Corporate self-taxation – Newspaper Kommersant No. 25 (7470) dated 10.02.2023

The government continues negotiations with large companies and their shareholders on voluntary contributions to the budget as part of the 2021-2022 windfall profits. The RSPP insists that voluntary payments are unacceptable, and believes that it is better to increase income tax for everyone. The position of the White House on the collection, partly similar to that discussed in all major jurisdictions of the “tax on casual income”, windfall tax, has not changed. We are talking about voluntary, gratuitous and legally optional transfers, what is happening will not affect medium and small companies and most industries, the transfers will be one-time and will not change taxes, only large structures with large excess profits are asked to pay extra.

The exchange of views between the RSPP and the government on a voluntary contribution from large companies in 2023 from the excess profits of 2022 to the budget system did not remove the issue. Recall that on February 8, First Deputy Prime Minister Andrei Belousov (see Kommersant dated February 8) announced the idea of ​​​​such a one-time payment and discussions with the Russian Union of Industrialists and Entrepreneurs (RSPP) about it – RSPP, as an alternative, proposed a temporary increase in income tax by 0.5%, the Ministry of Finance rejected this idea. Yesterday, the head of the RSPP, Alexander Shokhin, who had previously refused to comment on the situation, gave news agencies a detailed commentary on the situation, Kommersant’s sources in the government, in turn, confirmed that the White House’s position on one of the most non-standard moments in the economic policy of the Russian Federation has not changed. RSPP and the White House confirmed the continuation of consultations on this topic.

The discussion of February 2023 has an unusual look: it is important and significant that the White House is discussing the construction with business and is not going to make the Russian incomplete analogue of the windfall tax a tax, believing that the regulatory tax on excess income, which, according to Kommersant from sources in the government, was considered – “we know what a standard excess income payment might look like, and business would like it much less” – not yet on the table. It is unlikely that this idea is not put forward just because the description of the basis for the tax would be very complicated (recall that in the EU, the USA, and Norway, such taxes will de facto be “negotiated” following the results of closed but tough consultations with them). Not changing the tax mandate until 2024 was a political commitment, and introducing a permanent “excess income tax” into the Tax Code could lead to a general discussion about the tax burden.

Recall that in the summer of 2018 Andrey Belousov initiated a conflicting discussion about the unevenness of the tax burden in the industry, and the White House does not consider it a good time for such discussions.

But there is a big difference from the situation of previous years: for the first time, companies were offered the voluntariness of paying contributions from excess profits to the budget, in all other jurisdictions windfall tax is a tax, that is, a forced and unconditionally forceful, hard redistribution. In Russia, however, the problem of the budget deficit is proposed to be resolved amicably, without affecting most of the economy. This is an unusual step: although the possibilities of the White House, for many reasons, are now higher than usual, it was decided to negotiate with companies, and not to negotiate behind the scenes.

According to Kommersant, the discussions of the RSPP and the White House included data on the profitability of the largest companies for 2019-2021 and the profitability in large (13 largest according to OKVED codes with income above 100 billion rubles per year) industries for 2018-2019 and for 2021–2022, including taxes on corporate income as such and on dividend income. The sectoral concentration of income by these data was considered to be shown (and not only and not so much in the oil and gas sector, but mainly in the field of wholesale trade operations, chemistry, coal mining, part of cargo transportation and financial services), it was also found at the corporate level: companies with revenue were analyzed here. in 2019-2021 above 100 billion rubles. (these are 43 companies with revenue for the period of 23.3 trillion rubles), the majority (61%) of revenue comes from eight companies – in chemistry, non-ferrous and ferrous metallurgy, telecom, and energy. Profitability above 10% (net profit to revenue) is shown by 24 companies, the three leaders are from energy, chemical industry and non-ferrous metallurgy. The total profit of 43 companies in 2021 amounted to 3.1 trillion rubles, in 2019 it was 1.4 trillion rubles in the same group.

Thus, the calculations showed (according to Alexander Shokhin, consultations with the RSPP on the issue were held for “two months”, that is, from the end of 2022) that, in fact, tax exemptions cannot solve the problem: the excess profits of 2019-2022 are very heterogeneous. But in any case, the proposal of the RSPP to increase the income tax rate by 0.5% is the idea of ​​“smearing” the excess profit tax throughout the economy, reducing payments from the most profitable companies and industries at the expense of medium and small ones. The common problem is the budget deficit in 2023, an additional task is not to worsen the situation in the economy in general and in small and medium-sized businesses in particular. To do this, in the logic of the White House, it is fair to withdraw the occasional excess income of the few, without touching the earned income of the many.

This is probably why the form of voluntary contribution rather than taxes was chosen. By itself, it is generally constituted in the Budget Code (Article 35) – both individuals and legal entities have the right to replenish the budget voluntarily and free of charge, but basically this provision was necessary to introduce the institution of “self-taxation” into the legislation at the local government level . The Budget Code recognizes targeted and initiative voluntary payments in the field of road construction.

From the words of Alexander Shokhin it follows that it is the voluntary nature of contributions that does not suit the RSPP (however, he clarified that there are different opinions on this matter, probably referring to the RSPP within himself): he explained that business would prefer a “normative” form of payments , and voluntary payments are best made to company shareholders. In this case, the issue becomes purely political – such voluntary payments by individuals make them obviously vulnerable to external sanctions, while corporate payments of this kind will not change the situation with sectoral / sectoral sanctions. Other options proposed by the RSPP, however, do not look better from this point of view: it is the purchase by the RSPP companies of long-term OFZs or their commitment to invest in the regions.

But, according to Kommersant, the government insists (to the extent that one can insist on a voluntary payment at all) precisely on the proposed format of voluntary participation, and the issue in this sense is indeed becoming more and more political. There is no doubt that additional excess profits will in any case be withdrawn in one way or another. At the same time, arguments will certainly come up in the discussion against leaving excess profits in the corporate sector de facto received by companies as a result of a change in the situation not only because of the COVID-19 pandemic, but also because of the Russian military operation in Ukraine: encouraging the “military” to By its very nature, corporate windfalls usually lead to corporate support and even provoking this kind of conflict.

Dmitry Butrin