Taxing times hit Moscow
Published: 27 October, 2009, 12:29
Edited: 28 October, 2009, 13:54
The tax office in Moscow is suddenly a little more popular than you'd expect. Business owners are queuing up to submit their papers after a change in tax law, ignoring the authorities' reassurances that there's no rush.
The new law states that owners of private businesses have to re-register their enterprises before the 1st of January at one specific Moscow tax office.
The entrepreneurs are in a rush, queuing long before the tax office’s opening time and standing in the street for hours to submit their papers. A spot at the front of the line is for sale, with some asking for over $100 for it.
Meanwhile, the tax office has issued reports that no fines or sanctions will be imposed on firms if they re-register after the 1st of January. But people, for some reason, do not trust the authorities on this.
Margarita, who is pregnant and who has been standing in the queue for hours under the rain, is one of these people:
“I have two reasons not to trust the authorities,” Margarita explained.
“The first is that my clients have already asked me about the new registration forms, so I can’t do business. And the second reason is that information changes from day to day,” she added.
According to the federal tax office, the “hysteria” has been provoked by the banks, who informed their clients that they would halt operations with their accounts if they didn’t get their firms re-registered by the 1st of January.
The banks are afraid that the federal tax office may prosecute them for dealing with firms who have not re-registered. However, the tax office insists that this is not true. So the whole queuing nightmare may just be stemming from a big misunderstanding.
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President Medvedev has stated in no uncertain terms that the Russian economy must diversify or die, He wants by 2020, 40% of the economy to be generated by non commodity based enterprises. At this time 80% is commodity driven, he has set a tuff target one that can only be achieved by stream lining Russia’s taxation/registration systems and encouraging a large amount of internal and external investment into the economy. To achieve this ambitious target Russia must be business friendly, But what is the current reality on the ground?, there is as we speak a kilometre long line of smartly dressed small businessmen and women standing in the rain, soaked and bedraggled outside the one and only tax office available, waiting to re-register their businesses. This is in Moscow the engine room of the Russian economy, what a sorry sight what an embarrassment. Mr Medvedev must be pulling his hair out, And why is this happening? because these educated hard working entrepreneurs do not trust the system, what a damming indictment on the government’s limp wristed attempts at reform.