The new levy

The Association of Retail Companies (AKORT), which unites the largest retail chains of the country, requested the President Vladimir Putin to veto the draft law on municipal levies on commerce. The State Duma has adopted the respective draft law in the second reading today. The document enables implementation of levies on commercial objects. The chapter “Commercial Levy” may be included in the Tax Code for that purpose.

Only federal cities – Moscow, Saint Petersburg and Sebastopol – will be able to exact the new levy at the first stage. Should the document be adopted, said regions will gain the respective right as early as July 1^st of 2015.

Such was the initiative moved in early November by Andrey Makarov, Head of the State Duma Budget and Taxes Committee. At first, he suggested taxing 22 types of commerce, including catering, hotel business and automobile transportation. However, the final decision dealt only with the levies on retail commerce.

Vladimir Putin explained that the idea to impose municipal levies originated in the Moscow City Government due to the fact that large retail chains in the capital are lax in their taxes.

«Do you know how much the large retail chains paid in their taxes last year? <…> I’ll try to err on the safe side – not more than a couple million roubles. That is, nothing. Can this be allowed?», — stressed the President.

Meanwhile, the retail chains themselves insist that their tax payments are much larger. For example, X5 Retail Group paid 108 million dollars in income taxes last year. However, X5’s parent company is registered in the Netherlands.

Maxim Rovinskiy, Head of the Tax and Customs Law Practice of the Law Firm "YUST", points out: “The assets that originate income and the center of tax payments may be located in different regions. Retail commerce as well as holdings in other sectors employ such practice fairly frequently”.

Diksi retail chain, according to its accountability, paid over 1 billion roubles in income taxes last year. M’Video’s income tax payments amounted to 1,1 billion roubles. However, said amounts are distributed between the budgets of different levels and regions.

It is expected that the rate of the levy for stationary retail chain with the commercial area of over 50 sq. m. will not exceed the estimated amount of the tax on the basis of the retail commerce patent divided by fifty. The rate for retail markets cannot exceed 550 roubles per 1 sq. m. of the market’s area. Besides, the rate is subject to annual indexation utilizing a deflating coefficient. The levy will not be paid in advance: it is to be paid within 25 days of the end of each quarter.

The main objective of the announced levies is to increase the revenues of the regional budgets, which have been suffering deficits lately.