In several previous articles, considering the problems of our tax system, among others, I pointed to such an acute problem as the high level of tax burden on business.
In particular, I cited data on the tax burden in the most rapidly developing countries of Asia in recent years in comparison with Uzbekistan.
The tax burden in our country is 1.5-2 times higher. How can our entrepreneurs be competitive in such conditions? How can we attract investments into our economy with such taxes?
During numerous discussions from officials and not only from them, I received several arguments: "Why do you only compare with the countries of Asia? For example, in some countries in Western Europe (Holland, Sweden, France), the tax burden is higher than ours! "
To object to such an argument is very simple. The level of the tax burden depends, among other things, on the level of well-being, on the level of GDP per capita: the richer the country, the business and population pay more taxes, not only in absolute but also in relative terms.
This does not mean that in the rich countries the tax burden is automatically higher than in the poor. There are rich countries where the tax burden is relatively low (for example, the US and Japan). The point is that as the level of welfare increases, the overall tax burden increases.
And then, developed countries do not need to catch up with anyone. This we need to develop several times faster in order to reach the living standards of rich countries in a few decades. We can not afford a high tax burden simply.
Therefore, it is necessary to compare with "similar ones", with countries where the standard of living is comparable with the level of life in Uzbekistan.
Proceeding from this, in another article I cited the World Bank experts' calculation of the tax burden in the framework of the generally established taxation system for the countries of the former USSR.
The standard of living here is more comparable with Uzbekistan (a comparison, at least, more correctly than with Holland and Sweden). In addition, the starting conditions after independence were very close: the same burden of social obligations, which put the burden on the budget, which opponents of reducing the tax burden like those of Uzbekistan like to refer to. We see a significant difference in the tax burden.
What's the answer? "These World Bank experts have messed up something. We have practically the same taxes as in the same Georgia or Estonia. And the average rate is not higher."
I am an economist, not an expert in the field of taxation. With a move to object to such arguments is difficult for me. So I decided to check the opponents' statement on specific examples.
But how can you compare the tax burden in different countries? The World Bank experts took a conditional enterprise, described its work and calculated how much it would pay taxes, based on the rules of the existing legislation. Opponents of this approach is not satisfied: "Too abstract, in practice, business does not pay so many taxes."
Good. Let's see how much they pay in practice. There are international companies that conduct business in several countries. For example, the company "Beeline", which I often buy and use sim-cards when visiting countries of the near abroad
(I have to travel a lot).
I managed to get data on the tax burden of Beeline's enterprises in seven countries of the former USSR, including Uzbekistan.
The tax burden was considered as the share of taxes and other mandatory payments in the company's operating income. In fact, the data are not very good from the point of view of comparing the overall tax burden, since they do not include the payment of VAT (this tax is paid, not by the company, but by the buyer) and some taxes on labor (which, although in practice this burden falls on the company). But for these taxes we'll talk below separately. In the meantime, we will use the available data, especially since they are comparable: one and the same type of business, the same base of comparison (operating income), VAT and labor taxes are not taken into account equally everywhere.
In Uzbekistan, the tax burden on Beeline is twice as large as in Ukraine, about three times as much as in Georgia, Kyrgyzstan and Kazakhstan, more than three times as much as in Armenia and almost six times as much as in Russia. Very similar to the "abstract" calculations of World Bank experts, is not it?
Further we will try to understand why such a huge gap arises, especially since taxes and tax rates are supposedly "almost the same as in other countries."
If so, why is the result completely different?
Half of the 40% of operating income of the "Beeline", which in Uzbekistan is spent on taxes, is due to taxes on profits. And in comparison with other countries, the tax burden is incomparably higher.
"Slander," - immediately opponents will object. - We have the lowest income tax rate in the world - 7.5%. How can the tax burden in Georgia be 0.3% of operating income if the tax rate is 15%, and in Russia 1.3% at a rate of 20%? "
That's a good reason to understand how at "the lowest tax rate in the world" we pay this tax much more than others.
First, the hurray-patriots of our ultra-low profit tax forget to pay attention to "very little" - on the taxable base, that is, with what tax is calculated. Entrepreneurs of other countries have much more opportunities to deduct various kinds of expenses from the taxable base of the profit tax.
So, according to the current legislation of the Republic of Uzbekistan, hospitality expenses are deductible only within 1% of the proceeds. Investments expenses are most often deducted indirectly (how much they spent during the year, so much and subtracted), and through depreciation deductions (that is, the deduction is extended for many years). Not deducted from the taxable base of charitable assistance, material assistance to employees (with the exception of maternity for vacation and related to labor injury or death), the cost of conducting an audit more than once a year, the cost of medical insurance for employees.
The list of deductible expenses is closed, and the non-deductible is open, that is, all the expenses of the period necessary for the work of the enterprise, not listed in the list of deductible expenses, automatically become unreadable and do not reduce the taxable base. So the "taxable profit" in Uzbekistan and somewhere in Russia or Georgia is (as they say in Odessa) two big differences. De facto entrepreneurs pay this tax not only with profit, but also with a portion of the costs that can not be deducted from the taxable base.
