Federal Tax Service Doubts World Bank’s Doing Business Data on Russia

Russia’s Federal Tax Service (FTS) questions the data that the World Bank used in its assessment of the country for the latest Doing Business ranking and would like the global financial institution “to look into the situation,” RIA Novosti reports.

In 2019, Russia moved up to 28th place from 31st in 2018 on the Ease of Doing Business index, but, according to the tax agency, the data cited in the index is very different from the information gathered via polls and independent experts.

One of the criteria used for the index is how long it takes to file taxes. According to the World Bank, businesses in Russia will spend 159 hours per year on average doing this. Meanwhile, polls among clients of 1C — one of the major accounting software developers —show that this is more likely to take 32 hours. FTS polls based on the index methodology suggest 10 hours.

“The differences on this call into question the original data from the respondents,” the FTS said. The agency added that it sent a request to the World Bank but never received any answer substantiated by facts.

According to the researchers, the number of taxes that businesses have to pay grew from seven to nine after the FTS became tasked with handling insurance premiums. However, the tax agency pointed out that social security payments used to be collected by three organizations. Now, only one agency is handling them, and three payments can be put on one filing form. The index team has not taken into account the fact that this change saves time, the FTS said.

“The amount of payments has not increased, but a taxpayer has fewer agencies to deal with,” the head of the tax policy at the Economics Department of the Moscow State University, Kirill Nikitin, said.

There were some inconsistencies regarding the registration of a business as well. The World Bank did not take into account the fact that state registration became free of charge when paperless. Meanwhile, more than 50 percent of new companies are filing online, according to the Federal Tax Service.