Collecting corporate taxes in high tax countries has become a difficult task. In contrast to local firms, multinational corporations can shift profits to lightly taxed foreign locations, leading to substantial losses in tax revenue. One important channel to reduce the global tax liability is the transfer pricing of intracompany trade.
Consolidated group of taxpayers (CGT) is voluntary union of profit tax payers aiming to compute and pay profit tax based on aggregate financial result. That is the purpose of tax consolidation is the redistribution of revenues from the tax on profit in the region where this profit is created, not in the subject, where is the head company. However, without effective tax control over all members of the CGT have an easy opportunity to create false business losses in the region where it is better not to pay the tax. And so it happened that during the development of the Federal Law of November 16, 2011, N 321-FL no clear prediction of negative consequences of its adoption for revenues to consolidated budgets of subjects of the Russian Federation. Using the new rules in 2013 CGT made the largest contribution to the reduction of the tax on profit is the main source of regional incomes.
Changes in budget and tax legislation has traditionally become a great problem for the regions of the Russian Federation. For the last 6 years has increased the share to the GDP of Customs Duties, The Mineral Resource Recovery Tax, Excise Taxes, Personal Income Tax and Social Insurance Contributions on a background of sharp reduction of revenues from VAT and Tax on Organisations’ Profit.
When creating a CGT function of the tax administrator passed to taxpayers. Negative trends became obvious already in the first year of consolidation. In 2012, the revenues from the Tax on Organisations’ Profit of the largest oil and gas companies (including OJSC «Rosneft», OJSC «Surgutneftegas», OJSC «Transneft», OJSC «Oil company «LUKOIL») and other participants of CGT, according to the Finance Committee, has decreased by approximately 30 billion rubles. Strange statistics of declining revenues in 2013 from the Tax on Organisations’ Profit by the fault of the CGT is different agencies: the Federal Tax Service of Russia and Ministry of Finance of the Russian Federation - 16 billion rubles; the Accounts Chamber of the Russian Federation - 94.5 billion rubles (i.e. one third of the total reduction). This difference is explained by the fact that the losses of regional budgets submitted to the responsible taxpayers in the framework of a CGT. Real data cannot be double-checked and confirmed by the tax authorities.
In 2013, the inflow of the Tax on Organisations’ Profit decreased in 21 regions 63.8 billion rubles and has increased in 62 regions by 47.4 billion rubles. But why such a difference, if ordinary taxpayers do not show the losses, but by the CGT such incomes fall? Should completely exclude the possibility of the leadership of the CGT to manipulate the profit, including the moratorium not only to create new CGT, including the new members, mathematically determine the limit for the allocation of loss in the consolidated database for each of the 16 existing CGT, including: OJSC «Sberbank»; OJSC «Surgutneftegas»; Joint Stock Company «Russian Railways»; OJSC «Transneft»; OJSC «Gazprom»; JSC «NokianTayers»; OJSC «LUKOIL»; OJSC «Rosneft»; OJSC «NOVATEK»; OJSC «Severstal»; OJSC «Mechel», OJSC «MegaFon-International»; OJSC «RTComm.RU»; OJSC «Svyazinvest»; OJSC «Gazpromneft»; OJSC «MMC «Norilsk Nickel».
Before formation of a CGT filling of revenue base consolidated budgets of subjects of the Russian Federation is largely dependent on the activities of the largest taxpayers and organizations included in vertically integrated companies.
Analysis of the Accounts Chamber of the Russian Federation from 2010 through selective information of subjects of the Russian Federation, showed that the share of receipts of the Tax on Organisations’ Profit in the consolidated budget from the branches of such companies in the amount of the tax amounted in 2010 in the Astrakhan region almost 70%. For 2013 consolidated group of taxpayers OJSC «Gazprom» and OJSC «LUKOIL» has transferred just 2.9 billion of income - whereas in the previous year - 4.5 billion rubles. In connection with falling incomes regions have to take out commercial loans.
In 2013, the budget of the Samara region has not received the planned volume of taxes. It is reported to portal Provincial Duma, the region failed to receive revenues from the tax on profit. The budget received only 39.5 billion rubles, which is less than the planned 14%.
The most affected regions, in which revenues from the influence of the CGT has decreased more than on 1 billion rbl.: Moscow, St. Petersburg, Krasnoyarsk and Perm Krai, Belgorod, Tyumen, Volgograd, Nizhny Novgorod and Samara region, Republic of Karelia and Khanty-Mansiisk Autonomous district - Yugra.
Section of new Main directions of tax policy «Ensuring sustainability of budgets of subjects» does not contain any proposal aimed at ensuring sustainable development of regions, since the planned transfer of the right to grant tax privileges, in the absence of the tax base is not maintaining economic growth.
Priorities for solving the problem are:
- audit of all participants of the CGT in the affected regions;
- change the order of collection and publication of static tax reporting on revenue from each CGT (statistic forms 5-CGT, 5-MCGT need clear deciphering the graph «sum of the tax to reduce» so that was recognized by participants decreased tax base);
- a moratorium on inclusion and exclusion of a participant from the CGT in order to avoid the possibility of artificial bring unprofitable participants of the CGT to bankruptcy; mathematical definition of the threshold amount of carry forward losses for each of the 16 CGT.