Secondly, in some industries (including in the mobile communications sector) in Uzbekistan, in addition to an ultra-low 7.5 percent profit tax, an ultra-high 50 percent (!) Tax on super-profits is used.
Here you have the lowest tax in the world ...
In addition, it must be borne in mind that, in addition to the corporate income tax, businesses also have to pay other taxes on profits:
- a tax on the improvement and development of social infrastructure (8%, its base is profit before taxation minus income tax), which is not combined with the tax on profits in one tax only to ensure that we continue to be proud of our "lowest in the world »With profit tax;
- tax on dividends (10%), which may not be accepted as a deduction from the founder, if the founder is registered in another country and there is no agreement with the country on avoiding double taxation.
Now it is clear how at "the lowest tax in the world" you have to pay more than others.
Fee for using the subscriber number
This is the second-largest item of Beeline's tax expenses in Uzbekistan (more than 12% of operating income to date) after income tax. Cellular operators since 2012 pay for each operating subscriber number. Since July 1 of this year, the amount of payment has been raised to 2750 soums per room per month. And in none of the other countries we are considering, there are no such payments.
The presence of this payment is the reason that in Uzbekistan (unlike in other countries) there are no tariffs without a subscription fee.
The amount of payment for the use of the subscriber number is constantly growing (for example, in 2016 it was 1500 soums). And now the operators (I'm afraid, not without reason) are afraid that from January 1 there will be another increase.
Taxes from proceeds
In Uzbekistan, enterprises that are payers of generally established taxes pay mandatory revenues to the Republican Road Fund (1.4% of revenue), to the off-budget Pension Fund (1.6% of revenue), to the non-budgetary Fund for the reconstruction of educational institutions (0.5% % of revenue). Total - 3.5%.
I have already written many times that taxes on proceeds are the main killers of the social division of labor in Uzbekistan, which, along with the huge gap in the tax burden between simplified and generally established taxation regimes, simply do not leave our economy any chance to create competitive products with high added value.
Taxes on revenue are the third-largest (3.5% of operating income) of the "Beeline" tax expense in Uzbekistan (excluding taxes on labor and VAT, which, as I have already noted, are not taken into account in the calculations we are considering).
Now about other taxes, the calculations of which did not fall into the above 40%.
Value added tax
Experts in the field of taxation say that the methods of calculating this tax are very complicated for us, not all the deductions provided in other countries can be done. For example, taxable turnover for the purposes of VAT in Uzbekistan is a gratuitous transfer of property to non-profit and government organizations. If you sold the product below the cost (and in the market often have to do so), then VAT will have to be paid not with revenue, but with cost, that is, the tax is imposed on unearned revenues.
Yes, and the tax rate (20%) can not be called the smallest in the world in the world. For example, in Russia and Georgia it is 18%, in Kazakhstan and Kyrgyzstan - 12%. That is, and for this tax we pay knowingly more.
In addition, the tax burden on VAT in Uzbekistan is increasing due to frequent disruptions in the VAT payment chain. I also wrote a lot about this earlier. The problem is that we have very few payers of this tax, as enterprises are saved from the exorbitant burden of the generally established tax regime (where VAT is to be paid), moving to a simplified regime (where VAT is not required).
Therefore, when buying resources from a VAT non-payer (and there are an overwhelming majority among such enterprises), the VAT payer does not have the opportunity to offset the previously paid VAT. As a result, this tax turns from a value-added tax to a sales tax. Maybe this problem is not very relevant for cellular operators that do not use raw materials and materials. But for production companies operating in a generally established mode, especially those engaged in material-intensive production, it is very acute.
Taxes on labour
In a recent article, Mansur Tangishov gave a comparison of the tax burden on labor in Uzbekistan, Kazakhstan, Russia and Georgia. And we are again "ahead of the whole planet."
Thus, if we also take into account the tax burden on VAT and labor taxes, the gap between Uzbekistan and the countries we are considering will increase even more.
For self-reliance, opponents can cite data on how much taxes are paid in France or Sweden. Of course, more than ours. But they should first compare the level of income of our countries. And ask ourselves why Uzbekistan has such a high level of external labor migration and why our enterprises can not provide jobs for the able-bodied population.
Perhaps, including because our tax burden is still significantly higher than in other countries with comparable levels of income and what should be if we want to create an efficient economy?
What to do?
I wrote about it many times - to carry out tax reform, which will include:
1. Radical reform of the generally established taxation system in order to ensure a radical reduction in the tax burden and encourage the transfer of most of the small enterprises to the generally established taxation regime, including:
- cancellation of taxes on proceeds under the general established regime;
- a significant reduction in the number of taxes (including exotic ones such as payment for the use of a subscriber number);
- reduction of tax rates;
- introduction of the principles of 100% depreciation and VAT refunds at investment costs.
2. Stimulation of the transition to VAT of enterprises operating under the simplified taxation regime. Either the waiver of VAT in favor of the tax from retail sales (as in Japan and the US).
3. Radical reduction of taxes on labor, transition to a "flat" scale when paying income tax.
4. Refusal from individual and sectoral tax incentives. In the future - the rejection of many taxation regimes.
5. Simplification of the system of tax administration and tax reporting.