suggest that
clause 163 of TC should be abrogated.
Apart from it, the functioning order of adding accounts
and qualification of profit tax doesn't stimulate tax payers
for further deposits into production, purchases of shares,
investments into projects; it means there is no impetus
for attracting home reserves of either citizens or bodies
corporate into the economy of the country. In this connection
we propose to enforce the following alterations concerned
with profit tax. To complement clause 129 of the Tax code
with the following items:
f) credits and loans obtained from crediting and financial
organizations, international funds and banks;
g) resources obtained in the kind of grants for implementation
of a certain program or project.
To complement section VI with clause 135 "Deductions
in Reference to Resources for Acquisition of Shares of Privatized
Enterprises". It should be to the following effect:
"Tax-payers have a right for deductions in regard to
resources spent for acquisition of shares of privatized
manufacturing enterprises and also for 50% from the profit
obtained at the cost of long-term financing in the spheres
of every day services, construction, industry and agriculture".
- What other alterations and addenda do You suggest of
being enforced into RT TC?
- In order to maintain and stimulate the entrepreneurs of
small and middle-sized outfits it is necessary to proceed
from 12000 minimal wages, but not from a minimum of tax
unimposed income when qualifying tax imposed turnover by
the tax paid by the subjects of small business on a simplified
system. It will enable to equalize turnovers with price
raise and inflation. It is worth mentioning that in RT Tax
code, section XV, one of five elements of the tax in question
is absent, i.e. there are no benefits. We suggest the following
benefits on tax be introduced: the following subjects are
exempt from taxes paid by small business outfits on a simplified
system:
a) religious, charitable, budget, interstate and
intergovernmental organizations (incomes obtained from entrepreneurship
being liable to taxation);
b) gratuitous transfers, grants, membership fees
and donations obtained by organizations;
c) dividends received from enterprises and organizations;
d) outfits owned by the societies of invalids, the
blind and the deaf-mute people;
e) credits and loans obtained from crediting and
financial organizations, internatioal funds and banks.
The grand problem of entrepreneurs lies in frequent inspections
on the part of the bodies of various levels; that interferes
with their work, moreover, presumption of innocence is not
observed. Thereof, we move a proposal to complement clause
29 of RT TC with the following passage: "Counter-inspections
on taxation issues and proper registrations should be conducted
by tax bodies only provided they are authorized for it in
written form by a leader of the tax department under RT
Ministry of state collections and revenues; clause 91 should
contain a passage being to the following effect: "The
brunt of the proof concerned with properly qualified tax
rests with the tax body".
We propose also a clear-cut consecutiveness in regard to
redemption of arrears owed to the budget on the part of
tax-payers and suggest that clause 62 be formulated in the
following recension: "Redemption of arrears owed to
the budget is carried out in the following scheme:
a) qualified sums of taxes;
b) qualified fines;
c) qualified percent."
Apart from all mentioned above, we moved some more alterations
and addenda to be enforced into the Tax code and submitted
them to the working group under RT government. We hope they
will be adopted.
