The tax officials of the CIS and Baltic countries believe that to be taxes.

Since the CIS was established, a lot of extremely important documents have been passed. Those are the agreement On Taxation Policy Principles (Moscow, March 13, 1992), unification protocol On the Approach and Signing Agreements on Preventing Double Taxation (Tashkent, May 15, 1992), agreement On Principles of Indirect Taxation on Goods, Labor, and Service Export and Import (Moscow, November 25, 1998), Agreement On Cooperation and Mutual Assistance in Keeping the Tax Legislation and Dealing with Violations in the Sphere (Minsk, June 4, 1999), etc. But only since 2001 the CIS countries have started coordinating tax legislation and rating authorities function in a really skilled and effective way, for that year chiefs of the states established the Coordination Council in Minsk. Its first meeting took place September 25-26, 2001 in Moscow, the second one — February 23, 2002. The fourth meeting will take place in June, 2003 in Baku. By the summer of 2002 tax authorities of the states participating in the agreement, the former employing over 300.000 people, had been controlling tax funds of more than 400 billion dollar and serving over a million taxpayers who conduct foreign economic activities in these countries. The meeting resulted in signing over 10 documents on cooperation between tax services in exchanging information, working out documentation, taxation practice and on working out the Model code.

Judging from the information presented by the participants of the meeting, i.e. rating authorities representatives from 12 CIS and Baltic states, they had some experience to share. First of all, according to what RF revenue minister Gennady Bukayev claimed at the press conference, they believe the tax reform in Russia to be completed in general, for the Tax code has been passed gradually, division by division. In Mykola Azarov’s opinion, this, unlike Ukraine, facilitated the task greatly or, at least, the four years of debates were not wasted, as it happened in Ukraine. Four divisions of the RF TC, which are dedicated to the taxation procedure for individuals, companies profits, VAT and excise payments, have already come into force. Since January 2003 another two divisions on the simplified tax payments system for small-scale business sphere will come into force.

As for such a system, however, Mr. Azarov had something to be proud of, when answering the question of The Day’s correspondent. The former emphasized that, unlike Russia, where the simplified tax payments system (the so-called ‘uproshchenka’) has not yet come into force, ‘Ukraine has the preferential taxation system for small-scale business already functioning. Such a system is not presented in any other country.’ Special license and single fixed tax make it possible for small and medium business to develop in Ukraine. But, according to the head of Ukrainian revenue department, many large-scale businessmen with an income exceeding greatly maximum rates peculiar to small—and medium-scale business (and often amounting to millions of dollars) abuse this right. Mr. Azarov noted that a new Tax Code in Ukraine would bring the simplified taxation system in concordance with the requirements of time and the circumstances of the country, rather than repeal it.

Double taxation problems proved to be of great interest for heads of revenue departments. Yalta conference also resulted in the agreement signed by Ukraine and Tajikistan on preventing double taxation (it is to be ratified by the parliaments). That is the 44th agreement of that kind Ukraine has signed with its economic partners. Mykola Azarov claimed also to have information on draft agreements with another 10 countries being prepared at the moment. In his opinion, in the next 2 or 3 years such agreements will be signed with all partners of Ukraine throughout the world.

The documentation signed in Yalta also includes the agreement on combating transfer price formation. The Russian Federation believes to have successfully, though not completely, solved the problem by handing the function of registering entrepreneurial activity subjects over to the Ministry of revenue. Thanks to its big database the department has information on almost every enterprise (and the founders as well), set up in Russia. The point is, the process of transfer pricing always involves operations with fictitious and straw companies. First one independent enterprise sells goods at very low prices to a straw firm, which sells it on and closes down without paying taxes. The procedure of registering such firms in Russia from now on will be more complicated, which is not going to happen in Ukraine. In Mr. Azarov’s opinion, a lot of Russian transfers will now be made through single-day firms that will register in Ukraine as agricultural enterprises, informed the chief tax official of the state. Even now up to 20,000 single-day firms are closed down monthly in Ukraine. The situation can be changed by the agreement on information exchange and mutual access to tax services database.

Working out a Model Tax Code is an important part of Yalta tax officials discussion. According to Mr. Azarov, Ukraine supposes the code to be harmonized with the EU requirements and believes it should contribute to the European integration of the country. On the other hand, the above-mentioned document should serve as methodical recommendations for the development of the CIS countries tax systems, including Ukraine. But it is much easier for our country to work out such a system, because the draft Tax Code of Ukraine has already passed its second reading. And now we have substantial materials to be handed over to the working group, currently proceeding work on the draft Tax Code.